The Free Press
June 24, 2009 07:59 pm
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There appears to be an unwarranted calm about the state budget crisis. Although Gov. Tim Pawlenty plans to erase this year’s deficit by cutting spending through the unallotment process, there will still be a large deficit of $5 billion to $7 billion by June 30, 2013.
Pawlenty needs to take some responsibility for this deficit because his plan for more revenue through borrowing didn’t get approved (even by his own party) and he offered no other plan.
The DFL-led Legislature gave him a balanced budget, but did so with tax increases that Pawlenty warned would be vetoed. They didn’t give it to him on his terms, but split government doesn’t work like that. It’s a distortion to say the Legislature did not get its job done.
When the governor vetoed the DFL balanced budget, he did what he said he was going to do. There’s no blame in that. But now that he has decided to balance the budget himself, he must cure not only the current deficit but the one many know is coming in the next biennium. Why? Because the budget he is balancing won’t really be balanced. It relies on accounting gimmicks and shifts that must be paid for in the next budget.
The governor knows this. He admitted the 2012-13 budget wouldn’t be balanced when he met with The Free Press editorial board earlier this year. He was hoping the economy would turn around and the revenue picture would brighten.
Unfortunately, his decision to not seek re-election will give him little motivation to fix the long-term deficit. If he doesn’t lead on this, then the 2010 Legislature — Democrats and Republicans — should.
Increasingly, though, Republicans are running out of room on solutions. Even Pawlenty agreed early in the session that revenue was needed, that the current deficit could not be made up with all cuts. That is why he proposed borrowing against the state’s tobacco funds. Unfortunately, paying $600 million to $700 million to borrow $1 billion over 20 years was resoundingly rejected, by a 120-2 vote in the House of Representatives, with dozens of his own party members siding with Democrats. And the governor had no plan B.
There are very few solutions left for the Republican governor and his party for curing the long-term deficit. Borrowing has been rejected. Raising taxes has been rejected. Doing deeper cuts than Democrats proposed also seems like it would be rejected. We must remember both the DFL-controlled Senate and the House initially proposed larger cuts in spending than Pawlenty.
The long-term deficit projection is not likely to change much. We’ve not yet turned the corner on adding jobs. The state is still losing jobs. The rate of job growth after a recession, if history is any indicator, will be barely 1 percent a year. That won’t be enough to “grow” our way out of the deficit.
Unfortunately, the governor’s decision to unallot may create costs he wasn’t anticipating. While he and the Legislature had agreed to shift $1.8 billion in school payments to the next fiscal year, the fact that it wasn’t put in law, and is an administrative function through unallotment, means the money is not guaranteed to the schools. A cut of $1.8 billion to schools would border on catastrophic. Picture class sizes in Mankato going from 20 to 30 for elementary kids. Picture small town schools like Wells, St. Clair and Nicollet going away.
Fortunately, the governor has proposed that many unallotment cuts start after July 2010, giving the Legislature another crack at solving the problem. Still, schools, cities and counties will feel the cuts after July 1 this year.
We hope the Legislature gets to work fixing the long-term deficit, and we hope Pawlenty and the Republican Party consider themselves part of the solution.
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