The great Minnesota get-together: Can Pawlenty, DFLers agree on a budget plan?

Thursday's unveiling of the state's most recent budget forecast certainly cast dark clouds over the Capitol in St. Paul: The shortfall for the current budget cycle is at $426 million, and the 2010-2011 biennium is short some $4.8 billion. Still, Gov. Tim Pawlenty and DFL legislative leadership were casting about for a silver lining in call-and-response press conferences this afternoon.

"This is a big challenge, but it's a big opportunity for reform and the streamlining of government," Pawlenty said, a variation on a talking point he hit repeatedly. "Necessity is the mother of invention."

House Speaker Margaret Anderson Kelliher said: "There will be a lot of innovation in the Legislature about how we budget this time."

That forced optimism aside, there sure were a lot of grim faces at the media gatherings and around the Capitol grounds. The forecast, released by the Minnesota Management and Budget office, had everyone believing that it was the worst shortfall in state's history, even worse than that of 2002. "If it's not the biggest, it's pretty darn close," Pawlenty said.

What that means is that the upcoming legislative session, slated to start Jan. 6, is nearly in full motion already. Pawlenty wants to start work immediately to clear up the shortfall for 2009, and to that end he and Anderson Kelliher and Senate Majority Leader Larry Pogemiller are sitting down for what likely will be a stomach-churning breakfast Friday morning. And indications are, from today's comments, the cat-and-mouse has already started.

What budget items are going to be cut? No one would say for sure, and both the governor and the Democrats were cagey enough to not even offer suggestions or hints, just to say that nothing is off the table. There must've been some kind of record set for non-answers given in a 90-minute period today.

In fact, Pawlenty said more about the possibility of getting federal dollars into state coffers than anything else, but took great pains to rail against federal budget policies. This indicated that at least some of his battle will be waged on the national stage — you know, should he ever want to run for president or something like that. And DFLers, who wield considerable power with strong majorities in both the House and the Senate, managed to take 30 minutes of questions from reporters without ever uttering the dreaded word "taxes."

"I think many of you," House Majority Leader Tony Sertich said, "are trying to read the last page of the book first."

Cut and hack vs. tax and spend
Well, let's at least jump past the prologue and wade into where some cuts may come — and what budgetary couch cushions might have some chump change hiding in them.

For starters, Pawlenty ran some numbers on the current shortfall, and noted that there's $155 million in reserves, meaning there's some $271 million from the current budget that needs to go. For a clue as to how some of that might be made up, Pawlenty offered past practices like automating paperwork in some departments and consolidating and/or elimination some state agencies, which he took pains to point out he had done. (This, no doubt, was at least in part an effort to distance himself from the mess.)

He also talked about hiring freezes and the like, but in reality he's going to have to cut — whether he does it alone or with lawmaker leadership is up to him, but he did note he had started to "trigger the governor's unallotment authority," which allows him to start taking funding away from budget items already passed.

Still, he and all the DFLers made it clear that they'd rather start working together now.

"If the governor thinks this is a single-person exercise," Anderson Kelliher noted tartly, "that would be a misread."

Still, neither side, despite repeated questioning, gave any specific examples of where money might be saved.

As for the next biennium, Pawlenty did indicate that he was looking at Health and Human Services, saying that the budget there was poised to rise some 21 percent. "It's unsustainable," he said. "It's mathematically difficult if not impossible."

When pressed he said he was "not necessarily" looking there, but that "Minnesota has programs in that regard that many other states don't have." He also wavered on whether he would make cuts in Local Government Aid, the state program that disperses money to cities and municipalities.

As for the Democrats, Anderson Kelliher was sounding like a starve-the-beast Republican. "We're going to start by making cuts," she said by way of answering a question about the possibility of new taxes.

'No magic bullet'
Both the governor and the DFLers want to keep spending for 2010-2011 at $32 billion from the general fund, and both agreed that they would start at zero and work their way up, rather than take a figure of, say, $38 billion and try to work it down.

"We're going to work our way from the ground up," Anderson Kelliher said.

"We're going to start with zero and build our way up to 32," Pawlenty said.

But then what? The Democrats tried to make it all about jobs, noting that according to state economist Tom Stinson, the state lost 25,900 jobs through October this year. But other than Anderson Kelliher talking about "cleaner, greener" job growth, nothing much specific was offered.

Pawlenty said that his top priorities are military and veterans, public safety and K-12 education. Does that sound like Pawlenty in 2012? (In regards to gambling money, he said "we're not going to revisit it." The notion of a new Vikings stadium "doesn't seem to fit in the priorities list.")

So, that leaves federal money, which has been talked about in helping the 41 out of 50 states that are likely running deficits. "The federal government of the United States of America is broke," Pawlenty said, sounding like a bit of a maverick candidate. "It's a Ponzi scheme, it's a house of cards, it will collapse, it's reckless and irresponsible. I'm gravely concerned about the federal government spending in that regard."

But he said that Minnesota is a "significant net contributor" to the federal government, putting in a dollar for every 73 or 75 cents returned. "I consider it appropriate," he said, ending some days of speculation, "to receive and accept this federal spending."

In the end, though, that seemed like the only concrete way out offered. Unless, of course, the two sides can come together early and often and find a number of solutions.

"If anyone says there's a magic bullet," Sertich said, "they're not being honest."

G.R. Anderson Jr. covers politics, the state Capitol and issues related to public safety.