MINNESOTA - A $3.8 trillion budget proposed by President Obama on Monday could pump hundreds of millions of dollars into Minnesota's budget, including $45 million for the Central Corridor light-rail line, making that the biggest public works project in state history.

The rail money is part of a sweeping federal budget that freezes some domestic spending, but also would extend tax cuts for 2 million Minnesota families while offering the biggest increase ever for K-12 education -- 32 percent -- a near doubling of Pell Grants for college students and increases for local health care.

Although Obama vowed to slash unneeded programs and end tax cuts for households earning more than $250,000, the budget still leaves a $1.3 trillion hole -- big enough for Republican critics in Minnesota to charge that the White House hasn't ended Washington's big-spending ways.

The nation still faces a "fiscal train wreck," said U.S. Rep. Erik Paulsen.

Even Democratic budget analysts said that Obama faces a tough balancing act between deficit reduction and investment in the struggling economy, which includes money for jobs programs, health care and local government aid to plug state budget deficits.

"It's very important for Minnesota with its projected budget shortfalls," said Steve Francisco, federal policy director for the Minnesota Council of Nonprofits.

Minnesota's share

If passed by Congress, Obama's budget would throw a lifeline to a state drowning in red ink.