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Deficit will cut deep; Governor is firm on no tax hike

ST. PAUL -- News of a $5.3 billion state budget deficit could hit nearly every Minnesotan with program cuts or increased costs.

Or it could be an opportunity to shrink state government.

Or, more likely, it could be a combination of the two.

It will be months before Minnesotans know how the record deficit will affect them. Gov. Tim Pawlenty will take a month and a half to finish his proposal for the next two-year budget and legislators probably will not wrap up their plan until March.

State and local agencies long have expected Thursday's deficit announcement, and in many cases already are taking action to reduce spending.

Supporters of issues ranging from the courts to early-childhood education to cities were quick to respond to the budget announcement with comments that boiled down to: Don't slash my budget.

An example came from Chief Justice Eric Magnuson, a friend and former colleague of Gov. Tim Pawlenty, issued a statement -- rare for a chief justice. He said that the courts are a "core function" of government and should be adequately funded.

Pawlenty said the deficit is an opportunity to rethink state government -- "to reform, prioritize, streamline and shrink state government." But the governor also said spending cuts are going to be unavoidable.

"This is not going to be easy," he said, adding that there will be "real impacts" on Minnesotans. "Some of those will be very difficult."

The deficit for the two-year budget that begins July 1 will be $4.8 billion, with a $426 million hole in the budget that ends June 30, Management and Budget Commissioner Tom Hanson announced Thursday.

Minnesota's two-year budget is $34 billion. Spending is projected to increase to about $36 billion for the next budget period, but tax collections only are estimated to total $32 million, Pawlenty said.

He will propose $4 billion in spending cuts.

Tax increases are not an option, he said.

House Speaker Margaret Anderson Kelliher, also a Minneapolis Democrat, said DFL lawmakers will focus on a budget approach that positions Minnesota strongly for the future.

"We are willing to make the cuts on places were we can save dollars both in the short term deficit and into the long-term deficit," she said.