When Republican Gov. Tim Pawlenty and the Democratic-controlled Legislature couldn’t agree on how to plug a huge budget deficit, the governor reached deep into the state’s legal code for a seldom-used executive power to chop $2.7 billion in spending on his own.

The move won the day for Pawlenty last year and burnished his credentials as a fiscal hawk. But it also sparked litigation that goes before the Minnesota Supreme Court today. How the case comes out may have implications not only for the state’s budget but also for Pawlenty’s presidential ambitions.

A victory would cement his ingenuity in handling Minnesota’s budget problem, which has only grown worse since then. But a loss could hand his national political opponents an issue by casting him as an executive who overstepped the law and exceeded his authority. Either way, Pawlenty’s assertive use of executive power will be a focus of attention in any campaign.

“He really doesn’t want to be dealing with this,” said University of Minnesota political scientist Larry Jacobs. “What he wants is a clean exit from being governor and a clear runway to run for president.”

At issue is Pawlenty’s use of an obscure executive provision known as unallotment. It’s been on the books in Minnesota since 1939, but legislative researchers were unable to find any cases of its use before 1980. Pawlenty employed it twice before last year, but neither occasion came anywhere close to the magnitude of last year’s use.

Many states have some form of the procedure on their books, sometimes called impoundment, but its murky status has made its use rare. Briefs filed in the Minnesota case indicate various forms of unallotment have faced court challenges in at least a dozen states.

Pawlenty said Wednesday he doesn’t believe losing would carry any particular risks for his political future or force him to make unpalatable concessions, but it would force his administration to cut spending even more.

He said his people have plans in place in case they lose, but wouldn’t say what they are.

“The possibility of losing the lawsuit would put Minnesota in a very difficult spot,” Pawlenty said.

The dispute stems from a stormy 2009 legislative session that pitted the governor against a Minnesota House and Senate with Democratic majorities. Pawlenty signed major spending bills but used a line-item veto to block some items, and then vetoed a tax increase passed by Democrats. Instead, to balance the budget as required by the state constitution, he unilaterally canceled $2.7 billion in spending. One of his cuts — $5.3 million from a nutritional program for elderly and disabled people — prompted the lawsuit that led to the Supreme Court case.

Ramsey County Chief District Judge Kathleen Gearin blocked the cut to that program, ruling that Pawlenty “crossed the line between legitimate exercise of his authority to unallot and interference with the legislative power to make laws.” She wrote that the unallotment provision was meant for an unforeseen crisis and “is not meant to be used as a weapon by the executive branch to break a stalemate in budget negotiations with the Legislature.”

Democrats, who have submitted briefs in the case, argue that Pawlenty created his own emergency by signing spending plans while striking down the tax plan to pay for it. They accuse the governor of trampling on the separation of powers in the constitution. Pawlenty argues that a shortfall in revenue created an emergency, even if it was foreseeable for some time.

Peter Knapp, a professor at William Mitchell College of Law in St. Paul who follows the high court closely, said the justices would likely try to decide the case on the wording of the statute if possible, and would address whether the law is constitutional only if necessary.

Pawlenty appointed four of the seven justices on the court, including Chief Justice Eric Magnuson, but Knapp noted that it’s the same court that declared Democrat Al Franken the winner of Minnesota’s protracted U.S. Senate race recount last year over Republican Norm Coleman.

“It’s conservative in the sense that it’s cautious, it’s conservative in the sense that it’s not activist, but it’s not conservative in the sense that it’s ideological,” Knapp said.

The case has echoes of the bitter fights in the 1970s over President Richard Nixon’s claimed impoundment power, when he refused to spend billions of dollars that Congress had appropriated. The Supreme Court ruled against the Nixon administration in two cases but didn’t address the constitutional question of whether presidents even had impoundment powers. Congress banned impoundment in 1974.