Pawlenty’s budget cuts Minneapolis subsidy

Republican Gov. Tim Pawlenty, pitching his first state budget as "Tough Choices Today For A Better Tomorrow," unveiled his proposal Feb. 18 for the 2004-2005 biennium. The plan would eliminate Minnesota's projected $4.2 billion shortfall without raising taxes.

Pawlenty's plan includes local-aid cuts that could translate into a 40 percent cut in aid to Minneapolis's city budget, said Laura Sether, a spokeswoman for Mayor R.T. Rybak. That would mean at least $35 million hit to the city treasury annually.

The governor would increase state school spending by 2.2 percent. Still, Minneapolis School District officials said that wouldn't keep up with rising staff and material costs, and likely mean more multi-million-dollar cuts in school services and staff.

The state’s subsidy to cities is known as Local Government Aids, or LGA. LGA pays for $90 million of the city’s $306 million general-fund budget. The program was devised to hold down property taxes in communities with high needs and less property wealth. City leaders say they depend upon it to fund police and fire services.

Pawlenty's proposal cuts LGA by 28.8 percent statewide.

However, Sether said the Minneapolis finance officials think the cuts will translate into a 40 percent loss for the city. The actual LGA formula is usually the last thing decided in a legislative session, she said.

A 40-percent Minneapolis LGA cut would be at least three times bigger than a five-year budget-cutting plan the City Council passed last month. The $11-million-per-year cuts limited city salary hikes to 2 percent per year and would give the police $12 million less by 2008 than they spend to provide current service.

Pawlenty's budget is not a certainty. The governor, a Republican, has a 80-53 majority in the state House of Representatives, but Democrat-Farmer-Laborites -- mostly from major cities affected by LGA cuts -- control the Senate 36-31.

To keep cities from raising property taxes to cover the LGA cuts, Pawlenty proposes levy limits and "reverse referendums" that would let voters nullify some municipal taxes.

Despite cuts that have sparked conflict, Pawlenty's is the largest budget in Minnesota history. The 3.8 percent increase represents more than $1 billion in new spending. He cited his economic plan as a necessary response to the rise of globalization and the need to keep the state competitive in a world economy so that Minnesota does not lose more jobs.