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Legislative leaders emerged from their first budget talks of 2010 with Gov. Tim Pawlenty Friday afternoon expressing optimism about the forthcoming legislative session. But the goodwill seems unlikely to last once legislators dig into closing a $1.2 billion budget deficit and other thorny issues.

All smiles after first budget talks of 2010

Margaret Anderson Kelliher

Margaret Anderson Kelliher

Legislative leaders emerged from their first budget talks of 2010 with Gov. Tim Pawlenty today expressing optimism about the coming session. The state is facing a $1.2 billion deficit in the current two-year budget cycle and a projected $5.4 billion budgetary hole in the next biennium.

“We’re in a budget crisis here,” said DFL House Speaker Margaret Anderson Kelliher, following the hour-plus meeting in the governor’s office. “There’s a very big problem to solve and we’re all committed to working towards solving that problem.”

“We are facing economic times in our state right now that are unprecedented,” echoed GOP Senate Minority Leader Dave Senjem. “What I noted today, at least amongst the leaders, was a willingness to really look constructively at how we can deal with that and how we can come out of this budget crisis. All in all a good session, a good start to 2010.”

But while all sides offered praise for the initial gathering, seemingly few concrete policy proposals were on the agenda. Most notably, by all indications the two sides still have diametrically different ideas about how to balance the state’s books.

Pawlenty and his GOP allies have stated repeatedly that they intend to close the deficit without raising taxes. According to Brian McClung, Pawlenty’s deputy chief of staff, the governor will present an initial budget blueprint to the Legislature near the start of next month’s session.

“The governor wanted to remind legislative leaders that he’s not interested in raising taxes,” said McClung. “That’s not exactly breaking news, but it’s worth reiterating.”

By contrast, DFL leaders have repeatedly expressed skepticism that the chronic budget deficits can be eliminated without tapping additional revenue sources. They insisted today, however, that any proposal put forth by the governor will be seriously considered.

“Our expectation is that he will present us with a budget that is honest, straightforward and that implements those types of budget reductions that are necessary,” said Senate Majority Leader Larry Pogemiller. “We hope that he does that.”

Budget talks are also being shaped by the acrimonious end of last year’s legislative session, when Pawlenty eliminated the state’s $2.7 billion budget deficit through unilateral cuts. Last month a judge ruled that the governor had overstepped his budgetary authority in doing so, and reinstated roughly $5.3 million in funding for a nutrition program. The ruling puts into question the legitimacy of Pawlenty’s other 2009 cuts.

But both sides agreed today that a special legislative session to deal with the issue–as previously suggested by Pawlenty–was not necessary. And apparently the possibility of Democrats codifying Pawlenty’s previous budget cuts — most notably a $1.8 billion delay in education funding — was not discussed at today’s gathering.

“We in the House remain committed to making sure that school districts do have some plan for repayment,” said Kelliher. “We prefer that to be with real revenue. Those are going to be some sticking points along the way.”

Beyond the budget deficits, Democrats laid out an ambitious legislative agenda for the opening weeks of the session. According to Kelliher, they hope to pass a bonding bill and an additional measure intended to spur job growth. They also expect to enact a new health insurance program to assist individuals who were enrolled in the state’s General Assistance Medical Care (GAMC) program, which was defunded by Pawlenty last year.

While today’s initial gathering was friendly and productive by all accounts, the goodwill seems unlikely to last. Rep. Kurt Zellers, the House Minority Leader, raised one potential impediment to legislative progress: electoral politics. With Pawlenty actively eyeing a presidential campaign in 2012, and eight members of the Legislature currently seeking to take over his post, political posturing could make any deals difficult.

“Based on the number of candidates there are for governor right now, I can guarantee one vote and that’s mine,” Zellers said at the press conference. “I don’t think that any legislative leader can come out and command that three-fourths of their caucus vote for or against anything.”

Even so, both parties insisted that the tone will be different in 2010. “It does remind you a little bit of being married,” said Kelliher. “It takes a little bit of work on each side of this to come to agreement.”

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