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Leaders urge counties to ignore new law

ST. PAUL - Gov. Tim Pawlenty and legislative leaders want Minnesota counties to ignore a one-sentence provision in a new tax law, but the request angers county leaders because they want flexibility the new law would offer.

As written, the law would allow counties to reduce spending in areas ranging from health care to libraries. But Pawlenty and leaders decided the provision was a mistake and promise to eliminate it soon after lawmakers begin their 2009 session.

In a rare move, the Pawlenty administration and top lawmakers are sending letters to county officials suggesting they follow the old law.

Pawlenty and Democratic-Farmer-Laborite legislative leaders discovered the provision too late to change it before lawmakers adjourned for the year late May 18.

Letters from Pawlenty and leaders do not carry the weight of law, so counties could go ahead and reduce spending.

But Pawlenty and leaders say they will overturn the provision and make the new law retroactive to this year, so counties that ignore their advice could end up with large past-due bills if they cancel services now.

"They (state leaders) are using us to balance the budget," said Jim Mulder, executive director of the Association of Minnesota Counties.

Pawlenty on Thursday signed the tax bill containing the provision into law, along with other remaining bills from the 2008 legislative session. Among provisions becoming law are those establishing Lake Vermilion State Park, a new veterans' home and property tax relief.

He also signed a measure reforming health care in the state. One lawmaker called it the most important health policy Minnesota has adopted in at least 15 years.

The legislation attempts to make health care more affordable, more accessible and of a higher quality, Pawlenty said. Making those changes are difficult because the health care system is large and complex.

"This was a worthy effort and the results, I think, are very positive for our state," Pawlenty said.

The Vermilion park, which would be the first major new state park in three decades, remains up in the air. State negotiations to buy the land from U.S. Steel could continue for months, Pawlenty said.

Pawlenty said it is "very likely" that a deal will be reached. A public works funding bill Pawlenty signed Thursday included $20 million to buy 3,000 acres for the park, as well as money for a new Minneapolis veterans' home and for a new passenger rail line between St. Paul and Minneapolis downtowns.

The senator in charge of funding public works projects, such as the park, said he has mixed feelings about Vermilion.

Sen. Keith Langseth, DFL-Glyndon, said he likes the "preservation aspect" of securing new park land, but said adding a new facility could hurt overall state park operations and funding because state money already is tight and it will be stretched thinner with a new park.

A tax bill Pawlenty signed includes $130 million in property tax relief, partially coming from placing a limit on how much cities, counties and townships can raises property taxes.

Cities and counties also will receive more state money in hopes that keeps property tax increases down. About 70,000 Minnesotans will receive larger property tax refunds as part of the tax-relief measure.

Another bill Pawlenty signed plugs the state's $935 million budget deficit without raising taxes.

The public is not expected to see much change because of program cuts and other actions. The bill also increases school aid at least $51 per student.

The governor vetoed a measure to allow home buyers facing foreclosure to delay a part of their payments. Republican Pawlenty said the bill would change mortgage contracts after they are signed.

County leaders have waited for days as Pawlenty considered what to do with the tax bill that allows counties to make cuts in some programs that state law now says must be maintained at current levels.

The old law forbids counties from cutting programs such as those for mental health, employment, child care, regional libraries, chemical dependency treatment and child welfare programs.

But county lobbyists complained that with a 3.9 percent property tax increase cap contained in the bill, they needed flexibility to make cuts so money would continue to flow to vital programs such as law enforcement.

The controversial exception to the mandates was inserted in what Pawlenty termed "a pretty serious misunderstanding."

Counties are considering their options, Mulder said. If they follow the new law, they could face overwhelming costs if the next Legislature overturns it and requires the programs be reinstated retroactively.

On the other hand, counties long have sought to get out from under spending mandates. If they opt to go with the new law, ignoring Pawlenty and legislative leaders, Mulder said that some services could be cut.

Mulder said a quarter of property taxes counties collect fall under the spending mandate.

The health legislation, which Democrats and Republicans agreed to in the session's final hours, could reduce health care cost increases 12 percent by 2015, Pawlenty said. That amounts to a savings of $7 billion from projected costs.

It expands health insurance options for 12,000 Minnesotans, either through a state-subsidized program or by making it easier to obtain private-sector insurance. It also is designed to make health care costs more transparent for consumers and to begin changing the way health providers are paid.

The aim is to make Minnesota's health care system more focused on early intervention than late intervention, supporters said.

House health care expert Rep. Tom Huntley, DFL-Duluth, said this legislation may be more significant than 1992 policy that created a large state-subsidized insurance program known as MinnesotaCare.

"The attempt is to fix the entire health-care system," Huntley said, later adding: "This is a really big deal."

There have been many studies and incomplete attempts at health-care reform in previous years, Pawlenty noted.

Pawlenty and lawmakers said the legislation serves as a foundation for further health-reform efforts.

Rep. Matt Dean, a Dellwood Republican who works on health care, said the debate next year and beyond will be about government-led vs. market-guided health care changes.

There also will be greater discussion of how to change the way health providers are paid without harming small, rural hospitals and clinics, he said.

State Capitol reporter Scott Wente contributed to this story.

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.