A rare Capitol day filled with pleasant news of big presents for Minnesota

It was a little like Christmas. But instead of sitting around a tree, Minnesota legislators sat around conference tables, watching, via satellite, as staff members of the National Conference of State Legislatures explained from Washington how the federal stimulus package will affect Minnesota.

One word seemed to sum up the briefing: Money. Or maybe three words would work better: Truckloads of money. It’s coming our way.

How much money?

No one is sure yet. But Tom Hanson, the state’s commissioner of finance, says he believes that at least $2 billion in federal funds will go into the state’s general fund.

Gov. Tim Pawlenty, in presenting his original budget for the next biennium, assumed “conservatively” that there would be $920 million available to help fill the state’s $4.8 billion deficit.

Even though the deficit is expected to balloon to $6 billion or $7 billion when revised economic forecasts are announced on March 3, the $2 billion in general fund aid is a pleasant surprise.  

“Very helpful,” said Hanson in an elegant understatement.

According to Sen. Dick Cohen, DFL-St. Paul, the federal money should mean that even when the new dismal forecasts come out next month, there won’t need to be an unpleasant unallotment process — as there was in December, when Pawlenty slashed such programs as Local Government Aid to keep the current budget in balance.

State’s total federal package still unknown
But how much will the total federal package amount to for Minnesota?

Nobody could put a number on it.

But, as soon as Congress passes the compromise package (likely Friday in one house and Saturday in the other) and President Obama signs it (perhaps Monday), the money’s going to flow to St. Paul and every other state capital. Perhaps flow’s too gentle a word. Gush is better.

The $2 billion that will go to the general fund is just a portion of the federal money that will arrive in Minnesota. Much of that money is to be used for state projects outside the general fund.  

There are going to be presents for everyone: Transportation. Education. Health and human services. Water projects. School projects.

There also are a few strings.

For example, don’t sit on large portions of the money.  Some of the funds for highway projects will have to be used within 120 days, or Minnesota will have to send it back so it can be sent to states that can put it to work.

There are other strings, too.

For example, you can’t cut education funding and then use federal money to make up the state cuts. In many cases, the feds’ money must be IN ADDITION TO the amount that was budgeted in 2008.

This fact brought large smiles to the face of Sen. Linda Berglin, DFL-Minneapolis. Under the governor’s budget proposal, many of the people Berglin cares so deeply about, the poorest of the poor, were no longer going to be eligible for state health programs.

To receive federal dollars for human services, though, many existing programs will need to be “held harmless.”

“Medicaid cuts are off the table,” said Berglin, smiling, though she quickly added that adults without children still are going to be in a world of hurt when it comes to getting health insurance help.  

With generous gifts come lots of strings
There’s one other big string to the federal money.

This is one-time money from heaven/Washington. It’s going to essentially help states through the rest of this year and 2010.

DFLers, who are insisting that Pawlenty’s initial budget proposal didn’t go nearly far enough in addressing state government’s structural financial problems, were making a big point today of saying that the one-time federal money is NOT really a fix to the state’s financial woes.  The Pawlenty budget solution to the budget crisis, DFLers say, is heavily reliant on one-time money.

The growing belief among DFLers seems to be that the only reasonable approach to the budget problem is one-third in cuts, one-third in one-time money, and one-third in tax increases. The governor, of course, is insisting there will be no new taxes. In fact, his initial budget proposal called for a series of business tax cuts.

So even with billions coming in, there is going to be plenty to fight about.

The antipathy between Republicans and DFLers was evident at the meeting of the Legislative Commission of Planning and Fiscal Policy, the group that was briefed today on the stimulus package.

One sign of those feelings was the absence of a couple of key Republicans from the briefing session.  

Secondly, there were a couple of shots taken at Gov. Pawlenty by DFLers weary of the shots he’s taken at them.

Apparently Wednesday, at a meeting of township leaders from around the state, the governor attacked DFL leadership because it hasn’t come out with a budget proposal of its own.  He said something close to this: “Come out from behind the trees and show us your budget.”

House speaker Margaret Anderson Kelliher, DFL-Minneapolis, the chair of the Legislative Commission, made reference to that comment when she addressed Hanson, the governor’s finance guy.

“Words like that are not helpful,” she said.

Hanson did not respond.

After the meeting, Kelliher took another indirect shot at Pawlenty. Through his spokesman, Brian McClung, the governor has said the federal stimulus package is “wasteful.”

Said Kelliher today, “It’s a good thing many of us have a good working relationship with our delegation and others in Washington.”

Sen. Larry Pogemiller, DFL-Minneapolis and the majority leader in the state Senate, also implied he’s weary of Republicans taking shots at the lack of a DFL budget plan. (Pogemiller has previously said that DFLers are doing their job by trying to work from the governor’s budget.)  

Today, Pogemiller pressed Hanson and state budget director James Schowalter to get a revised budget – based on the federal stimulus package – to the Legislature in a hurry.

“That budget (Pawlenty’s original proposal) does not work,” Pogemiller told Hanson and Schowalter.    

But mostly this was a pleasant day. It felt a little like Christmas for legislators who kept opening packages filled with billions of dollars.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

Comments (2)

  1. Submitted by John N. Finn on 02/12/2009 - 07:43 pm.

    I really hope that it’s realized that this might be a one time only bail out and that we could be a much poorer (material wealth) society going forward. My town’s plans for industrial parks on farmland now within walking distance makes me nervous. Back to business as usual?

  2. Submitted by John Olson on 02/13/2009 - 07:51 am.

    I’m tired of the “Christmas” metaphor.

    Christmas is supposed to be a time for family and a generally happy occasion.

    A lot of families are stressed out and frightened because of this economic mess and the uncertainty of what may lie ahead. This is no “Christmas present.”

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