State deficit will hit outstate, say local lawmakers

By KURT NESBITT

Journal Staff Writer

SLEEPY EYE -- The effects of Minnesota's projected budget deficit are going to have an effect in rural Minnesota, but the details aren't exactly clear yet, said two area state legislators Saturday morning at a meeting with Sleepy Eye Chamber of Commerce members.

While budget cuts to certain state programs and agencies have already been made public, there are still a few key issues that both the House and Senate need more time to iron out, said State Rep. James Clark and State Sen. Dennis Frederickson (both R-New Ulm).

The bill to balance the state's budget for 2002-03 was passed recently, over the governor's veto.

In order to make that cut, Minnesota will need to use $653 million from its budget reserves, trim about $230 million from its worker's compensation fund and make $400 million in spending cuts, Frederickson said.

"Most of them, you won't feel," he said, adding that the legislature will also need to cut $25 million from higher education, freeze hiring and state contracts to balance the budget.

Another bill that recently passed the Senate is the 2002-03 state bonding bill, which succeeded despite Ventura's veto. Frederickson said the $1.1 billion bill includes $40 million for local township roads and another $40 million for state parks.

Redistricting was the final item in Frederickson's update. He said neither house in the Legislature has passed such a bill, but said the state courts are expected to release a proposal this coming week.

The floor shifted to Clark, who added the House's information to the update.

He began by talking about cuts to health and human services contained in the House's newest budget balancing bill, made necessary by worse than expected projections in the state's February revenue projections. Clark said the bill will cut $65 million in health and human services spending, but won't eliminate programs.

"Instead, we're asking single adults without children to kick in for their own health insurance," he explained. "We think that's reasonable. This is real. There's a lot of money to come out of health and human services, but we're facing a $6.5 million shortfall."

The subject then shifted to taxes. Clark promised income taxes won't change. He said Minnesota has reduced taxes by $10 million in the past and doesn't think that fact should change.

"The only state that has more reserves than Minnesota is Alaska," he said. "We've been saving this money for a rainy day. Now we're using it. We're not going to be raising taxes to resolve the budget shortfall, but are probably going to raise gas taxes for roads and bridges."

"People want transportation funding. They absolutely want transportation funding," Clark continued. "We're in a crisis, in my mind. I never thought I'd be supportive of a gas tax, but I am."

Clark echoed similar House sentiment over Ventura's proposal to use gas taxes to fund light rail transit in the Twin Cities metropolitan area and also to balance the budget, saying the money should go to roads and bridges instead.

"We have a significant bond for trunk highways," Clark said. "We're hoping it doesn't slide to the bottom of the list."

Moderator Harry Hornbrook, a Sleepy Eye Chamber of Commerce member, then opened the floor to questions.

"After those two sermons, here's where we pass the collection plate," Hornbrook joked.

Some concern was raised over where transportation funding will go. Frederickson said the Senate Transportation Finance Committee likely will pass the gas tax, but said the Association of Minnesota Counties has accepted a funding distribution plan that favors metro counties over rural counties.

"It will affect state and county highways," Frederickson said. "A lot of people are concerned about rural transit."

Clark added that the House's bonding bill has $4 million for rural transit. He said later that the Legislature saw unprecedented cooperation on the budget bill and on the biodiesel bill, which Ventura allowed into law by refusing to sign it.

"It was shocking," he said. "Shocking in a good way."

When asked about the status of the state's economy, Frederickson said, "I think it's turned around already. It's unfortunate that there's lax time between the economy and taxes coming up. We will rebuild the reserves."

Clark said he thinks legislators want to keep Minnesota's AAA bond rating, but said he was shocked to hear that a lower rating doesn't have that drastic an effect on borrowing.

The topic of discussion gradually shifted to legislative efforts made by the Minnesota Twins to build a new stadium in the Twin Cities. Frederickson said the Senate recently passed a bill that would make people attending the games pay for the stadium by adding charges to tickets, licensed memorabilia and hotel room rentals. He said the bill has $350 in bonding with the Twins footing $165 million for the principal and $10 million for the interest on the bonds.

Clark added that the House will address the stadium issue, but likely won't start discussion until after higher priorities are addressed.

"Eventually, we're going to have a vote on it, but it won't be a high priority," said Clark.

Frederickson added, "We're not spending money on a stadium that we could spend on education."