As expected, Gov. Tim Pawlenty today outlined a no-new-taxes budget to solve Minnesota’s estimated $4.8 billion deficit for the new biennium.
The governor’s plans call for making permanent spending cuts of more than $2.3 billion, lopping $153 million from the Health Care Access Fund and producing nearly $3.2 billion in one-time revenues.
Pawlenty said the new funds would come from three sources, including an estimated $920 million in federal stimulus funds. The rest would come by shifting nearly $1.3 billion in school payments and raising $983 million from tobacco appropriation bonds.
He says he also wants to increase K-12 funding but “transform” the funding system “by linking all future funding increases to improved performance.”
The governor said his plan also will preserve health care coverage for children in need.
In terms of federal stimulus funds, Pawlenty said he is assuming a minimum of $920 million in direct state aid. He expects the actual amount of federal help to be larger and wants to use the additional funds as a budget cushion needed when the February budget forecast is likely to show an even larger deficit caused by deteriorating economic conditions.
The governor said he would use tobacco appropriation bonds to raise nearly $1 billion in one-time funds to soften the state’s revenue shortfall. His plan would carry “little state risk,” he said, because the state would use about 50 percent of current tobacco revenues during the next 20 years to retire the debt.
Pawlenty outlines his budget plan here with a slide show and numerous supporting documents.