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Pawlenty uses stimulus to ease Minnesota budget cuts

Associated Press

ST. PAUL — Gov. Tim Pawlenty backed off on some cuts in a revised budget plan Tuesday, relying on federal stimulus dollars even as he criticized them.

The Republican said he aims to reverse proposed cuts to universities and colleges, delay some health care cuts and send more money to courts and public schools. He is counting on $2.6 billion from the feds, about $800 million more than his administration forecast two weeks ago.

Minnesota faces a two-year deficit of $4.6 billion, about 13 percent of the budget, but the hole would be even deeper without stimulus aid. Pawlenty’s revised budget avoids tax increases but sticks with two other plans to raise revenue — a $1.3 billion accounting shift in school payments and nearly $1 billion from selling proceeds from tobacco settlement payments.

His proposal would cut hospitalization benefits for childless adults on the state-funded General Assistance Medical Care program, instead trying to manage their care through clinics and care coordinators. Pawlenty still aims to cut adults from two other subsidized health care programs, but not until January 2011 when stimulus requirements expire.

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Democrats and others found plenty to dislike in the plan, from the use of one-time money to a mix of cuts that would hit health and welfare programs and local governments the hardest.

"We don’t think this budget is balanced," said DFL House Speaker Margaret Anderson Kelliher.

Democratic Senate Majority Leader Larry Pogemiller said Pawlenty’s plan to send schools more money while cutting deeply into health and welfare programs, particularly starting in 2011, was a "cruel hoax."

"That is not a wise decision for the future of the state," said Pogemiller, DFL-Minneapolis.

But Pawlenty had words for a Senate DFL plan that would cut spending across the board and raise $2 billion in taxes, mainly targeting the wealthy. He said it would take a large increase in the income tax rate for top earners to raise the kind of money Senate Democrats are aiming for.

"They would visit a massive tax increase on an individual making $65,000 or more, so this doesn’t hit a small slice of Minnesota," Pawlenty said at a Capitol news conference. "It hits a big slice of Minnesota and it would give us one of the highest income tax rates in the country."

House Democrats are set to release a budget outline Friday, with proposals for higher taxes expected. Release of the three budget plans sets the stage for negotiations that will consume lawmakers and the governor for the next two months.

Pawlenty’s plan would help counties cut jail costs by moving short-term offenders into state prisons. It also includes $28 million to remove income taxes from the first $2,400 in unemployment insurance benefits, matching Minnesota with the federal law.

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The governor said Minnesota pays more to the federal government than it gets back, so the state is entitled to its share of the stimulus.

"We’re going to follow the law and make use of it and we have," Pawlenty said at a Capitol news conference. "But it turned into more of a spending bill in terms of the federal government than I think a targeted prioritized stimulus bill."

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