Pawlenty: ‘The State of our State is challenged’

Gov. Tim Pawlenty began his seventh State of the State address by invoking the fate of Minnesota’s 16th governor, John A. Johnson. Like Pawlenty, Johnson harbored national political ambitions. But after unsuccessfully seeking the Democratic presidential nomination in 1908, Johnson returned to the more humble task of running the State of Minnesota. “He dropped dead a few months later,” Pawlenty noted to laughter. “To my friends in the legislature, you might not be so lucky. My health is pretty good.”

While the Governor may be in prime physical shape, the financial health of Minnesota is not so robust. The state currently faces a projected $4.8 billion deficit over the next biennium — a figure that’s only expected to increase as the economy continues to flatline.

“The state of our state is challenged,” Pawlenty acknowledged. “But overcoming challenges is what Minnesota does best, so let’s get at it.”

Despite the looming deficit, which is equal to almost 14 percent of the state’s general fund, Pawlenty stuck to his mantra of no new taxes.

“Please don’t add to their burden by increasing their bill from government,” he urged legislators referring to Minnesota residents. “Please don’t take more of their hard-earned money. Please don’t raise their taxes.”

Rather than seeking additional revenues to close the projected deficit, Pawlenty actually proposed cutting the state’s corporate income tax in half — from 9.8 percent to 4.9 percent. In addition he laid out a variety of tax credits aimed at reinvigorating the economy and spurring job creation.

“Now I know these tax cuts and incentives are gonna seem aggressive in the context of our big budget challenges,” he said. “But we simply have to take dramatic measures to improve our job climate and kick-start job growth in this state.”

On the spending side, Pawlenty proposed a two-year freeze on the salaries of all state employees. In addition he called for a similar cap on raises for all government agencies that receive state funding.

Given that K-12 education and health and human services spending currently take up just over two thirds of the state’s general fund, those would seem to be the areas most ripe for cutbacks. But Pawlenty vowed not to slash funding for education, instead proposing an increase of up to two percent per pupil. In return he wants all schools across the state to institute Q Comp, a system that bases teacher compensation on classroom results.

Pawlenty was less specific in laying out areas that will be facing big cuts when he unveils his budget in two weeks. In higher education, Pawlenty proposed that Minnesota state colleges and universities cut costs by teaching 25 percent of their courses online by 2015, while also advocating a cap on tuition increases at all public colleges.

Health and human services is the area that likely will be hardest hit by Pawlenty’s budget proposal. He didn’t get into specifics during today’s speech, but clearly foreshadowed deep cuts in such programs.

“Their cost is simply unsustainable,” Pawlenty said. “We must slow down the rate of growth in these programs or it will eliminate our ability to fund other priorities in the not-too-distant future.”

While he vowed to protect all health-insurance programs aimed at children, adults who currently rely on the state for health care will likely not be so fortunate.

Pawlenty closed by invoking an average Minnesota family sitting at their kitchen table.

“Yes, there’s fear and worry at that table, but there’s also hope and there’s also optimism,” he said. “In our own modest way Minnesotans have a confidence that we can find a way to make it work. We always have.”