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Pawlenty and Legislature fail to best serve the people


Fri, May 22nd, 2009
Posted in Commentary

Sadly, the Republican governor and the DFL-led legislature were unable to compromise and play "let's make a deal" and do what is in the state's best interest as their session ended on May 18th at midnight. Pawlenty had given the legislature an ultimatum declaring he had signed the spending bills that have been sent to him, but would use his powers of line-item veto and an "unallotment" process to make cuts to bring the budget into balance if he and the legislature failed to come to an agreement as to how to pay for the spending. I find this to be contrary to the principles of a representative democracy. Essentially, one person will decide what is worthy of funding and what is not. This is an unprecedented use of executive power. He will essentially by pass the state legislature. Unallotment has been used rarely before Pawlenty and usually only near the end of a budget cycle when there is a shortfall.

The governor has been unyielding in his effort to hold the line on taxes. Unfortunately, this effort has forced higher property taxes which are levied by city and county governments. Pawlenty may find adoration from conservatives for standing firm on his pledge for no new taxes (new fees are OK). However, he may have negative blow back when the pain from the resulting cuts sets in that he alone put into place.

Pawlenty's cuts will assuredly affect all of us, costing jobs for many, and hospitals will be stressed with the General Assistance Medical Care (GAMC) cuts. Mayo Clinic estimates it could loose as much as $30 million due to the GAMC cut which affects medical assistance for low income adults without children. The $381 million cut will take effect July 1, 2010, and will affect as many as 35,000 people. Rochester DFL Rep. Tina Liebling says it puts the cost for care onto hospitals, since affected people will get sick or injured and go to emergency rooms.

Rep. Greg Davids was quoted in the Post-Bulletin saying, "When there is a $6.4 billion shortfall, there will be pain." The governor claims the DFL is unwilling or unable to balance the budget.

Pawlenty won't be able to make any cuts affective before July 1, the beginning of the new biennium. A financial emergency will be declared making the unilateral unallotments a legal avenue for the governor. Unallotments will target Local Government Aid, which will affect local law enforcement, libraries, and other services and will cause cities and counties to raise funds through higher property taxes. This is a shifting of the tax burden. It is estimated that there could be a 9% increase in property taxes across the state.

Property Tax Study Project

A property tax report dated April 27, 2009, was completed by a committee chaired by Hennepin County Commissioner Peter McLauglin. The conclusion of the report was that Minnesota has a "revenue problem, not a spending problem." From 2003 to 2009, state tax revenue is projected to fall 13.5%. The report claims "real per capita state spending declined by more than 5% from 2003 to 2009."

County government has sustained a loss of 10.7% of revenue per capita while the state has retained an increase of 3.2% per capita. The figures show that the state has kept more funds as local government revenues show a substantial loss.

County and city governments have suffered a 2 billion loss of dollars the state shares with local government from 2002 to 2008. In the same period state revenue has declined by less than $1 billion.

Property taxes have increased significantly to replace the losses from state aid, but the revenue per capita is still over a 10% loss over the period from 2002 to 2008. The blame is placed squarely on the state for the growth in homestead property taxes.

There is one more inequity according to the report. The property tax increases paid by homeowners have increased over five times more than the increases paid by commercial/industrial property owners. The report warns that the revenue problem cannot continue to be handled with "additional spending cuts and short term accounting gimmicks," but will require new revenues.

Minnesota Legislature

The Minnesota legislature passed a huge $2.7 billion piece of legislation that would put the state's budget in balance with a $1 billion tax increase and about $1.8 billion in shifts shortly before their session ended Monday. The bill would raise taxes on the wealthy, liquor, and credit card companies. Pawlenty promises to veto the bill and proceed with line-item vetoes and unilateral unallotments. Senate Minority Leader Dave Senjem R-Rochester said the DFL "accomplished nothing. The bill is dead on arrival."

House Speaker Margaret Anderson Kelliher, DFL, claimed the governor did not bargain in good faith. She expects he decided a while ago to go the unallotment route. A spokesman for the governor said that isn't so and that the governor wanted to get a bill similar to his proposal made in January. Pawlenty had made an offer over the weekend before the end of the session. The governor was criticized for non-forward looking planning and not trying to fill the large hole in the next biennium budget. Critics find fault with Pawlenty for his unwillingness to raise additional revenue, for planning to balance the budget through cuts and for borrowing against the future. Legislators claimed the governor had given them two choices, either they balance the budget his way or he would balance the budget his way. Pawlenty is expected to make cuts totaling about $2.7 billion.

Pawlenty said the DFL essentially repackaged the tax bill that was vetoed earlier. He says his cuts will amount to a 3 to 4% reduction of spending. Pawlenty insists with a budget shortfall, the budget must be balanced, saying the unallotment cuts are his duty. On May 19 at a press conference he claimed that legislators are gone and not coming back (meaning no special session). He made it clear that in his opinion the legislators failed to deliver a bill he could sign, keeping the state living within its means. Pawlenty said it is not wise to raise taxes in a recession and it is now up to him to balance the budget. He said, "The sky isn't going to fall, we can get through this." Likely cuts to be made by the governor in his go it alone strategy will include LGA, health and human services programs and higher education. Cuts in higher education will most assuredly result in significant increases in tuition costs for students. K through 12 funding is not likely to be cut but will not have increases either, a serious problem for very cash-strapped school districts.

Minnesotans are represented by a DFL-led legislature and a Republican governor with absolutely opposing views, fundamental differences, and both are unwilling to compromise and bargain in good faith. Unfortunately, even more problems will likely arise in trying to balance the budget for the next biennium. I, for one, am disappointed in both branches of state government. We need elected officials that are willing to meet somewhere in the middle in a crisis, leave political ideologies aside, and do what is best for the state.

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