Minnesota economy worsens, but federal stimulus money gives leaders a political breather

Gov. Tim Pawlenty
governor.state.mn.us
Gov. Tim Pawlenty today discussed the Minnesota Management & Budget’s updated economic forecast.

In the midst of economic tumult, here’s what we’ve got, Minnesota:

A governor who is obviously running for president when he’s not doing his radio gig on WCCO Radio.

While the state is in economic free-fall, Gov. Tim Pawlenty has added to his radio schedule. Along with his Friday morning regular program, this week, he’s working — for no pay — as a fill-in host three hours a day, from noon to 3 p.m., on the Good Neighbor. And when he’s not doing that, he’s ripping on President Obama’s stimulus package as he packages himself nationally by continually saying, “No tax increases.”

So, we’ve got that.

Shy legislator leaders
And we’ve got a DFL Legislature led by people who absolutely are afraid of the words “tax increase.”

The question about increasing taxes to help solve the state’s deficit problems was asked, for about the 800th of DFL Senate leaders Larry Pogemiller and Tarryl Clark,  and House leaders Margaret Anderson Keilliher and Tony Sertich.

Pogemiller looked at Clark, Clark looked at Keilliher, Kelliher looked at Sertich. They hemmed and they hawed, and finally House Speaker Kelliher looked at the gathering of reporters and smiled.

“We will propose a budget that has to have in-flows and out-flows,” she said.

Are “in-flows” tax increases?

Probably.

But Keilliher, Pogemiller, Clark and Sertich flee from the words “tax increase” whenever talking about  the state’s budget mess.

Yes, Minnesota. These are the people who are to lead us through the worst economic crisis since World War II. A governor who does talk radio and legislative leaders who are shy of courage.

State economic problems huge
Here’s what’s clear: Minnesota has a HUGE economic problem. In laying out new economic forecasts for the next four years, Tom Stinson, the state’s top economist, painted a wretched picture.

A revised budget forecast released this morning shows that the deficit has grown from $4.8 billion to about $6.3 billion. But because of federal stimulus money, directed mostly to Medical Assistance, the projected budget deficit is forecast to be $4.57 billion for the 2010-11 biennium. The one bit of good news is that thanks to stimulus money, there will be a slight — $200 million — surplus at the end of 2009, meaning there should be no need for another round of unallotments for the current biennium.

Given this help, you might think governor would back off his criticism of President Obama’s stimulus plan.

But this is a man whose eyes seem to be on bigger jobs than being governor or a radio host.

At a news conference before his radio show, Pawlenty was again critical of the Obama plans.

“An old-fashioned Democrat spending bill,” he called the stimulus package.

And there was more.

“A house of cards,” said Pawlenty of the stimulus program.  And when the cards collapse, he predicted that the Obama stimulus program will be a bigger financial crisis than the current mortgage crisis. Then, he started in on Secretary of State Hillary Rodham Clinton, criticizing her for “pleading with the Chinese” to buy up more U.S. debt.

Meanwhile, Stinson kept coming out with grim economic numbers. Minnesota, he pointed out, currently has an unemployment rate of 7.6 percent, the national average. There are predictions that national unemployment will hit 9.4 percent and stay at that level into early 2010. Stinson expects that Minnesota will echo those grim numbers, meaning thousands of more lost jobs, including 3,400 public sector jobs.

By the way, those public sector jobs — from municipalities, to school districts, to counties to state government — are expected to be lost even if all those public employees accept pay freezes, as the governor is demanding.

Fewer jobs mean less economic activity on main streets across the state. Fewer jobs and less activity mean less revenue for the state and higher demand for social services.

Even though Stinson and other economists do believe there is going to be a light at the end of the recession tunnel sometime in the coming year, his budget forecasts for the 2012-13 biennium show a $5.133 billion deficit.

It should be noted that throughout the Office of Management and Budget report there were positive words for the federal stimulus package. In the otherw” and “one-time federal stimulus aid helps in the upcoming biennium.”

But even DFLers pointed out that the stimulus money, which is saving the state’s bacon for the moment, is “one-time money.” Long-term structural problems need to be address, they said.

What do any of our leaders intend to do about the problems? The calendar says it’s March. But the ideas being advanced by the governor and DFL leaders sound no different from what they were saying in January.

Oh, sure, there were lots of little comments about the importance of “working together.”

“I’d hope we’re at a point that partisanship will fall by the wayside,”said Kelliher at a news conference in which DFLers worked hard at saying nothing. “I’d hope we’re at a point where gimmicks and snarkiness will fall away.”

Snarkiness in full supply
But, in fact, the day was full of snarkiness.

The DFLers, who refuse to say “tax increase,” were accusing the governor of “word games.”

For his part, Pawlenty was full of snarky comments, too. For example, he has taken to using the old Rovian term “Democrat” to describe DFLers. That word “Democrat” is supposed to be a pejorative.

Example: “Democrat legislators don’t like it but we have to slow growth down,” said the governor at one point in his news conference.

What sort of plan is the governor advancing?  For starters, given the new numbers and federal stimulus money, his budget people will be coming up with a new budget in a few weeks.

One thing is certain about that budget.

“No tax increases,” said the governor. “The last thing the people of Minnesota need is a tax increase. This state already is not competitive enough. It’s not because we love big corporations or rich people — many we don’t. But we need to be more competitive.”

If DFLers ever get around to coming up with a budget proposal to counter the governor’s and if that proposal contains tax increases, Pawlenty said, “We’re going to have a collision.”

In the midst of these brutal economic times, he cautioned the DFLers from coming up with “one big social service agency” that would “suffocate” efforts to create jobs.

Of course, it’s hard to know just what DFLers have in mind, if anything. Bigger government? Smaller government? More help for people as the unemployment numbers grow?  Less help?

DFL  leaders said today that they hope to pass on budget targets to various committees sooner than usual, perhaps within the next two weeks. Sometime after that, they said, they’ll  come up with a budget proposal, which would presumably include “in-flow” increases.

What’s  almost amusing — in a political slapstick sort of way —  is that the governor and DFL legislators have agreed that in this session they will balance the budget over a four-year period, not just the traditional two years. Both the governor and legislative leaders claim they want to “tackle the structural problems” within the state budget.

Nice idea, but given their respective styles  — a one-note governor playing to a national audience and shy DFLers — it doesn’t seem likely to happen.

The only legislators using straightforward language Tuesday were Republican legislative leaders.

For example, Rep. Marty Seifert, R-Marshall, the House minority leader, has some specific ideas on how the state could save money. He says that $150 million could be saved by the state by outsourcing technical work to private businesses. He believes there are DFLers who will agree with that approach.

“Employees would be transferred from the public sector to the private sector,” said Seifert of the idea. “If you structure it right, it can be a great thing.”

Seifert wasn’t the only one at the Capitol with a straightforward idea.

Eliot Seide, the executive director of the employee union AFSCME, was telling anyone who would listen that the governor must raise taxes on the state’s wealthiest people to help solve the budget mess and save public jobs. Laying off public employees, he said, would just “pile on” to the growing unemployment problem.

Sen. Dave Senjem, R-Rochester, the Senate minority leader, stands opposite from Seide. But he, too, offered some clarity on this day of dark numbers and leadership silliness.  

“We’ve had forecasts, the governor’s budget proposal, listening sessions, the State of the State address, let’s move foreward,” he said. “… We call on leadership for their ideas. Let’s get every idea on the table and then have glorious discussion. Let’s have a legislative proposal to this.  … We were sent here to lead.”

What an interesting idea in a week in which the governor is doing radio programs and DFL legislative leaders are tap-dancing with language.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

Comments (1)

  1. Submitted by Bernice Vetsch on 03/04/2009 - 04:33 pm.

    Just as letting the Bush tax cuts for the rich expire is not a tax increase but a return to prior levels, so the Minnesota cuts for the wealthy of 1999 and 2000 (WHICH COST US A BILLION DOLLARS IN REVENUE PER YEAR) should be reversed so revenues can return to normal levels.

    I, too, wish the DFL would stand up and fight what is an extremely harmful ideology. The goal of its creator, Grover Norquist, is to reduce all government by 40 percent. Pawlenty slavishly follows Norquist’s lead.

    The legislature should pass what is right and moral and serves the public good. Let the public see the governor veto good legislation and cut-cut-cut good programs so they can also see who is to blame for endangering the lives of those who cannot defend themselves from his actions.

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