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State looks to schools for more money

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ST. PAUL -- Minnesota schools may be asked, again, to help balance the state budget.

Pawlenty administration officials this morning said they may need to delay more school payments this spring when the state will not have enough money to pay its bills. And while they do not expect to borrow money from outside state government before the end of June, Management and Budget Commissioner Tom Hanson said his department wants a plan to borrow $550 million just in case.

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Hanson and State Budget Director Jim Showalter told a legislative committee that they may look at delaying state payments to colleges and universities and slowing sales tax and corporate tax refund payments to help the state's budget situation.

The committee and administration officials barely touched on fiscal year 2011, which starts July 1, but Showalter said the picture then is much worse. The state budget could be in deficit 10 months during the coming fiscal year if nothing is done.

Last summer, Gov. Tim Pawlenty delayed $1.8 billion in school payments as part of a $2.7 billion budget-balancing action. Since then, the state learned it faces another $1.2 billion deficit.

Pawlenty plans to release his proposal to alter the state budget during the first week of the legislative session, which begins Feb. 4. But, first, Hanson said that state attorneys must interpret a law that appears to require the state to reduce payments it makes to schools before it can take other budget-balancing actions.

Showalter said that it now appears that the state will be very close to having no cash in March and May, and be $143 million short in April. Since revenues and spending are hard to predict, Hanson added, the state needs a bit extra to cover needed spending.

Pawlenty wants to deal with the spring problem by cutting and delaying spending. He ordered his commissioners to propose ways to cut their budgets, with proposals due today.

"We haven't had this type of situation since the early '80s," said Rep. Loren Solberg, the House Ways and Means Committee chairman.

The Grand Rapids Democrat added: "This is going to be very difficult to manage."

Schools are not happy they may be asked to help balance the budget.

"Now, they are just living until the next day," said Grace Kelliher of the Minnesota School Boards Association.

Already, Pawlenty is delaying state payments to schools. Now, Hanson said, the administration is considering delaying or eliminating entire payments due this spring.

Hanson said he does not anticipate all of the twice-monthly payments to be delayed, but it remains a possibility.

Kelliher said almost all Minnesota school districts already are borrowing money to make up for existing state payment delays and the situation would worsen if there were further delays.

Don Davis reports for Forum Communications Co.

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Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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