Polinaut: March 3, 2009 Archive

The Daily Digest: 3-3-09

Posted at 6:02 AM on March 3, 2009 by Tom Scheck
Filed under: Daily Digest

Gov. Pawlenty and state lawmakers may not be so sure but red is definitely their color today. The budget forecast is released this morning and the red ink could rise to $7 billion.

The update will be announced at 9:45. Gov. Pawlenty will deliver his address at 11:00. You can listen to Pawlenty live on MPR's Midday.

AP says the Minnesota deficit update is complicated by the federal stimulus.

The GOP slams the DFL for not producing a budget plan yet.

Meanwhile, some cities are warning of budget cuts as they sit on large rainy day funds.

The League of Minnesota Cities also wants legislation that would let mayors keep their budgets secret until they release them.

The Arts and Outdoors funds is the only place where money is flowing this year.

Pawlenty is also scheduled to be the guest host of WCCO Radio for the second straight day.

DFL House Speaker Margaret Anderson Kelliher says the Legislature can finish on time.

Kelliher discussed the budget at a U of M forum.

A bill would increase sex trafficking penalties.

St. Paul's City Council could slow down the Central Corridor line.

St. Paul wants a downtown ice-rink.

MinnPost says there's some controversy over Minneapolis Mayor R.T. Rybak's proposal to shift civil rights probes to the state.

Economy

The Dow finishes below 7,000.

A survey says there's a bleak outlook for the Midwest economy.

D.C.

President Obama makes the Bush terror memos public.

Obama names two to lead his health care efforts.

He also courts the key committee chairs.

DFL Sen. Amy Klobuchar is working to release a U.S. journalist working in Iran. Here's her letter to the United Nations.

DFL Rep. Betty McCollum announces funding for the Red Rock corridor.

AP says a study paints a rare portrait of Muslim Americans. DFL Rep. Keith Ellison is mentioned.

Banks take aim at Obama for planning to end the mortgage deduction for couples making over $250k/year. GOP Rep. Michele Bachmann said the plan would create further uncertainty in the markets.

TCF plans to returns its federal TARP money.

Minnesota farmers meet with DFL Rep. Collin Peterson.

Ag Secretary Tom Vilsack says the subsidy debate pits farmers vs. hungry children. Peterson is mentioned.

DFL Rep. Jim Oberstar promises vigorous oversight of stimulus funding.

The Hill says Obama's cabinet picks are throwing a wrench into the message. Oberstar is mentioned.

Obama's trade rep pick owes back taxes.

2008 Race for U.S. Senate

GOP Sen. Norm Coleman rests his case but not before suggesting that the election be set aside and a new election be held. Democrat Al Franken starts his case today. Meanwhile, the court is making the Coleman campaign pay for court delays caused by his side. The Star Tribune, AP, CQ, MinnPost, Forum Communications and the Pi Press have stories.

Franken says he expects to join the senate soon.

Here's a recap of the trial.

Coleman closes his campaign offices. Another staffer also leaves.

2010

MNProgressiveproject interviews John Marty.

2012

Gov. Pawlenty says the GOP must modernize.

Federal stimulus $ reduces state deficit

Posted at 7:56 AM on March 3, 2009 by Tom Scheck

The money provided by President Obama's federal stimulus package has actually reduced the state's budget deficit. With $2.2 $1.8 billion in federal stimulus, the state has a surplus of $236 million in the current budget that ends on July first. For fiscal years 2010 and '11, the state is facing a $4.57 billion deficit. Finance officials said the deficit would have been more than $6.3 billion without the federal stimulus money.

The new number will guide lawmakers for the remainder of the legislative session, as they try to come up with a plan to erase the red ink. In November, finance officials projected the budget deficit to be nearly $5 billion over the next two years.

The governor has proposed the use of one-time money, accounting shifts and cuts to erase the deficit. DFL legislative leaders have yet to propose a budget balancing plan. Lawmakers and the governor are required by the state constitution to balance the budget.

Live blog: February forecast announcement

Posted at 9:24 AM on March 3, 2009 by Tim Nelson

10:29: Wrapping up. Hanson is giving the valedictory and offering to take more questions as the day goes on. The governor will be talking at 11 a.m. Look for more live blogging in 30 minutes.

10:25: Stinson is asked what hope there is for one of his signs of improvement, the credit markets, which have had billions poured into them already. "There are signs the credit marking is improving. Tax exempt bonds are getting closer to previous levels and high grade corporate bonds are trading close to normal."

10:21: Stinson: "We've had just an enormous depression in the housing construction industry." Housing starts have been down under a million for the first time since World War II. "You can't overcome that overnight."

10:17: Hanson is punting to the governor on what will happen next. "We have prior statutory authority on the receipt of the Medical Assistance money," he says. The rest will have to be hammered out with the governor and the Legislature.

10:14: Budget director Showalter says there are a number of strings attached to the stimulus money that will prohibit cuts in some areas of the state budgets. "There are quite a few programs that will be receiving federal stimulus money," he says.

10:08: Stinson back at the mic: "The stimulus dollars may be hiding the long term problem, but they're certainly helping the state economy in the short term... In the short term, it's welcome relief."

10:06: Hanson starts taking questions. He emphasizes that stimulus money is only for medical assistance, but that he's very worried about accelerating declines in revenue. "We're not out of the woods."

10:03 Stinson: "We're in the worst recession since World War II... but it will come to an end. It may take another stimulus package, but it will come to an end." He projects a return to growth in 2011 or 2012.

10:01 Stinson, again, on signs that the economy is turning around: 1) reversal of last three quarters of declines in consumer spending 2) drop off of growth in consumer savings rates 3) improvement in credit market 4) payroll employment.

10:00 Stinson: "The stimulus package is not going to jump start the economy... It just takes time to get that money into the system."

9:59: Stinson: "We think its going to be a relaitvely slow recovery. Those jobs that have been lost aren't going to fully recover until 2010." He says Minnesota has already lost 35,000 jobs and will lose a total of 120,000 by the time the recession ebbs. Total losses are forecast to be 15,000 in construction, 42,000 in manufacuturing, 15,000 in services.

9:57: Stinson says corporate, income and sales taxes are trending down nearly 5 percent over the last fiscal year. "This recession is going to be longer and deeper than we thought in November. It's probably going to be the longest and deepest recession since World War II."

9:55 -- State economist Tom Stinson says fiscal year 2009 revenues are down $213 million, 60 percent of it in corporate taxes. The stock market decline is also contributing to lower income taxes as Minnesotan's portfolios take a hit.

9:50 -- State budget director Jim Showalter is starting the state slide show, showing the infusion of Medicaid money that will help give an immediate boost to state finances.

9:45 -- State finance director Tom Hanson has kicked things off. Puts new budget shortfall at $4.6 billion, with the help of $1.8 billion in federal stimulus money. Without the cash infusion, the actual budget deficit would be over $6 billion for the biennium that starts this summer.

Live blog: Governor weighs in on new forecast

Posted at 11:04 AM on March 3, 2009 by Tim Nelson

11:38: Governor is finished, headed back into his office.

11:36: Asked about his increasingly vocal criticism of federal spending, Pawlenty responds: "I don't limit my criticism of federal spending to what's going on currently. Whether a Democrat or Republican has been in the White House... it has been about the same. In my view, you have the fox watching the chicken coop..."

11:33: Once again, Pawlenty refers to Secretary of State Clinton encouraging China to keep buying debt, predicts that federal debt will cause a government version of the subprime crisis. Calls stimulus plan "porky" and "earmarky," and says its a spending spree, not a meat and potatoes stimulus plan. "This thing is unsustainable both at the federal level and the state level."

11:31: Pawlenty returns to statewide public employee wage freeze idea. "It will minimize, if not eliminate, government employees being laid off."

11:28: Governor says education will still be "held harmless," and perhaps increased.

11:26: "We have to be competitive... we need to be a more job friendly, business friendly state," Pawlenty says. He notes that all other states that have had better job growth had smaller costs of government. Pawlenty said earlier that this may be the first time in history that Minnesota state government shrank over a biennium. (It has shrunk on an annual basis before.)

11:23: Pawlenty is asked if the stimulus plan will have some unintended consequences, like forcing cuts in other areas that are not addressed by "maintenance of effort" requirements from Washington. He says there are some state programs that may be subject to cuts.

11:20: Pawlenty demurs on the possibility of revisiting his earlier plans to balance the budget, including holding the line on education and cutting human services, particularly health care. "We will have a balanced budget," he says, in conformity with the state's constitutional requirements.

11:10: Asked about the out years, state budget comissioner Tom Hanson asks the crowd to remember May 30, 2007, when the current budget was passed. He says that budget was balanced for the out years, too. Presumably he's noting that the state's ability to foresee the future is limited at best.

11:08 Pawlenty says stimulus money has some strings that prevent changes in eligibility for medical benefits, but that the rules may not prohibit changes in the "benefit set" that the state offers. There's a lot of discussion about "maintenance of effort" stipulations that go with the federal stimulus money.

11:06: Pawlenty on $4.6 billion shorftall: "This is about what we expected. We will have a supplemental budget out in a few weeks or sooner...We should not be raising taxes on people or business that are employing people."

11:00 -- Governor Tim Pawlenty is holding a press conference in his office right now. "As we balance the budget, state government needs to reflect the realities that families and business are facing. We need to focus on creating an environment that will grow jobs, tighten the government's belt by reducing spending, and avoiding making the situation worse by raising taxes."

Live blog: DFL responds

Posted at 12:01 PM on March 3, 2009 by Tim Nelson

12:25: Wrapping up. Minority leader Marty Seifert is waiting in the wings.

12:21: Kelliher has answered all but a handful of a half-hour of questions. She is clearly stepping forward as the DFL's point person on the budget issue. She also talked about "spending some time" with senior management at General Mills recently, perhaps a not-so-subtle reference at burnishing her business sector connections.

12:20: "I don't plan on a special session. We plan to end by sending the governor a budget that he can sign," says Kelliher. "That is our plan."

12:17: Kelliher: "The snarkiness of the first two months is going to go away," when lawmakers realize the newly unemployed would fill the Metrodome twice.

12:13: Majority leader Tony Sertich is back, defending a proposal to require a four-year budget plan. "This is pretty common sense. There's nothing vague about your books must balance."

12:11: Kelliher: The actual budget gap has grown by 25 percent since November, with $1 billion less in revenue, but that the drop is masked in the budget forecast by the federal stimulus money. "The actual budget balancing we are going to have to do over the long term has become harder," Pogemiller says of the new forecast. He also says it can't be done without cuts to K-12 education. "You can't do it taking 40 percent of your budget off the table."

12:09: Kelliher, again, on stimulus: This is short term, temporary help, and senior DFLers have some doubts about what the long-term effects of the stimulus. "There is some skepticism about how the math is being calculated here."

12:07 Senate Majority Leader Larry Pogemiller: "Everything needs to be on the table, that includes government, state, local, school districts."

12:05: Kelliher, on taxes: "All options are on the table, that includes revenue."

12:03: Speaker Margaret Anderson Kelliher: "I believe you'll see us begin to put a budget together before you see the governor's do-over budget."

12:00 -- Tony Sertich says DFL isn't going to rush to judgment with a budget plan, says putting forth a plan before this forecast was pointless. "It's just political food fights that we're not going to involve ourselves in."

Live blog: GOP lines up for a turn

Posted at 12:26 PM on March 3, 2009 by Tim Nelson

12:48: Seide departs and the official reactions draw to a close.

12:42: Eliot Seide, Executive Director of AFSCME Council 5, has jumped on the Republican caboose and walked up to the lectern as Seifert departed. "A loss of a public sector employee is a loss of a consumer on main street." Says he doesn't think "it's unfair for the folks making more than a quarter of a million dollars a year to pay their fair share." He says Minnesota has the "10th leanest" public sector in the country.

12:39: Seifert says he's working with DFLers including Karla Bigham, Phyllis Kahn and Loren Solberg to save "44 million here, 150 million there." He starts sketching out a plan to oursource state IT, presumably moving public employees into the private sector. He cites the example of Minneapolis, "not exactly the bastion of conservatism." Cites other states like Texas, and points out that IT giant IBM is a "Minnesota company," given its presence in Rochester.

12:37: Seifert on tobacco settlement money and the governor's plans to borrow against it. "He only takes half of the tobacco money and securitizes it. The question is is he going to take more of it?"

12:32: Seifert on the "four year" budget plan. "There's political as well as financial volatility ahead...Economically no one would have predicted two or three years go the predicament we're in now." Seifert says he has about "half a billion dollars worth in my sock drawer." He says he and DFLer Phyllis Kahn have a plan cooking that they'll unveil soon.

12:30: Senate minority leader Dave Senjem says the DFL leadership needs to step forward with their budget plan now. "Let's get every idea on the table."

12:19: Seifert: "Everybody is going to have to come out and say whether or not they're going to raise taxes and not do it on the Friday before Easter or something like that."

12:27: Marty Siefert, House minority leader, says "there's no more excuses as to why inaction is the theme of the day." Says the state has to come up with another 700 to 900 million more dollars.

The Bad News Bearers

Posted at 2:19 PM on March 3, 2009 by Tim Nelson
Filed under: MN Legislature

State officials released a revised budget forecast this morning, including a gap between revenues and projected expenditures that's 25 percent wider than it was in November. The real gap stands at about $6.4 billion dollars, a near record. Federal stimulus funds, though, are expected to buy down the actual gap to about $4.6 billion.

Here's what it looked like as state budget director Tom Hanson, standing at the podium, delivered the news to a roomful of reporters (in front) and lobbyists (in back) in Room 15 at the State Capitol. (Click for a bigger version.)

Here's the full-sized file. The tick-tock on the announcement and what the governor, DFL and GOP legislators had to say, is below.

Franken to make appearance

Posted at 3:23 PM on March 3, 2009 by Tom Scheck

DFL U.S. Senate candidate Al Franken will be making an appearance at the State Capitol on Wednesday afternoon. The Commission of Deaf, DeafBlind and Hard of Hearing Minnesotans will hold a rally at noon to urge lawmakers to protect funding for deaf and hard hearing programs. The group will also give Franken an award for "Most Accessible Campaign." The rally is scheduled for noon. I'm told Franken will speak at about 12:20.

Pawlenty can't live without his radio?

Posted at 4:58 PM on March 3, 2009 by Tom Scheck

For the third straight day, Governor Pawlenty will be a guest radio host. On Monday and Tuesday, Pawlenty was the guest host on WCCO (which hosts his weekly radio show). On Wednesday, Pawlenty's schedule says he'll host KKMS "Live with Jeff and Lee" at 3 pm on 980 AM.

Pawlenty's recent radio exploits make me think of LL Cool J's hit song I can't live without my radio:

My radio, believe me, I like it loud

I'm the man with a box that can rock the crowd

Walkin' down the street, to the hardcore beat

While my JVC vibrates the concrete

I'm sorry if you can't understand

But I need a radio inside my hand

Don't mean to offend other citizens

But I kick my volume way past 10

My story is rough, my neighbourhood is tough

But I still sport gold, and I'm out to crush

My name is Cool J, I devastate the show

But I couldn't survive without my radio