Today Gov. Tim Pawlenty released his recommendations to solve the state's nearly $5 billion budget deficit for FY2010-11, a deficit characterized as the state's worst since World War II. The Governor's FY2010-11 proposal spends $33.61 billion, an overall 2.2% reduction.

Since the November 2008 budget forecast, the Governor has repeatedly stated that he will construct a balanced budget proposal focused around his priorities: the areas of job growth, K 12 education, and public safety. The proposal today follows through on those promises, funding a new initiative linking student achievement to education funding, expanding the Q Comp pay-for-performance program, and cutting the current corporate tax rate of 9.8% in half.

Health care received some of the steepest and hardest cuts under the Governor's proposal. Gov. Pawlenty cited an expected growth rate in health care spending of 22%, a trend that was deemed "unsustainable." Some of the biggest areas of change include: a permanent 3% ratable reduction in both Medical Assistance and General Assistance Medical Care, merging the Health Care Access Fund with the state's General Fund, and reducing eligibility for Medical Assistance to parents with incomes up to 100% of the Federal Poverty Guidelines.

County and city governments also received difficult news today, as the Governor requested a 25% reduction in local government aid over the next two years.

Currently, there is a $920 million placeholder in the Governor's budget for a possible federal stimulus package. Several estimates suggest that Minnesota could soon receive up to $3 billion from the federal government, although Gov. Pawlenty cautioned that the entirety of federal monies cannot be simply plugged into the state's general fund, and potentially only half of the stimulus payments could be used at the state's discretion.

For more information on the Governor's budget proposal, please see the official press release and the Minnesota Management & Budget Web site, which includes today's budget presentation and additional state agency information.