AP and staff reports

ST.

Friday, January 04, 2002

ST. PAUL (AP) – Minnesotans must wait a week for Gov. Jesse Ventura to fill in the countless details he left blank in the final State of the State address of his term.

Thursday’s speech, which focused on the state’s $1.95 billion projected budget shortfall in broad terms and offered no solutions, marked the beginning of what is sure to be Ventura’s toughest legislative session yet.

&uot;I wasn’t expecting a lot more than what I heard,&uot; said Rep. Dan Dorman, R-Albert Lea. &uot;But I wish he had those details last night, especially if he expects action early in the session.&uot;

Three rosy years of tax cuts and steady increases in state funding are likely to dim in people’s minds as the GOP-controlled House, DFL-controlled Senate and Ventura struggle to agree on how to plug the gaping budget hole.

The state will have to cut spending, raise taxes or both to fix the projected shortfall for the two-year budget cycle that ends in June 2003.

”It is my belief that when we are facing a $2 billion budget deficit, we should concentrate on what is necessary and not necessarily what’s nice,” Ventura said.

He said he will offer a specific deficit-reduction plan next Thursday and wants the Legislature to act on it in the first week of the regular session, which begins Jan. 29. If that doesn’t happen, Ventura said he would unilaterally cut state spending.

”I will not stand by and watch our state’s fiscal integrity be dragged into a political quagmire,” he said.

Rep. Henry Kalis, DFL-Walters, praised Ventura’s straightforward approach.

&uot;I agree wholeheartedly with him (the Governor) when he says we can’t play games with this,&uot; Kalis said. &uot;There are only two ways to deal with this – cutting spending and increasing taxes.&uot;

Kalis said the state has been deficit spending for awhile, and that many legislators currently serving have only had to decide how to increase spending and cut taxes. Many are still in denial, including the governor, Kalis said.

&uot;The problem I see with the governor is that he’s a day late and a dollar short,&uot; he said. &uot;He should have given this speech back in November and then called us into a special session.

&uot;He’s still procrastinating, still in denial.&uot;

Ventura said cutting spending won’t be easy. But, in a sign of a likely target for cuts, Ventura spent several minutes discussing the state’s aid to cities and counties, which accounts for about $2.83 billion of the current two-year $27.8 billion budget.

”Because the purpose of these payments to local governments is to hold down property taxes, some might question if it’s working,” he said. Ventura said he expects cities and counties to absorb state cuts by dipping into reserves before raising taxes.

&uot;If local government aid (LGA) is cut back, obviously that would be a problem in a community like Albert Lea,&uot; Dorman said. &uot;It seems to be the story of saying we have a problem at the state, so let’s shift it to the cities and counties.&uot;

If the plan would be to cut back from future LGA funds, that might work, Dorman said. But if it means taking away LGA that’s already been promised, Dorman said he isn’t sure he can support that.

Jim Mulder, executive director of the Association of Minnesota Counties, said he wasn’t surprised that the governor was looking to cut local government aid, but said the solution wasn’t as easy as Ventura suggested.

Using their reserves is just a one-time solution, he said. And 65 percent to 85 percent of the services counties provide are mandated by the state and federal government, leaving only a small portion of the budget available to cut.

”We understand that we have to share the pain, but people will need to understand that property taxes will be higher than they otherwise would be if there was no cut,” Mulder said.

Of the $28 billion budget, five areas consume about 85 percent of the money. K-12 and higher education alone make up more than 50 percent, with health care, human services and state aids to local governments rounding out the top five.

If legislators don’t meet Ventura’s criteria for quickly reaching a solution, he said he will intervene. &uot;At the appropriate time, I will begin to use my executive powers to begin cutting our expenses and avoid a budget deficit made worse by inaction.”

After the speech, House and Senate leaders said they would start working on the problem immediately, but added that passing a bill in a week would be difficult.

Senate Majority Leader Roger Moe said disagreements about how to balance the budget would be ”constructive,” not based in ”political rhetoric,” as Ventura suggested they might in his speech.

Departing from the practice of delivering the State of the State speech before lawmakers at the Capitol, Ventura spoke in the evening from an office in the governor’s residence, wearing a turtleneck and sportscoat. He sat beside poster-sized charts illustrating fiscal issues and pointed to them during his speech.

Although cutting spending is his first choice, the governor said he was open to raising some taxes and specifically mentioned the gas tax, the cigarette tax or extending the sales tax to clothing. Last year, Ventura proposed lowering the overall sales tax and extending it to many services not taxed currently.

”These are just some of the taxes you will hear about,” he said.

Leaders in the GOP-controlled House said they wouldn’t agree to hike taxes of any kind. ”Raising taxes is not an option – whether it be on gas, clothing or sin taxes,” said House Speaker Steve Sviggum, R-Kenyon.

Republicans also said they would oppose cutting school or nursing home funding. That would leave a small pot of money from which to balance the budget.

Sviggum proposes a hiring freeze on non-essential state workers and eliminating a handful of state programs and agencies like the Board of Government Innovation and Cooperation, Highway Helpers and even the state planning agency.

Moe, DFL-Erskine, said everything should be on the table, but said education was ”a long way down on the list.”

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Ashley H. Grant may be reached at agrant(at)ap.org