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Pawlenty, Democrats far apart on budget

ST. PAUL - The Minnesota Legislature entered its next to last day today far from a budget deal with Gov. Tim Pawlenty.

Democratic legislative leaders and Republican Pawlenty exchanged budget offers late Saturday and early today, but there was no sign an agreement was anywhere near.

Pawlenty announced Thursday that he would cut $3 billion in spending on his own if a deal is not reached.

He trimmed less than $400 million Friday and Saturday by delivering line-item vetoes when he signed budget bills into law. Short of a budget agreement by the Legislature's midnight Monday adjournment deadline, Pawlenty will turn to an executive power known as unallotment to trim the rest in the coming weeks.

The governor says he will not call the Legislature back into a special session to finish writing the budget.

The Legislature sent Pawlenty spending bills totaling $34 billion for the budget, when tax collections only are expected to reach $31 billion.

Staring at the $3 billion budget gap, Democrats offered late Saturday to make spending cuts and raise taxes $986 million. That followed a Pawlenty proposal to chop payments to local governments and health programs.

Both sides agree that part of the way to save money is delaying payments to schools, which would free up $1.7 billion in the two-year budget that begins July 1.

The biggest disagreement is over raising taxes. Democrats who control the Legislature say they must raise taxes if they are to delay school payments.

Commissioner Tom Hanson of Minnesota Management and Budget said Pawlenty continues to reject the Democrat's nearly $1 billion tax increase.

"Why don't we set that aside and focus on those items we can agree with and move forward?" Hanson asked a legislative commission.

A Pawlenty offer early this morning proposed to delay school payments, cut local government aid and similar programs, reduce higher education beyond reductions already signed into law and make further spending cuts in other areas.

Pawlenty offered no specifics for how much spending would be cut under his latest proposal, but Hanson said that would be part of negotiations with lawmakers.

Pawlenty would unilaterally cut the remaining spending needed to balance the budget, Hanson said.

Democrats said they would review Pawlenty's latest proposal.

"This is something that we can definitely sleep on and think about," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said before a legislative commission wrapped up early this morning.

Pawlenty signed into law bills funding all areas of state government, but used his line-item veto authority to eliminate $387 million in spending.

The governor late Saturday signed bills funding agriculture and veterans programs and public school funding, the last of the budget bills funding state government.

Pawlenty eliminated $130,000 from the agriculture bill.

He made no cuts to the $13 billion public school funding bill. The bill holds funding flat during the next two years. The governor said he signed the bill with "reluctance."

"The state's K-12 education system is in need of significant reform," Pawlenty wrote to legislators. "This bill, unfortunately, does not meaningfully address that need."

Pawlenty vetoed a bill that would have funded state government services beginning July 1, when the new budget period begins, even if a balanced budget was not reached.

He also trimmed $85 million out of a $361 million public works bill, saying vetoed projects had merit, but should not be tackled during the current recession.

The full House and Senate today meet in rare Sunday sessions, taking up a variety of relatively minor bills while legislative a legislative commission discusses the budget. Meetings of legislative leaders and Pawlenty also are possible.