Politicians’ Minnesota budget standoff makes for unsettling breakfast fare

Over eggs and orange juice, members of the Chamber of Commerce this morning got to listen in on the fundamental budget debate being waged at the state Capitol.

When it was over, most of the 140 people gathered probably left the St. Paul Hotel gathering with a serious acid reflux problem.

Gov. Tim Pawlenty, DFL legislative leaders Sen. Larry Pogemiller and Rep. Margaret Anderson Kelliher and Republican leaders Sen. Dave Senjem and Rep. Marty Seifert laid out their cases on how to solve the $4.6 billion budget problem.

No signs of consensus
Chamber members left, shaking their heads. There were some harsh words and political threats — and nothing that sounded like consensus.

First up was the governor. He came to the breakfast meeting in shirt sleeves. As always, he was glib, comfortable and friendly.

For example, when asked if there were any chance of a Viking stadium bill being passed this session, Pawlenty grinned.

“There’s as much chance of that as there is of the Wild winning the Stanley Cup this year,” he said to laughs. 

But on this gorgeous spring morning, his message was grim, though it was said with a smile.

“My friends [DFLers] have a different view — dramatically raise revenue — billions in tax increases,” he said.

This plan, he said, would kill jobs. In fact, by the time he was discussing the Minnesota business climate, it was surprising that every business leader in the room didn’t rush out of the room, pack their bags and take their business somewhere else.

Oh, what a grim picture the governor painted — always with soft words, often with a smile on his face. It’s not just Minnesota that’s in trouble because of a bad business climate, he said. It’s the entire Great Lakes region.

He used troubled Michigan as an example.

“The business climate and unions priced Michigan out of the market,” he said.

Pawlenty promised that he would veto any legislation that would include any tax increase. Perhaps surprisingly, none of these anti-tax sentiments drew reaction from the breakfast-eating chamber members.

The big problem, he said, was the health and human services budget.

“It’s the runaway area of state spending,” he said. “It’s financially killing us. It threatens to overwhelm everything. We are in danger of becoming one big welfare and social services agency.”

Before leaving, he implored chamber members to call their legislators.

“Most legislators don’t have a business background,” the governor said. “They need to be educated, cajoled, pressured.”

He left the room to standing applause. But this was no ovation. Was the standing out of respect for the office or respect for the message? It was hard to tell.

Testy time for legislative leaders
Following Pawlenty’s message, the legislators sat, panel fashion, at the front of the room. Things got testy.

Pogemiller, the Senate leader from Minneapolis, clearly was irritated by Pawlenty’s anti-government message and his threats to veto the work of the legislative bodies.

“I think he needs to change his tone,” Pogemiller said, anger creeping into his voice. “I think we all need to recognize that the government is us. All of us. You may not like the representative from one district or another. But the body is us. … Our Job 1 is to balance the budget. If you can’t balance the budget honestly and fairly, you shouldn’t have the job.”

The tone seemed to startle the chamber members. Pogemiller was relentless in defense of the Senate’s tax bill that calls for $2.2 billion in tax increases. The governor’s balanced budget is not a balanced budget at all, he kept saying. “Borrowed money and accounting shifts,” he said. Pogemiller also kept saying the Senate’s approach to the budget problem called for far-deeper government cuts than those being proposed by Pawlenty.

Keilliher was also saying that the House bill, which calls for $1.5 billion in tax increases, was responsible and included business-friendly provisions. She rattled off a number of credits and breaks that would go to business as she addressed, in soft tones, the Chamber members.

“We all share responsibility,” she said.

Things really got personal when Seifert, the House minority leader from Marshall, picked up on the theme that health and human services is “out of control.”

Seifert then made everyone in the room gasp when he suggested that Minnesota might not be able to help provide health care to “anyone not born in Minnesota.”

House Speaker Keilliher was first to jump on Seifert’s comment.

“How many of you were not born in Minnesota?” she asked chamber members.

About half the people in the room raised their hands.

She noted that her great-grandmother was born in Sweden. Her husband was born in a different state.

“We shouldn’t leap to conclusions about who’s getting health care,” she said to Seifert.

“I meant foreigners,” muttered Seifert at one point.

And this got Pogemiller incensed.

“Those people — the Ecuadoran mothers with their children, the Hondurans, the Somalis — may be foreigners to you, Seifert,” Pogemiller said, “but they’re constituents to me. It’s offensive what you said.”

This was uncomfortable breakfast table talk.

The chamber members shifted the conversation to whether the governor and the Legislature could possibly reach agreement by the session’s closing date, May 18.

Seifert suggested that the only way that could happen is if the legislative leaders’ position moved.

“Unlike the federal government, we have someone with a veto pen, and he’s going to use it,” Seifert vowed. “The far left is going to have to move to the moderate right, which is where most Minnesotans are.”

He asked that the chamber members “e-mail your representatives and tell them to vote no on the House tax bill.”

Indeed, the governor does have a veto pen. But he’s also got a huge problem. Much of his balanced budget is based on the sale of tobacco revenue bonds, a borrowing technique that would give Minnesota $1 billion in one-time money. At 2 a.m. Friday, the House voted down the tattered remains of the governor’s bond bill, 130-2.

Chamber members kept coming back to the same question: Can the session end on time?

Somehow, the legislative leaders said it could.

The chamber members seemed skeptical.

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

Comments (13)

  1. Submitted by Tim Walker on 04/24/2009 - 11:29 am.

    The racism in Rep. Marty Seifert’s words is appalling and inexcusable.

    I hope the mainstream media covering this morning’s meeting make an issue of this. But I’m not holding my breath.

    So, the GOP’s racist Southern Strategy has come to Minnesota. I hope we have the good sense to kick it back to the slimy swamp whence it came.

  2. Submitted by Bob White on 04/24/2009 - 12:28 pm.

    Superior reporting, Doug. I could almost taste the tainted eggs.

  3. Submitted by Bernice Vetsch on 04/24/2009 - 02:27 pm.

    We may need a constitutional amendment that makes it easier to impeach a sitting governor.

    Pawlenty has done nothing that is actually forbidden by law, which is what impeachment now requires (see Article VIII of the state constitution).

    What he HAS done that a goodly majority of state residents would agree is immoral rather than just illegal is his refusal to tax wealthy Minnesotans at the rates they paid prior to the 1999-2000 cuts. The $1 billion per year revenue we have lost to his “pledge” would have allowed the state to continue caring for those the economy, age or disability have rendered unable to care for themselves.

    Instead, we have nothing more in store from him except more of the same — plus his insistence that it is not HE who must change but those who see the terrible harm he plans to continue inflicting on vulnerable people. Yarrrggh.

  4. Submitted by ellen wolfson on 04/24/2009 - 04:15 pm.

    When is Powlenty going to wake up to the fact that we can’t go on expecting to borrow and one time money our way out of this mess. We have a Revenue problem and the only way it can be fixed is by collecting more revenue.

  5. Submitted by Howard Miller on 04/24/2009 - 07:28 pm.

    So crisply written.

    With quality writers like Mr. Grow and Mr. Black, MinnPost provides a uniquely high-quality news forum. Kick in, if you haven’t! These folks need to pay bills too!

  6. Submitted by Duke Powell on 04/24/2009 - 08:30 pm.

    While Rep Seifert may have been unartful in his description of noncitizens, their eligibility for various health care and cash assistance programs is a subject that should be talked about.

    As of today, app. 55,000 poor or near-poor non-citizens are enrolled in one or more of this state’s expansive public programs. While the federal gov’t requires some program coverage for many of these folks, Minnesota is exceedingly generous in its coverage for those who the feds don’t require us to cover. Illegal aliens are not counted in this number since they were kicked off the rolls in 2003.

    What are the programs non-citizens eligible for?The Dept of Human Services programs are: MFIP Cash and Food Portion (Welfare), General Assistance, Minnesota Supplemental Aid, Food Support, Emergency General Assistance, Group Residential Housing and Refugee Cash Assistance. The health care programs are: General Assistance Medical Care, Medical Assistance, Emergency Medical Assistance and MinnesotaCare.

    It is not a stretch to say that many non-citizens receive benefits that total $30,000/year or more.

    The Governor has said thru-out his tenure that our Health and Human Services budget is unsustainable. If that is true, and I believe it is, then someone is going to get whacked. Non-citizens receiving cadillac public benefits have to be part of the conversation.

  7. Submitted by John N. Finn on 04/25/2009 - 09:19 am.

    I keep hearing about how Minnesota’s business “climate” is eliminating jobs due to companies leaving, not expanding here, etc. T’paw has requested that the corporate tax rate be cut in half. Well, why not eliminate it completely? If accurate, the pie chart linked to here shows that tax accounts for only four percent of revenue. Make it up by increasing other revenue streams just a bit, perhaps progressively. So, problem solved, nothing to complain about anymore.

    http://budgetforum.senate.mn/wp-content/uploads/2008/12/slide31.gif
    http://budgetforum.senate.mn/wp-content/uploads/2008/12/slide31.gif

    I’m aware that other factors contribute to our supposedly unfavorable business climate, and many business enterprises are not corporations. What might be the unintended consequences? Non-corporate businesses converting over resulting in a much larger revenue decrease? Other states making similar tax adjustments so no resulting advantage for Minnesota?

    I’d seriously like to know why we shouldn’t halve or eliminate the corporate tax. Personally, I wouldn’t mind a slight increase in my personal taxes if I wouldn’t have to listen to the Chamber of Commerce complaining about how terrible a place Minnesota is to conduct business.

  8. Submitted by Bernice Vetsch on 04/25/2009 - 12:16 pm.

    Mr. Powell: When Mexico signed on to NAFTA, it had to open its borders to our agricultural products as well as its workers to less-than-a-living-wage job in the corporations that moved their and to the assaults upon its environment committed by some of those same corporations.

    As I understand it, something like 15 million Mexican farmers were forced out of business when our agribusiness folks dumped underpriced beans and corn (their two basic staplesl) on the Mexican market. I would imagine those who enter the U.S. illegally are members of that group desperately seeking any way to support their families, especially since the agribusiness folks raised their prices as soon as they had destroyed their competition.

    Immigrants who are not citizens pay into Social Security and Medicare through payroll deductions, the same as citizens. They do not, however, receive those benefits when they get older.

  9. Submitted by Duke Powell on 04/25/2009 - 03:37 pm.

    Mr.Vetsch. I’m sorry if I did not make myself clear. My post addresses legal non-citizens and that is the population that Rep Seifert was referring to. Undocumented immigrants (illegal aliens) do not qualify for the programs listed and have not since 2003.

    The point is that if we are going to be forced to make hard choices concerning eligibilities for our public programs, the legal non-citizen population will have to be scrutinized.

  10. Submitted by donald maxwell on 04/25/2009 - 06:08 pm.

    “No new taxes” and its ilk are the mantra of politicians who have nothing to offer the public in the way of constructive public policy ideas. When was Minnesota a leader in new business development? When it was close to the top in state taxes. The anti-tax bunch don’t try to back their bellowings with any real evidence of good because they know their slogans are crowd-pleasers.

    What the legislature needs to do is to send Pawlenty honestly balanced budgets, let him veto them, send them back up to him and keep sending them until he is the vetoingest governor in history. Possibly at some point the people will see through him for the fraud his positions represent – that you can have good government without paying for it.

    Most of our state legislators were elected by majorities in their districts. Pawlenty was elected governor by a minority vote.

  11. Submitted by William Pappas on 04/26/2009 - 08:03 am.

    Right on Mr. Maxwell. It’s about time DFL’ers got a spine. I think a line in the sand and willingness to stay in session all summer until Pawlenty approves a logical budget tht is not entirely based on ideology is entirely appropriate. Pawlenty’s smiling but constantly negative rehtoric about the “far left” will start to ring hollow as democrats once again are crafting a centrist budget and not a right wing attack on Minnesota government. Seifert’s negative and personal attacks along with the obligatory liberal psychosis will also become tiring as legislators try to construct a workable budget.
    Even Pawlenty’s pet proposal to borrow the debt by bonding it was defeated in stand alone legislation by a near unanimous vote. Pawlenty is out of the mainstream with his revenue production. How far can a silky voice, negative attitude and ideological purity take the governor? Certainly Seifert’s suggestion that you have to show Minnesotsa purity to receive benefits in this State should repulse anyone reading that remark. It was clerly racist and designed to create resentment of “foreigners” which he could then link to social policies favored by democrats. I think his suggestion speaks volumes as to his methods.
    DFL’ers have the high ground on these issues and need to exploit it.

  12. Submitted by Joe Matheis on 04/26/2009 - 09:22 am.

    I understand the discourse around the topic of taxes.

    What I fail to see, is why we always have a revenue problem and not a spending problem? Why are there spending increases when the rest of the economy is shrinking?

    Surely it’s not a black and white issue, or resolution, but there needs to be moderation on both sides of the coin.

  13. Submitted by Richard Schulze on 04/27/2009 - 12:51 pm.

    The budget that Governor Pawlenty proposes will allow for two things.

    1) The Governor will balance the budget as is required.
    2) He will do so by creating larger deficits in the future.

    The larger deficits will be caused in a number of ways:

    His proposal to shift some state education payments to just outside the window of this biennium would deepen the projected deficit in the subsequent biennium.

    His proposed budget this year would take tobacco-settlement revenues that would otherwise be collected over many years in the future, spend them now, and leave a large hole for the future.

    His proposal to cut corporate taxes without paying for it creates a big budget hole in future years.

    Governor Pawlenty came into office with a projected 4.5 billion dollar deficit. Nearly the same level that it is today. Half of the projected deficit in the upcoming biennium is not from the declining economy but from a holdover projected deficit he refused to deal with in earlier years.

    Governor Pawlenty has taken to criticizing the federal government for deficit spending, saying it should learn from governors who have to enact balanced budgets.

    It would appear that the Governor can talk a “good game” while criticizing the Federal government in the hopes of increasing his national stature. When in truth, the governor has not made the tough choices here in MN.

    One way to do that would be to “work together” with both sides of the aisle in order to fix the structural problems in our budget.

    As one of the previous comments suggested “moderation on both sides of the coin”.The One thing is clear: We can neither tax our way nor cut our way out of this problem.

    The governor chooses to paper over the problems and leave them for the next governor to fix. Clearly not the most responsible solution.

    Leadership and courage appear not to be part of the solution. Ideology, dogma and a smidgen of demagoguery would appear to be so much easier.

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