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Federal aid concerns Pawlenty

Tim Pawlenty. staff photo by Don Davis

ST. PAUL - The country's economy could worsen if the federal government sends aid to financially hurting states, Minnesota Gov. Tim Pawlenty warned Tuesday after meeting with the in-coming president.

"It is gravely concerning, the amount of money being thrown at this problem," Pawlenty told reporters, predicting harmful inflation due to federal deficit spending.

"The states should substantially fix their own problems," the Republican governor told a reporter in Philadelphia, where he and other governors met with president-elect Barack Obama.

However, in talking to Minnesota reporters later, Pawlenty said that he would reserve final judgment about whether he would accept Washington money until he sees a specific proposal.

Many governors were eager to get federal funds.

"It is going to help us," said Wisconsin Gov. Jim Doyle, like Obama a Democrat.

However, even Doyle's support came with a caveat: "There is not enough federal money in the world to take care of the deficits states are facing."

"We are going to have to make very deep cuts in state budgets and they are going to be very painful," Doyle said.

About 45 states face substantial budget deficits. Minnesota probably will be one of them, but official word will not come until Thursday.

Minnesota officials are braced for a deficit predicted to be $4 billion to $6 billion. The Minnesota Management and Budget Department on Thursday announces the size of the deficit lawmakers and Pawlenty must bridge in the two-year budget that begins July 1.

The current state budget tops $34 billion, but Pawlenty has ordered his agency heads to give him plans for spending less money.

While Pawlenty talked about "the need to put a limit on the nation's credit card, or better yet, tear it up," he also said that since Minnesota sends more money to Washington than it gets in return that he could consider accepting federal aid.

Obama gave the governors few specifics about an economic recovery plan, Pawlenty said, but promised to include money for infrastructure - such as road construction - in the program he wants Congress to pass next month.

Pawlenty complained that from what he knows about past federal assistance programs, states could be required to maintain some programs' current spending levels if federal money comes their way.

While on national television it appeared that Pawlenty was firmly against federal aid, he told Minnesota reporters that he might consider it: "It will depend on the strings attached."

Pawlenty said he briefly talked one on one with Obama about energy issues, receiving a promise that Obama's staff would be in touch with his office on the matter.

Upper Midwestern states like Minnesota that have emerging clean energy-related industries should benefit from an Obama economic recovery package, Sen. Amy Klobuchar, D-Minn., said, because Obama would spend billions of dollars to increase energy production.

Klobuchar said infrastructure aid should be part of an Obama economy recovery plan and predicted it will receive bipartisan support.

"This administration does not intent to delay in getting you the help you really need," Obama told governors.

Doyle said federal funds could help his state plug a $5.4 billion deficit in the next two-year budget and $500 million in the current budget.

He said there is "no doubt there will be reductions in jobs" throughout state government.

The story is similar in many states.

"Over the next two years, $140 billion of deficits will be facing state governments and that is a conservative estimate," said Democratic Pennsylvania Gov. Ed Rendell, who heads the National Governors' Association. "We believe the number could go as high as $200 billion."

How to fund federal aid to states remains unanswered.

Klobuchar said that while Obama promised during the campaign that he would provide ways to fund all of his proposals, the economy is such an emergency situation now that funding decisions can come later.

Wheeler News Service and contributed to this story.