Facing budget shortfall, Pawlenty targets cities, counties and human services

Gov. Tim Pawlenty announced his budget cuts today to address a $426-million deficit for 2008. When facing budget shortfalls, state law allows for unallotment, a process through which the governor makes the final decision on what parts of the budget he wants to cut.

At a Friday afternoon press conference, Pawlenty unveiled his unallotment decisions, announcing that cuts will come from local government, human services and higher education. Here’s the rundown of cutbacks: $66 million in local aid to cities, $44 million local aid to counties, a $73 million reduction in human services spending, $40 million reduction in appropriations to the University of Minnesota and the Minnesota State Colleges and Universities, a $40 million reduction in state agency spending (10 percent of operating budgets), $4 million in unspent funds from the Minnesota Housing Finance Agency Fund, a $2.2 million voluntary reduction of the Legislature’s unspent funds, $1.5 million reduction in the 21st Century Minerals Account and a $700,000 reduction in the Minnesota Investment Fund.

An additional $155 million will come from the state’s reserve.

“Unlike the federal government, we can’t deficit-spend,” he said. “We can’t print Monopoly money in the basement to fix the deficit… Families across Minnesota are tightening their belts, and businesses are tightening their belts, and they expect government to do the same. We intend to make sure that happens.”

Cities and counties will bear the burden of the budget cuts.

Senate Majority Leader Larry Pogemiller released a statement on the cuts, “We thought that across-the-board cuts would be a fair solution. The governor’s cuts fall harder on cities and counties across the state and could hurt police and fire protection. We look forward to working with the governor to find the best possible solution to fixing this historic deficit.”

Mayor Chris Coleman talked about St. Paul’s reaction to the cuts. “It is clear in today’s announcement that the Governor has come to at least a partial realization that the success of cities and our ability to provide basic services is the backbone of our economy and our quality of life in Minnesota,” he said. “I appreciate that the Governor took the time to meet with us on this issue. These cuts are painful, and force Saint Paul to make more tough choices among the services we provide. We will do what we’ve always done. We will rise to this challenge and overcome it. We are also eager to return to the table with the Governor and the Legislature to be a part of the solution for the State’s budget crisis.”

In human services, Pawlenty outlined cuts of $28 million to the Medical Education Research Costs, and a $10 million reduction in payments to hospitals for patients on Medical Assistance, specifically add-on services.

A number of unspent grants in human services will be eliminated:

• $17 million – Consolidated Chemical Dependency Treatment Fund Balance
• $2 million – New Mental Health Grants
• $6 million – Mental Health Grants (to be shifted to the next fiscal year)
• $98,000 – Community Service/Service Development (CSSD) Grants
• $2.717 million – Growth in Medical Assistance (MA) waiver programs
• $250,000 – Housing Grants
• $6 million – Adoption Assistance/Relative Custody Assistance
• $491,000 – Patient incentive grants
• $200,000 – Outreach bonus payments