Gov. Tim Pawlenty Tuesday proposed the biggest two year budget in Minnesota's history. So why are so many people feeling short-changed? The governor laid out a $29.667 billion budget that represents a 5.8 percent increase in spending over the current biennium. The two most controversial aspects of the plan are the governor's move to trim the projected growth in spending for state subsidized health insurance, and his plan to open a state sponsored casino in the Twin Cities.

Here's more on both issues. First, health care. MPR's Tom Scheck has the story:

The governor is quick to point out that the human services portion of his budget will still rise 15 percent over the next two years. But it won't rise fast enough to keep everyone eligible for state health insurance.

The governor is recommending cuts to MinnesotaCare, a state program that provides subsidized insurance to low income workers. Adults without children and parents who are on the higher end of the income scale would no longer be eligible for the program. Children would still be eligible.

Sen. Linda Berglin, DFL-Minneapolis, says Pawlenty's plan drastically eliminates health insurance for people who need it.

"Those jobs are just as important as my job," says Berglin. "The governor doesn't give speeches to banquets and luncheons without having people in the kitchen doing the work. And those people are earning an income, doing a good job, and they don't have health care and he's cutting them off."

State figures say 27,000 Minnesotans will no longer be eligible for MinnesotaCare under Pawlenty's plan by next year.

But the governor says there would still be a safety net for people who desperately need care. He says anyone cut off from MinnesotaCare would be eligible for General Assistance Medical Care, or GAMC. That's a program that provides coverage for people who make no more than $600 per month.

In addition to the cutbacks, the governor manages to find some new revenue while saying he sticks by his "no new taxes" pledge. He does it by proposing the state and three Indian tribes in northern Minnesota split the take from a new casino in the metro area. Here's MPR's Tom Robertson on the gambling issue:

Tribes would be required to pay a one-time licensing fee of $200 million. After that, the state and tribes would share the profits. Minnesota would get a projected $114 million in casino profits each year. Pawlenty says the plan would bring fairness to Indian gambling in Minnesota. "As we talk about fairness," Pawlenty said, "we define that not just as what's fair to the state of Minnesota, relative to the growth in the industry, but also what's fair to what's going on in comparable states, and what's fair to the 85 or 90 percent of Native Americans in our state who don't belong to the tribes who are involved in large casino gaming operations in our state."

Eighty-five percent of Indians in Minnesota live in the northern part of the state, on the White Earth, Red Lake and Leech Lake reservations. The three tribes are pushing legislation similar to Pawlenty's plan. The governor met with those tribal leaders just a few weeks ago, including Erma Vizenor, chair of the White Earth Band. Vizenor says the governor's goals are generally in line with theirs.

"There certainly is momentum," Vizenor said. "When the governor is working on redesigning Indian gaming in the state of Minnesota with a partnership with tribes that represent a majority of Indians in the state, yes. And White Earth is very pleased to be working with the governor's office and looks forward to refining and defining our common goals."

Wealthier tribes around the Twin Cities oppose another Twin Cities casino. They say it would cut into their profits. John McCarthy, director of the Minnesota Indian Gaming Association, describes the governor's plan as a "cynical effort to create disunity among tribes." He says it will transform Minnesota into a "Las Vegas of the north."

Of course the budget plan marks the beginning of a huge political debate, really the beginning of the 2006 campaign. MPR's Michael Khoo has a preview of that:

The gambling issue cuts across party lines -- but Democrats generally argue that casino payments are unstable and shouldn't be used to finance state government. DFLers also criticized the governor's plan for increased school funding, noting that a significant portion of it is to be built on voter-approved property tax increases. Larry Pogemiller of Minneapolis chairs the Senate Tax Committee. He says the governor's budget, far from holding the line on taxes, merely shifts them to homeowners.

"There is going to be, again, increases in property taxes on every homeowner in this state at high levels. Now, is that fair?"

Pawlenty, however, attempted to pre-empt some of the expected sniping. He says if Democrats don't like elements of his plan, they'll need to show a better way of balancing the budget.

"And so they go around the state and say, well, it's not enough for this, enough for that and Pawlenty won't raise taxes, blah, blah, blah. Well, where's your plan? And if you believe we should increase taxes come on out with it. Let's have the debate. And don't -- come on, let's go."

Democrats in both the House and Senate, however, studiously avoided any talk of raising taxes, arguing that they'll present their alternatives after they've had a chance to study Pawlenty's budget in greater detail. Other groups weren't so shy. From state employee unions to social service advocates to local government officials, a chorus has risen in support of tax increases. St. Cloud Mayor John Ellenbecker says previous cuts in state aid to cities have pushed municipal finances to the edge. And he says it's time to rethink the no-new tax pledge and to increase general state revenue.

" We've had continued increases in demand for services with only the property tax to fall back on. And we just don't think that that's appropriate. We really think that the revenue issue has to be addressed by the governor. And we don't think it's being addressed by this budget."

Ellenbecker says he hopes Democrats and even Republicans will force Pawlenty to abandon his anti-tax position. But so far there's little open enthusiasm for proposing new income or sales taxes. DFL House Minority Leader Matt Entenza says the first thing he'll do is take the governor's plan on a Minnesota road show, soliciting citizen advice.

A good old-fashioned budget road show. Now that's entertainment! I'll have more on the budget and reaction tomorrow.