Governor Tim Pawlenty used his eighth and final State of the State address Thursday to outline a plan for jump-starting the economy through a variety of tax breaks for businesses.
The two-term Republican governor is not running for re-election this fall. But Pawlenty said he'll push an ambitious job-creating agenda in the coming weeks. He also promised a plan to solve the $1.2 billion budget deficit with what he called dramatic and painful spending cuts.
Pawlenty said the state faces an epic budget crisis, but that Minnesota's spirit is resilient.
Budget deficits are nothing new for Pawlenty. He's faced them six out of his eight years in office.
During this year's speech, Pawlenty compared himself to an early Minnesota explorer. But instead of looking for the true source of the Mississippi River, the governor said his quest is the true source of economic recovery.
"That source is not bigger government, special interests, or political parties. The true source is good jobs for our people," he said.
Pawlenty said he wants to grow private sector jobs by listening to employers and making the state's tax system more competitive.
The governor's proposed Job Creations Bill includes a 20 percent cut in corporate taxes, as well as several exclusions and credits for investments in small business, research and development and capital gains.
"These steps will encourage job growth and send a strong signal that Minnesota is moving in a more pro-growth, pro-jobs direction," said Pawlenty. "These are important steps, but many more will be needed this years and in the years to come, if Minnesota is going to be truly competitive in a changing economy."
Pawlenty said he will release a plan Monday for solving a $1.2 billion deficit in the current two-year budget with spending cuts alone. Veterans, public safety and K-12 education will be protected, but Pawlenty said everything else is a target. He also warned legislators not to delay in making those cuts.
"Each day that goes by means more options are taken off the table. The hole is dug deeper and the problem gets much harder to solve," he said. "There may come a point where lack of action will make it nearly impossible to solve the problem if we don't act soon."
Pawlenty also proposed tax incentives for the Ford plant in St. Paul, a constitutional amendment to cap state spending, and said he supports giving mayors control of the public schools in Minneapolis and St. Paul.
DFL House Speaker Margaret Anderson Kelliher questioned the cost of the governor's proposals and their potential to make the deficit worse. Kelliher, who's a DFL candidate for governor, said Pawlenty didn't offer many details of his budget plan, and she's worried.
“[Pawlenty's] got to do the job he's got now, well, to be successful in his new career.”Senate DFL Leader Larry Pogemiller
"To me it does sound like the ax is back as a budget-cutting tool, and that is going to be of concern to a lot of Minnesotans," said Kelliher, "that it is not done with an eye to strategic investment or to the future. But it's just done with the idea that it's a big ax, and that how you cut budgets."
Democrats say they want to see some leadership this session from the governor, who's widely viewed as a potential GOP candidate for president in 2012 and has been spending a lot of time traveling around the country.
DFL Senate Majority Leader Larry Pogemiller said Pawlenty can leave a legacy of fiscal responsibility, if he sticks around to work on it.
"If the governor wants this constitutional amendment, he's got to fight for it. He's got to come in and work it, work the Legislature. If he wants to reduce spending to the levels he says he wants to, he's got to come in and work for it," said Pogemiller. "He's got to do the job he's got now, well, to be successful in his new career."
Republicans offered only glowing reviews of the governor's speech. Senate Minority Leader David Senjem said Pawlenty offered challenging solutions for challenging times, and set the right tone for the 2010 session.
Pawlenty began his speech by offering a little tongue-in-cheek advice to his successor, including telling them to schedule monthly mullet-managing haircuts, and avoid kissing an eelpout on the lips.
He also made fun of himself in an incident at a Minnesota Wild Game where he accidentally used an expletive. "Carefully practice pronouncing the word 'puck,'" he said.