1st Cuts Won't Be Deepest In Minn. Budget Debate

ST. PAUL, Minn. (AP) -- Even before Minnesota Gov. Mark Dayton unveils his first budget on Tuesday, his promised tax increases have slammed into Republican resistance. The GOP is sure to give a much warmer reception to his ideas for cutting spending.

Dayton's proposed cuts are likely to quickly become the minimum that interest groups can expect, given that the GOP-controlled Legislature is eager to go even further while setting Minnesota's two-year budget. The final package must erase a projected deficit of $6.2 billion, bigger than all but a few states' deficits as a percentage of overall spending.

"If you're cut in the Dayton proposal, things don't look good," said Dane Smith, president of Growth and Justice, a left-leaning think tank.

Dayton's administration is keeping lawmakers and interest groups mostly in the dark about what's in store. Advance briefings have been scarce, with new agency commissioners keeping a tight lid on details.

Dayton hasn't tipped his hand much either. He says he'll boost spending on public education, likely by beefing up the state's commitment to all-day kindergarten. But Dayton won't say whether he'll reverse a payment shift that delayed more than $1 billion in aid checks to schools as part of last year's budget fix.

Nursing home advocates listened closely to Dayton's State of the State speech last week hoping for some hint of his intentions. Gayle Kvenvold, a spokeswoman for the Long-Term Care Imperative, said they were disappointed the governor didn't mention seniors or issues specific to them.

"Like everyone else in the human services budget, we're braced for cuts," said Kvenvold, who heads an association of caregivers for seniors.

Aside from education, health and welfare programs are the state's biggest expenses -- about 30 percent of all general fund costs. But because lawmakers are reluctant to be seen as targeting schools, the health budget tends to take the hardest hits.

The Arc of Minnesota's Steve Larson, who is part of a consortium of advocates for 100,000 people with disabilities, understands how Dayton's budget will set the tone for the upcoming debate. Larson said he is "greatly concerned" about cutbacks in reimbursement rates for providers, which he said can translate into fewer hours of care or other offerings for people with acute disabilities.

"The high water mark during the legislative session will be with the governor's budget," Larson said. "Then at that point, we're going to be in a great struggle to maintain services at that level."

Majority Republicans said whatever Dayton marks for reductions will get extra attention in the Legislature, although they wouldn't commit to accepting all Dayton's cuts on his terms.

"It certainly puts them in the limelight a little more," said Deputy Senate Majority Leader Geoff Michel, R-Edina.

Senate Health and Human Services Committee Chairman David Hann said he doesn't expect Dayton to propose more than $200 million or so in cuts to health and welfare programs, a budget area that Democrats have sought to protect.

"To the extent that he's willing to do that, we're certainly going to take those seriously. But a lot of it too depends on how he's going to do that. What we're looking for is not only reductions, but reductions that have a reform direction," said Hann, R-Eden Prairie.

Some legislative Democrats are nervous.

"I haven't yet heard the governor articulate where those cuts are coming from. And so I am concerned because I can't imagine in this first pass where the cuts will be," said Sen. Terri Bonoff, DFL-Minnetonka.

Minnesota's forecasted deficit represents 16 percent of projected spending for fiscal years 2012-13, a period that starts July 1. Dayton's proposal will probably fall in the $35 billion range, give or take a billion.

Republicans argue that Minnesota will spend more for the next two years than it does now thanks to a rise in tax collections. That's true, but the state has reached the end of its federal stimulus money, is sitting on a pile of IOUs and is facing higher school and public health program enrollments.

Last week, Dayton vetoed a Republican attempt to shave $900 million from the deficit, about half of which would have come out of payments to local governments.

In doing so, the governor said he was concerned that the proposal would force up property taxes by cities and counties forfeiting state money. Dayton's reprieve doesn't mean local governments are out of the woods.

Gary Carlson, government relations director for the League of Minnesota Cities, said it would be overly optimistic to assume cities will avoid cuts in their state allowances. But they've tried to stress that timing matters, too.

Carlson said backloading reductions until the budget's second year would allow cities to better prepare, either by making cuts of their own or seeking more money through property taxes or fees.

Groups girding for bad news are marshaling members to work against proposed cuts.

Kvenvold said nursing home advocates are stressing caregiver jobs that could be lost if the state goes after payment rates or other aid to long-term care providers. She said past rounds of budget cutting have tapped programs that aim to keep seniors living in their homes and left caregivers with flat wages and decreasing benefits.

Nan Madden, director of the Minnesota Budget Project at the Council of Nonprofits, said she realizes Dayton is faced with a series of bad options. People, she said, are realistic about the likelihood of cuts. But that doesn't mean they'll happen without a fight.

"I don't think that means organizations that are going to see a cut in the governor's budget are not going to make their voices heard about what the consequences are," she said.

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