End of Minnesota’s legislative session is in sight, but budget deal is not

End of Minn. session in sight _ budget deal is not

ST. PAUL, Minn. — Minnesota lawmakers slid Saturday toward the end of the legislative session without a deal to address a $3 billion deficit, prolonging the uncertainty about how the state will pay its bills as its bank account empties.

While Democratic leaders held out hope for a last-minute agreement with Republican Gov. Tim Pawlenty, they were girding for the possibility that one wouldn’t come.

House and Senate leaders told their members to plan on an all-night session. They were up against a midnight Sunday deadline to finish all votes.

Pawlenty started his day on a lake near International Falls for the annual fishing opener and returned to the Capitol for evening talks with legislative leaders.

“We’ve been going around and around on the same issues now for several days,” Pawlenty said. “We have got to find a new way out of the box.”

Pawlenty said the outlines of a budget agreement were “in focus,” and the main sticking point was over health care legislation Democrats were pursuing.

Democrats who lead the Legislature said they would pass up to $800 million in spending cuts even if negotiations faltered.

That would put Pawlenty in a difficult spot. Among his options: Sign off on their cuts, order lawmakers back for a limitless special session or find other ways to manage an impending fiscal crisis. The state’s available cash is set to dip below $200 million in the coming weeks and could drop into the red this summer.

Pawlenty’s office announced he had issued a few more vetoes, including a bill expressly granting same-sex domestic partners legal rights when a partner dies. Pawlenty has said it duplicates existing law and only served to put domestic partner language into state law books.

Another bill in Pawlenty’s hands would overhaul several public employee pension funds. It passed by large margins in both chambers, meaning a veto could bring an override attempt. Pawlenty had until midnight Saturday to decide.

Saturday’s standoff centered mostly on the Democratic health proposal. The plan would enroll thousands more low-income patients in a federally sponsored Medicaid program. The state must come up with $188 million, but that would bring up to $1.4 billion in federal money.

Democrats said the expansion could ultimately give coverage to 100,000 people. But Republicans resisted the measure as an embrace of the new federal health law. Pawlenty had been open to the idea earlier in the week, but has since backed away and suggested he won’t support it unless legislative Republicans go along.

House Majority Leader Tony Sertich, DFL-Chisholm, accused the House GOP in particular of practicing “tea party politics” and pushing the state to the brink of a special session — or worse.

“They voted against our solutions we’ve offered all session long. They voted against the governor’s solutions all session long. I would hope they wouldn’t vote against and not support their own solution that they’ve offered,” he added, noting that House GOP members proposed something similar last year.

Rep. Jim Abeler, R-Anoka, said the version before lawmakers is flawed because as many as 20,000 people could be put on public health insurance rolls without establishing residency in the state, a departure from past practice. Abeler added that the federal money can’t be counted on.

“It’s unreasonable to expect that that money tree is going to keep shaking itself forever,” Abeler said.

Pawlenty said a possible compromise might be to seek a waiver that would access the federal money but allow Minnesota to write its own restrictions on coverage. Democrats were studying the idea and some legislative Republicans said they prefer that approach.

Minnesota lawmakers had been cruising toward a fast finish before the state Supreme Court ruled that Pawlenty acted improperly with a series of 2009 budget cuts and payment deferrals. That caused a budget problem of about $500 million to swell to $2.9 billion.

Democratic legislators have all but conceded that they’ll restore most of Pawlenty’s previous cuts and would agree to delay portions of school aid checks as long as some repayment plan is put in place.

If a budget gap remains, a House Research Department memo says Pawlenty might be able to withhold tax refunds, delay state grand awards and possibly cancel contracts with vendors. Another option is to take out short-term loans, but that comes with high interest rates.

Democrats have also warned that a budget crisis would harm the state’s credit rating and could cause the administration to put off borrowing for previously authorized construction projects.