CHICAGO - Minnesota Gov. Tim Pawlenty on Friday announced plans to cut spending and dip into reserves to eliminate a projected $935 million shortfall in the state's current two-budget cycle and called for a sales tax cut that would actually add to the deficit.
The plan to address the budget shortfall calls for $341 million in spending cuts, using $250 million from the state's $653 million budget reserve known as the rainy day fund and another $250 million from a fund balance in the health care access fund that would go directly to cover health care related costs for the poor. That fund is made up of taxes paid by medical providers and health plans. The plan also relies on an additional $102 million being collected by eliminating some corporate tax loopholes.