CHICAGO -- Minnesota Gov. Arne Carlson said this week that he plans to call a special session of the Legislature to revise the state's fiscal 1994-95 general fund budget in order to avoid the need for short-term borrowing in the next biennium.

John Gunyou, the state's finance commissioner, said yesterday that the governor hopes to call the special session before Memorial Day.

On Monday, the last day of the regular legislative session, the House failed to go along with a budget compromise struck between the Republican governor and the Senate, according to Patrick Sexton, spokesman for the governor. Both houses are controlled by the Democrats.

Passage of the compromise would have allowed the state to increase its rainy-day fund to $400 million from $240 million. Increasing the fund would eliminate the need for short-term borrowing in the next biennium that begins July 1, Sexton said.

In January, Carlson proposed a $16 billion 1994-95 budget that would allow the state to end the biennium with a $240 million rainy-day fund. In March, after an improved revenue forecast, Carlson proposed increasing the fund to $500 million.

Under the agreement between the Senate and Carlson, the state could have made across-the-board spending cuts to maintain the fund at $400 million if state budget forecasts through November 1994 indicated that dicted the reserve had dropped below that level. But the spending cuts could not have exceeded 1%, or $160 million, out of the $16 billion all-funds biennial budget, Sexton said.

Currently, the state must exhaust its rainy-day fund before it can make budget cuts, Sexton said. The governor has said that preservation of the fund is necessary as a cushion in the event of an economic downturn.

Senate majority leader Roger Moe, Democrat-Farmer-Labor party member from Erskine, said that Carlson's demands were "reasonable" in light of the governor's agreement to sign various pieces of legislation, including a campaign finance reform measure.

Marcie Jefferys, chief fiscal analyst for the House, said that House Democrats failed to go along with the compromise because they felt the across-the-board spending cuts would take away from the Legislature the authority to revise the budget.

In response to the House's failure to approve the compromise, Carlson vetoed several major spending bills that are vital to the operation of state government, including measures for health and human services and higher education.

In a press release, Carlson said he would call a special session to pass the bills only after he reached an agreement with legislative leaders that would rein in spending, increase the state's rainy-day fund, or authorize him to unilaterally curb spending in the event of a fiscal downturn.

State officials said that the logjam arose last week when the Democrats budgeted $300 million more in spending than Carlson proposed in his January budget address and set aside $360 million for the state's rainy-day fund.

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