Governor urges legislature to tighten its belt

Pawlenty visits Cambridge to discuss budget priorities.

CAMBRIDGE – “You can’t continue to spend beyond your ability to reasonably pay for it,” stressed Governor Tim Pawlenty during a visit to Cambridge on Wednesday, Feb. 25, 2009.
He was in the area to announce transportation stimulus projects for rural Minnesota, while also discussing his budget proposals.
Pawlenty spoke to about 100 people gathered for lunch at the Isanti County Historical Society. The event was sponsored by the Cambridge Area Chamber of Commerce.
The governor explained that the state creates budgets in two-year cycles. In the last one, the state spent $34 billion. This current cycle calls for a $37 billion budget. According to the latest forecast, the state will be earning $5 billion fewer in revenue than at first expected.
Pawlenty noted that it’s not really a $5 billion deficit yet. Rather, the amount the state expects to spend is being affected.
Thus he is pushing the legislature to approve cutting the overall state budget by two percent.
“The government should live within its means just like families and small businesses,” said Pawlenty.
He is urging the state to tighten its belt.
Legislators have questioned how they can cut state spending. Citizens have asked him why he didn’t shoot for a higher reduction.
State needs to be job-friendly
To identify areas for reductions, Pawlenty first ranked services according to a value system. In this way, he hopes to fundamentally change how the state’s budget is compiled.
At the top is to protect and defend, he said. Agencies like the National Guard, military, veterans, and public safety won’t see any cuts.
He is also pushing for Minnesota to change how it treats businesses. “We need to be a more job-friendly state,” said Pawlenty, “not to give businesses a break, but because citizens need access to jobs.”
He added, “You can’t be pro-job and anti-business. It’s like being pro-egg and anti-chicken.”
Pawlenty noted that if Minnesota were a sovereign nation, it would rank third highest in the world in terms of high business taxes. Minnesota charges businesses 9.87 percent. He proposes cutting that in half to 4.8% over the next six years.
He would also offer up-front tax sales tax exemptions for the purchase of new capital equipment, and allow businesses to write off the expense completely the first year rather than depreciate it over several. He would also like the state to begin offering a capital gains exemption.
And he plans to retain the JobZ program.
Supporting “clean and green” jobs is also a priority for Pawlenty who believes that is a growing field.
“We can’t have an economy where everyone is working on government buildings,” noted Pawlenty.
Schools need to revamp outdated sytem
Another top priority is education. He is proposing that schools actually get more funding.
But to receive it, they will have to revamp a system Pawlenty said was designed for the 1950s. “How many of you in this room get paid for seniority?” he asked.
Instead, Pawlenty advocates a pay scale that rewards merit and achievement, which is easily measured by various tests given to students.
He questioned why the state’s funding formulas are tied to the number of buses in a district and the number of students, rather than results.
“This is very controversial,” he admitted.
Health care system needs to be fixed
Pawlenty is also focused on fixing the health care system. He noted it is driving much of the financial pressure families and businesses are currently facing.
Again, Pawlenty believes the entire system needs to be fixed. First, he is pushing for one common billing code system for all health care and insurance providers. Second, he wants the fees being charged to be something patients can easily find out. He noted that there is nothing else citizens buy that they aren’t given the price ahead of time.
By changing how it provides health insurance, he noted the state of Minnesota has seen huge savings in the past few years. Staff are encouraged to go to low-cost, high-quality providers rather than high-cost, low-quality providers.
Health and Human Service costs need to be controlled
Pawlenty also advocated for containing the rapidly increasing health and human service costs.
“The health and human service budget is out of control,” said Pawlenty.
He noted that the programs are important, but the state can’t continue to see 20 to 26 percent increases in one area. It’s affecting how much money Minnesota has to spend on other things. Thus, he advocates holding the increase to 10 percent instead. This will involve shrinking eligibility for some programs.
‘We will get through this’
Overall, Pawlenty remains confident that the state will pull through its current budget issues. “We’ll find a way through it, but we need everybody to pull together,” he said.
“We will get through this,” promised Pawlenty.
Questions
An audience member questioned whether the state would be accepting the economic stimulus money being offered by the federal government.
Pawlenty assured the audience that the state will. He noted that currently Minnesota is ranked fifth in the nation in terms of how much money it gets. “For every $1 we send to Washington, we get 72¢,” he noted.
“We’re not going to be bashful about taking money because we’re paying the bill,” he added.