State Management and Budget Commissioner Tom Hanson today confirmed a $1.2 billion state borrowing and deferral plan — one that Senate Majority Leader Larry Pogemiller characterized as the current governor leaving the next governor with unpaid "IOUs."

Hanson told a joint House-Senate committee that the Pawlenty administration needs to borrow about $700 million from various state funds — including Minnesota State Colleges and Universities — and defer another $500 million or so in payments to K-12 schools, the University of Minnesota and corporate refunds to keep the state's budget cash flowing.

Meanwhile, Gov. Tim Pawlenty, despite his opposition to some federal spending, has asked the U.S. government for more than $260 million in Medicaid and other assistance.

Commissioner Hanson also told the Legislative Commission on Planning and Fiscal Policy today that the state has arranged for a $600 million line of credit from U.S. Bank for any short-term borrowing that may be needed next year ... when a new governor is in office. Hanson told the committee that New York bond houses are aware of the unusual short-term borrowing mechanism, and he doesn't believe it will adversely affect the state's bond rating.

The payment deferrals are known as "administrative actions." Many were previewed in hearings in July. They have been common mechanisms to aid budget shortfalls. Short-term borrowing is less common.

But Pogemiller, who chaired the Legislative Commission today, said the state is in a "a cash flow jam," and he criticized Pawlenty for leaving the state in a "fiscal condition that you don't want to see your state in."

Come spring, according to projections presented to the commission, the state will likely need to borrow money short-term to meet its obligations.

Today's hearing came as the three candidates for governor continued to debate the economic health of the state. Pogemiller said the new governor will be left with what Pawlenty has not paid.

In another move, Gov. Tim Pawlenty — who has been stridently opposing the new national health care legislation — sent a letter (PDF) to U.S. Secretary of Health and Human Services Kathleen Sebelius requesting $263 million in federal health care funds known as FMAP, Federal Medical Assistance Percentages. In releasing the letter, the governor's office said it was seeking the money that helps fund Medicaid and foster care recipients  because "the programs reflect current and longstanding Minnesota policy objectives and commitments."

Maybe so, but Pogemiller also noted that the governor's office needed those millions to better aid the state's bleeding bottom line.

"I think it's pretty clear that any discussion by future governors that there's not a problem is ludicrous," Pogemiller said."I've served with six or seven governors and I don't believe any of them has left the state in this kind of fiscal condition, other than this governor."