Legislative Advisory Commission Chair Larry Pogemiller expresses his disagreement with Governor Tim Pawlenty’s proposal for short term borrowing for cash flow purposes. Minnesota Management and Budget Commissioner Tom Hanson was seeking support for a $600 million line of credit. In addition, the department plans to delay payments to school districts and higher education systems to help with cash flow. The Legislative Advisory Commission took no advisory action during the Monday, July 12th, hearing.
Below: Press release from State Representative Loren Solberg of the House Ways and Means Committee on Governor Tim Pawlenty’s proposal to borrow money.
LAWMAKERS PRESS ADMINISTRATION FOR DETAILED CASH FLOW PLAN
Governor Tim Pawlenty’s top finance leaders revealed today that another round of emergency budget actions will be necessary to keep Minnesota from running out of money later this year. However, members of the Legislative Advisory Commission declined to support the moves until the administration provides critical details.
The Governor has proposed borrowing from schools and public college and universities. He also wants to delay business tax refunds and payments to health providers.
“It is difficult to buy into a plan that does not fully exist,” said Rep. Loren Solberg, chair of the House Ways and Means Committee. “Once again the Governor wants students, businesses and the sick and elderly to bail him out, but he has no idea how his actions would impact them.”
For instance, the administration has proposed withholding another $83 million from school districts and $89 million from the University of Minnesota until next summer. But state finance officials cannot explain how these institutions might deal with such a move.
“The Governor’s staff admitted they have only had preliminary talks,” said Solberg. “Schools are already cutting classes and instructors in response to earlier budget cuts. We need to fully understand how they would handle yet another budget blow.”
Solberg said other payment delays could also impact Main Street businesses.
“If the administration once again delays sales tax refunds, will that force small businesses to lay off workers or delay hiring new ones,” asked Solberg. “All of these cash-flow maneuvers have impacts that the Governor should fully consider before he moves forward.”
The Pawlenty administration also wants to secure up to a $600 million line of credit if necessary to keep the state of Minnesota out of the red. Finance officials told lawmakers they will continue to work out the details of their cash flow plan and return with additional information.