This morning at the State Capitol, Republican Gov. Tim Pawlenty and DFL legislative leaders will meet to advance the central drama remaining in the 2008 legislative session -- balancing a state budget that is out of kilter by nearly $1 billion.

The job must be done. The state Constitution requires it. But closing the big gap between revenues and expenditures can happen in one of two ways -- with a bipartisan agreement, reached either in regular or special session, or by unilateral gubernatorial action, via the legally prescribed procedure known as "unallotment."

Minnesotans should be rooting for a deal. In fact, they should demand one. Here's why:

• The rules of unallotment require emptying the state's $653 million reserve fund first. Given the risk of more economic trouble in the 14 months remaining in this budget period, taking the state's savings account to $0 would be a big gamble. Further, it would do lasting damage to the state's bond rating, adding millions to future borrowing costs.

• The unallotment option would only allow for budget reductions. Revenue-raising measures that both Pawlenty and DFL legislators support, such as a change in the definition of foreign operating corporations to prevent their use as a tax dodge for business income earned in Minnesota -- which would close the budget gap by at least $100 million -- wouldn't be available.

• A solo budget-balancing act would oblige Pawlenty to make roughly $300 million in spending cuts over the next 14 months. Where his ax would fall would be up to him -- and that's reason to worry. Already this year, he's shown a willingness to whack health care, slash transit funding and cut higher education enough to spike tuition at state colleges and universities. None of those is a good idea.

Unallotment also carries political risks, for both parties. Pawlenty might fancy the role of lone fiscal hawk. But he'd also be left to shoulder alone the blame for unpopular spending cuts.

Meanwhile, the DFL-controlled Legislature would share the shame of another botched attempt at bipartisan governance. Gridlock at the Capitol long ago ceased to be cheerfully tolerated in this state.

No easy choices

Still, cheer won't be a widespread response to any deal Pawlenty and the Legislature can strike. There are no painless ways to close a budget gap this large -- at least, none that is also fiscally responsible.

Both branches already propose to dip deeply into one-time funds to close the budget gap, an approach that creates the possibility of a nasty hangover in 2009. Using still more one-time money this year would ease the immediate pain, but make next year's headache worse. Using still more one-time money this year would ease the immediate pain, but make next year's headache worse.

New taxes are off the table, at the insistence of the governor and with the quiet approval of the House. Only the House stands for election this year.

That leaves spending adjustments, where the biggest point of conflict between governor and Legislature involves the use of up to $250 million in surplus that has built up in the earmarked account that finances MinnesotaCare, the subsidized health insurance program for the working poor. Pawlenty would tap at least half of that fund to cover human services spending now financed by the general fund.

DFLers have mightily resisted raids on the MinnesotaCare money, for good reasons. It is raised via a tax on health care providers' services, which was created in 1992 with a promise to providers that it would be confined to one purpose. Further, they see expansion of eligibility for MinnesotaCare as an important element in this year's multipart effort to rein in health care inflation. The more people are insured, they argue, the cheaper insurance becomes for everyone.

What's increasingly evident, though, is that without capturing at least a share of MinnesotaCare money for other purposes, Pawlenty isn't likely to say yes to a health reform bill that lays claim to any of those dollars. He will be loath to spend more on health insurance for the working poor if he's cutting health programs for people at even greater disadvantage at the same time.

Room to deal

For the sake of both health care reform and balancing the budget, a compromise must be struck. We see the potential for one in a proposal advanced by House Republican leader Marty Seifert: Use the MinnesotaCare money for one (and only one) additional purpose -- long-term care. Paying for nursing homes with that money strikes us as a deal-worthy choice, for several reasons.

• Years of tight state money have left the heavily regulated nursing home industry in such bad financial condition that as many as a third of the state's facilities are at risk of closure in the near term, an industry association says. Allowing nursing homes to fail in such big numbers would diminish statewide access to long-term care services -- and access to affordable care is what the MinnesotaCare money is supposed to provide.

• Legislative leaders of both parties say it's a priority to better serve an industry that cares for the state's indigent disabled and frail elderly population. They want to assure low-paid nursing home workers of at least a 2 percent cost-of-living increase this year, and to stay on a course set last session to adjust long-frozen reimbursement formulas. Pawlenty has proposed to erase both of those things to balance the budget, indicating that they will be targets of unallotment if there's no budget deal.

• Giving long-term care a modest claim on the Health Care Access Fund would make an implicit but important policy statement. It would acknowledge that the line between acute and long-term care has blurred, and is likely to become even less distinct as an aging population turns to providers of elder care for an array of technology-based health services. Preserving the elder care infrastructure that the long-term care industry represents, and helping it play an active role in the "medical home" system reformers want to create, is much in the state's interest.

Tapping the Health Care Access Fund for long-term care isn't all that's needed to complete a budget deal. But it might be a way to get around a major obstacle to an accord. If it also clears the way for health care reform legislation this session, all the better.