Governor's Latest Offer. The Governor has come forth with an offer to close the remaining $2.78 billion gap between projected revenues and expenditures. The offer to the Legislative Commission on Planning and Fiscal Policy is as follows:

• Accept the House K-12 Shift of 73%/27%.--$1.75 Billion
• Reduce LGA and related items--$450 Million
• Other Items --$100 Million (Reduce Renters Credit, Taconite Aid, Political Contribution and other items)
• Further Health and Human Services Cuts--$250 Million
• Higher Education Cuts--$190 Million

While not being embraced wildly, there does appear to be some progress here. Note that there are no direct revenue increases in the Governor's offer, as he has replaced his approximately $1 billion in bonding-for-cash with cuts to services.

There are myriad issues with the proposal, many of which relate to how these proposed cuts would work with the federal stimulus package and whether or not the cuts to higher education would create a cut to E-12. University of Minnesota President Dr. Robert Bruiniks is now testifying on how the proposed $190 million in cuts could have an extremely adverse effect on the University's operations.

Dr. Bruiniks was followed by Dr. James McCormick, Chancellor of the Minnesota State Colleges & Universities system. His testimony echoed much of what Dr. Bruiniks said in that reserves are limited (and only one-time) and going back to the fiscal 2006 level of funding (the amount necessary to be maintained to not endanger eligibility for stabilization funds in the federal stimulus package) would cause massive additional layoffs (as a large number of layoffs has already taken place) and may push tuition higher. Not a pretty picture.

The commission's focus then returned to the health and human services cuts, both the line-item veto of $381 million in general assistance medical care and the additional cuts of $250 million in the Governor's latest offer. I have to say that Health and Human Services Commissioner Cal Ludeman did a great job being extremely straightforward what some of the effects of the proposed cuts would be. Not a single dodge during a series of tough questions.