It is a familiar story: A major national recession — the most severe since the Great Depression — rolls through Minnesota, provoking a massive state budget deficit as a Republican governor faces off against his DFL foes in the Legislature.
But this is not today’s story. It is an old one that took place nearly 30 years ago. The time was the early 1980s, and the governor was Al Quie. Unlike 2009, when the final chapter in the current budgetary saga has yet to be written, we know how the budgetary battles of that era were finally resolved.
The affable Quie had been a 20-year congressional incumbent representing Minnesota’s First District when he decided to challenge DFL Gov. Rudy Perpich in 1978. Quie survived a tough race and ousted Perpich as part of the DFL “massacre” of that year, which saw Republicans gaining both U.S. Senate seats as well as the governorship.
Deficit was nearly 17 percent of budget
The newly elected governor soon found that he was facing mounting state deficits as revenue estimates throughout his four-year term continued to drop. For the 1982-83 biennium, Quie eventually faced a deficit equal to nearly 17 percent of the state budget. According to Mitch Pearlstein, who served on Quie’s staff and wrote a biography of the former governor in 2008, the budget crisis facing his former boss was as serious as the one currently facing Minnesota in 2009.
In 1979, within months after taking office, Quie was able to win legislative approval for a tax-indexing plan, which protected Minnesota taxpayers from being pushed into higher brackets as a result of the inflationary spiral spinning through the U.S. economy.
Indexing had the result of reducing state revenues by nearly $800 million and exacerbating the deficits that would continue to plague Quie during the remainder of his four-year term, as he called one special session after another to deal with the on-going revenue short-falls.
Unlike 2009, when Minnesota’s current governor has taken a hard line against any tax hikes, Quie was willing to negotiate with the DFL Legislature on revenues and expenditures. But those negotiations kept breaking down when DFLers kept demanding more tax increases and fewer spending cuts than Quie was willing to accept.
Forced to call another special session
During Quie’s troubled term, the state’s budget crisis came to a head in December 1981 when lagging revenue estimates revealed a new $768 million deficit. Again, Quie was forced to call a special session and renew his wrangling with DFL legislative leaders over tax and spending priorities.
By mid-month, the gap between the governor and the Legislature appeared to be closing when Quie hinted that he might be willing to accept some modest tax increases in return for more spending cuts, but a budget-balancing deal was never closed.
As the special session spilled into January, DFL legislative leaders were able to win a handful of Republican votes for a new plan that included a temporary income-tax surtax, new spending cuts and some spending shifts into the next biennium.
Three days of squabbling
Quie agonized for three days as his advisers squabbled among themselves over whether he should sign or veto the bill. Finally, reluctantly, he allowed the bill to become law without his signature.
Maintaining that he did not want to endorse what he considered a “bad bill,” Quie told the Minneapolis Star’s Betty Wilson that his veto would only have made a bad situation even worse. He explained that a veto would have forced him to cancel the huge state payments to local governments, which would have seriously disrupted law enforcement, fire protecting and other necessary public services.
Quie’s acquiescence to the DFL budget plan drew barbs from both sides of the political aisle. As Republican and DFL activists alike criticized him for his perceived lack of leadership, Quie announced in late January that he would not run for re-election to a second term in 1982.
In looking back, more than 20 years later, a reflective Quie provided the Star Tribune’s Lori Sturdevant with the rationale for his approach to the budget crisis of the early 1980s. “The question I had to come to was like this,” Quie explained. “You have a budget. You and your spouse are really staying within that budget. You look to the future, and you are going to be OK. Then your child comes down with a disease, and insurance doesn’t cover all the costs. You’ve just got to break that whole thing, because your love for your child is greater than all your budget principles. In public office, that is what you need to look at.”
Today, in 2009, what appeared to be lack of leadership on Quie’s part is being hailed in many quarters as responsible pragmatism and political statesmanship.