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State budget talks get answers

ST. PAUL -- Minnesota's top politicians could be excused if they are bleary-eyed today; after all, they pored over spreadsheets packed with numbers for much of Wednesday.

ST. PAUL -- Minnesota's top politicians could be excused if they are bleary-eyed today; after all, they pored over spreadsheets packed with numbers for much of Wednesday.

The numbers show how property tax relief proposals by Republican Gov. Tim Pawlenty and Democrats who control the Legislature would affect Minnesotans. After they are done looking at those figures, they will decide whether they can compromise on a tax policy, which the governor says is the linchpin of ending the 2008 legislative session.

The state constitution requires the session to end Monday, but to be a success, the governor and legislative leaders must agree on how property taxes and a state budget deficit will be handled.

"Each time we have gotten together we have got a little closer," House Minority Leader Marty Seifert, R-Marshall, said.

All sides were optimistic Wednesday night, a better sign than Tuesday night when negotiations folded over a dispute about whether $50 million should be removed from a health fund.

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Most of the attention was focused on how to lower property taxes, but negotiators also considered how to fill a $935 million hole in the state budget.

Pawlenty spokesman Brian McClung said the governor will not agree to budget-balancing measures without a property tax agreement.

The governor wants a strict limit on how much local governments can raise property taxes. Democrats propose a looser property tax cap than Republican Pawlenty wants.

Here are answers to some questions and answers about efforts to end the 2008 legislative session:

Q. What are the negotiations about?

A. As the mandated session deadline nears in most years, the governor and legislative leaders go behind closed doors to work out details of major unresolved bills, especially those spending money. This year, the main issue is how to fill a $935 million budget deficit, but the top policymakers also are discussing ways to lower property taxes.

Q. Wow! A $935 million deficit? That sounds huge.

A. To most Minnesotans, that is a lot of money. However, it is pretty tiny compared with the $34 billion, two-year budget legislators and Gov. Tim Pawlenty approved last year.

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Q. How did Minnesota get itself into this situation?

A. Minnesota is not responsible as much as the national economy. Tax revenues have fallen as people lose jobs, buy less and, in general, pay less tax money to the state. Also, some programs are costing more, such as those that help people in poverty and those without insurance. Many states are facing similar problems, although places like North Dakota and Wyoming that get a good percent of their revenues from energy sources like oil and coal are doing better.

Q. Didn't I hear something about a budget surplus last year?

A. Yes. The economy varies, a large part because of energy prices. Predictions are that high oil prices will keep the economy in the doldrums.

Q. Speaking of last year, if legislators passed a two-year budget then why is it being discussed again?

A. True. State leaders pass a two-year budget in every odd-numbered year. The current budget runs through June 30, 2009. However, the state constitution requires that the budget be balanced, so they are looking at ways to plug the budget hole.

Q. What happens if lawmakers and Pawlenty don't agree on a budget fix? Does state government shut down like in 2005?

A. There is no danger of a government shutdown this year like the partial shutdown three years ago. The state budget continues until mid-2009, so there is time for Pawlenty and legislators to take action.

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Q. If the budget deal does not happen, what is the next step?

A. Pawlenty already has discussed the prospect of calling the Legislature in for a special session, so that is one option. However, under certain circumstances the governor by himself can cut programs to balance the budget. While Pawlenty says he has looked into that procedure, known as unallotment, he cannot constitutionally do as much to balance the budget as he can in cooperation with legislators. The governor and legislators all say they want a negotiated deal.

Q. What things are the governor and legislators thinking about doing to balance the budget?

A. They actually agree on three broad concepts, but disagree on just a few details. They agree they need to cut programs, use surplus money in various state funds and close a loophole that allows some multi-national corporations to avoid paying income taxes. As negotiators met Wednesday, however, they could not agree on the specifics.

Q. If they agree on the broad concepts, why can't they close the deal?

A. That's the $935 million question. One example may help: Pawlenty began negotiations wanting to take money out of the Health Care Access Fund. Democrats, however, say they don't want money from that fund to be used to balance the budget. In other words, both sides have pet projects they either don't want touched or they want infused with new money.

Q. What about property taxes? I thought they were local taxes. What do they have to do with the budget?

A. Property taxes are mostly local -- levied by cities, counties, schools, townships etc. But programs the state requires local governments to do can force up local costs, which is what Democrats accuse Pawlenty of doing since he became governor in 2003. The governor, on the other hand, says they are local taxes, controlled by local governments.

Q. So what's going to happen?

A. Check back Monday, the last day the constitution allows the Legislature to meet.

Davis reports for Forum Communications Co., which owns the herald.

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