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Pawlenty: Cut spending, taxes in 'challenged' era

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Gov. Tim Pawlenty
Gov. Tim Pawlenty addresses a joint convention of the Minnesota House and Senate as he delivers his state of the state address.
MPR Photo/Tom Scheck

In his seventh State of the State speech, Gov. Pawlenty described Minnesota's current condition as "challenged." 

And he asked legislators to take a kitchen-table approach to solving the budget deficit and to setting new priorities for state government. Pawlenty described a Minnesota family trying to pay the bills and plan for the future.

"On behalf of Minnesotans sitting at their kitchen tables, I ask each member of the Legislature, please don't add to their burden by increasing their bill from government," he said. "Please don't take more of their hard earned money. Please don't raise their taxes."

Pawlenty is not only holding the line on tax increases. He's calling for significant reductions in the taxes currently paid by businesses. 

"Please don't add to their burden by increasing their bill from government. Please don't take more of their hard earned money. Please don't raise their taxes."

As part of a proposal called the "Minnesota Jobs Recovery Act," Pawlenty is recommending a package of tax credits, exemptions and deductions for businesses that create new jobs. He also wants to cut Minnesota's corporate tax rate in half as a way to keep and attract jobs.

"This means reducing the current 9.8 percent business tax rate to 4.8 percent over the next six years," he said. "This will take us from having one of the worst business tax rates in the country to having one of the best." 

The governor warned of significant reductions in most areas of state spending, especially in health and human services. But Pawlenty promised he would protect the eligibility for children who receive public health insurance. 

His budget will spare veterans programs, public safety and education. Pawlenty is actually proposing more spending for education in the form of training and salaries for teachers. He wants to further expand his performance-based teacher pay initiative known as Q-Comp, and provide a similar financial incentive to high-performing schools.  

"Let's pay school districts for results," he said. "I propose we increase school district funding by up to an additional 2 percent per student for students meeting standards or at least showing reasonable growth towards achievement." 

Pawlenty's education agenda also calls for a cap on tuition at public colleges and universities. More specifics will come later this month when the governor unveils his full budget proposal. 

Democrats in the House and Senate say they're waiting for those details, but they were mostly disappointed with the State of the State preview.

"I generally expected an uplifting speech on shared sacrifice. And I don't think that's what we received, said DFL Senate Majority Learder Larry Pogemiller.

Pogemiller said he wants to work with the governor to solve the budget deficit. But after the speech Pogemiller questioned Pawlenty's spending proposals, as well as his strategy of cutting business taxes.

"Arguably that strategy for the creation of jobs has been a failed strategy at the national level and demonstratively a failed strategy at the state level," he said. 

Democrats also raised questions about Pawlenty's education plan. Rep. Mindy Greiling, DFL- Roseville, chair of the House K-12 finance division, has her own proposal for boosting the funding for public schools. But Greiling said she doesn't like the governor's idea of singling out a limited number of schools for financial rewards.

"Well, I think what he's missing is that we need all students to be successful and all students graduating ready for success," she said. "We have the baby boomers retiring and we need all hands on deck. He is doing the haves and have not and the dividing. And that should not be done with real kids." 

Republicans were quick to praise the speech. House Republican Minority Leader Marty Seifert said the governor was uplifting and realistic, especially on the topic of government reform. 

"People expect reality when it comes to how the government solves its budget problems," he said. "And we have to look at what the private sector is doing. They are freezing salaries. They are reprioritizing. They are looking at doing spending decisions differently."

Gov. Pawlenty said the budget solution will mean layoffs for state government employees, but he said he wants to try to minimize that job loss with a two-year wage freeze. He's also pushing for cities and counties to freeze wages. 

Union leaders are resisting the idea. Eliot Seide of the American Federation of State, County and Municipal Employees Council 5 said Pawlenty must respect the bargaining rights of government workers.  

"Let local governments work their own budgets," he said. "He talked about eliminating mandates. Don't mandate local governments to freeze wages. Let those local government and their unions work out their disagreements or agreements as they see fit in their situations." 

As for state workers, Seide said the budget cannot be balanced on their backs. State and union negotiators will begin working on a new contract in March.