Pawlenty warns leaders of looming cash crisis

This morning’s closed door budget meeting with Gov. Tim Pawlenty and legislative leaders did not produce a budget agreement, but it did highlight a potential budget crisis.

Following the hour-long meeting, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, told reporters that he was told the state could run out of cash as soon as next week.

“Apparently the cash flow situation is a lot worse than we were led to believe,” Pogemiller said.

Wednesday’s state supreme court ruling against some of Pawlenty’s unilateral budget cuts in 2009 has complicated this year’s state budget. It’s also created some immediate problems for the state check book.

Pawlenty’s spokesman Brian McClung told reporters that state could face a cash flow crisis if a judge orders the state to repay any other party that lost funding under last year’s budget fix. The original lawsuit was specific to cuts to a nutrition program. Concerned that other claims could follow, McClung said the state check book is already close to its minimum cushion of $200 million.

“If a judge ordered the state to back pay, we don’t have the money to do that,” McClung said. “And so, not only would we be below the $200 million cushion, we would be at zero. And that is clearly a position that the state has never faced.”

McClung said legislators could head off the crisis by ratifying the governor’s 2009 unallotments. But DFL leaders are not embracing Pawlenty’s request.

“We have grave concerns about passing that unilateral plan,” said House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, who is also running for governor.

House and Senate Republican leaders said they believe a budget solution can still come from spending cuts alone. House Minority Leader Kurt Zellers, R-Maple Grove, warned against a DFL attempt raise taxes.

“This is as serious as a heart attack, Zellers said. “We are in a dire economic strait. You add on to the economic burden of Minnesota families of Minnesota businesses, and this could get exponentially worse in the next year or two.”

Legislative leaders are scheduled to meet again with Pawlenty at 3:00 p.m.

  • bsimon

    Sounds like maybe the Governor should have signed those revenue bills last year.