As budget problems mount, Pawlenty questioned about travel outside state

Minnesota’s deficit numbers were as bad as expected. But what was a little surprising was the rough treatment Gov. Tim Pawlenty received from the usually mild-mannered press corps Wednesday afternoon.

Start with the numbers, which were delivered by Tom Hanson, the state’s finance commissioner who has become used to announcing bad news.

Just five months into the current biennium (2010-11), the state’s budget already is showing a likely deficit of $1.2 billion. The main problem: state income tax collections, which cover 70 percent of the cost of government, are lagging far behind projections and that’s because of the brutal combination of high unemployment and, more surprisingly, lower wages among those people who do have jobs.

Wages have fallen roughly 4 percent in Minnesota, a decline that far exceeds projections made last February.

These bleak numbers on this bleak December day were greeted with expected responses.

The governor says Minnesota government must cut costs. He said he’d work with the Legislature at getting this new budget back into balance, but he repeated old refrains: “No tax increases… government must learn to live within its means… we must improve the business climate.”

Interesting aside, here: One of the few areas of black ink on the dizzying array of charts and graphs being shown Wednesday was receipts from corporate income taxes. Corporations actually appear to be weathering hard times quite nicely. The amount of taxes collected from the corporate income tax was slightly higher than forecast.

State economist Tom Stinson pointed out the reasons for that: Corporations are making money by reducing workforce and lower wages.

Gov. Tim Pawlenty
REUTERS/Jim Bourg
Gov. Tim Pawlenty

“That’s not businesses doing well,” Pawlenty said of the relatively healthy bottom lines of business as opposed to the bottom lines of working people. “It’s just business cutting costs. It’s not a sustainable model.”

Pawlenty has become adept at racing through the negative numbers over the years. Typically, he blames a bad national economy, the DFL, promises better days ahead and gets out of the room with a wink and a smile.

More questions
But Wednesday reporters weren’t quite so easy on the genial governor.

They kept asking him questions about whether he should spend more time selling Minnesota and less time zipping around the country promoting himself as a possible Republican Party presidential candidate three years from now.

One reporter asked him whether he should be more like Rudy Perpich, who constantly was on the road in search of companies looking to do business in Minnesota.

“Saturday I’m going on a trade mission to South America,” the governor responded. “This needs to be a place where businesses want to stay, to come and grow.”

He smiled a little, looked around the room in search of a different question; a different topic.

But the topic didn’t change. There was another question about whether he should be staying at home more instead of running for president.

“You know I’m not doing that,” he said, without a smile this time. He added that he didn’t know what he’d be doing in 2011.

 He waited for another question that could get him back to his usual talking points.

It didn’t come. Instead there was more about his schedule.

“The work here [in the governor’s office] is getting done,” he said, a little testy. “…The measure is whether you get the work done.”

He looked for a question that would get him back to his talking points about reducing the cost of government.

Instead, he got a question about his legacy. His seven years in office have been marked by budget deficits piled upon deficits. Bad as the current budget is, the budget forecast is far, far worse. It shows that the deficit will blow up to more than $5 billion because the one-time federal stimulus money won’t be coming down the pipeline.

Clearly, the governor was offended by the implication that the budget had gone south under his watch.

“This situation here mirrors what’s happening elsewhere,” said Pawlenty, noting that Democratic governors, such as Wisconsin’s Jim Doyle, are facing the same deficit woes that Pawlenty and Minnesota are facing.

As for the out-year budget, that’s really not as bad as it seems, Pawlenty said. If school shift payments are delayed, if his $2.7 billion in unallotments from last June are made permanent and there are more cuts in government, the out-budget deficit would “more likely be $2 billion.”

Pawlenty was finally able to extricate himself from the room with a couple of softball questions about the Minnesota National Guard and whether it would be facing more call-ups in the future.

The governor implied that he’s in pretty regular contact with the Department of Defense and that there likely will be more Minnesota troops headed to war zones but he wasn’t just ready to announce that yet.

All of this testiness showed that Pawlenty is in for a lot of lumps in his final year in office. But he also made it clear that he’s not backing down.

Asked if he’ll use unallotment again or try to work with the Legislature to solve the newest budget crisis, he said he has “a responsibility to the Legislature.”

But in the next breath, he painted a great big target on the next installment of local government aid money — some $400 million — that’s supposed to go to cash starved cities and counties at the end of this month. It appears almost certain he’ll unallot much of that money.

He expressed frustration with k-12 spending, noting that some districts seem to be giving teachers raises. He “will do a little investigation into where they’re getting that money.”

Despite the fact that he’s already whacked a program that provided medical care for the poor, there has to be more cutting done in the areas of medical costs, he said.

Opponents weigh in
Meantime, of course, opponents are foaming at the mouth, ready to swing at the lame duck.

Rep. Tom Huntley, DFL-Duluth, chair of the House health and human services finances committee, was attacking the governor on health care funding.

“It comes as no surprise that the Minnesota Care fund in going broke,” Huntley said in a statement. “This responsible path to providing health care for working Minnesotans has been under attack from the governor from Day One. From raiding the fund to help balance the budget to recently shifting close to 30,000 of the poorest and sickest non-working Minnesotans into MinnesotaCare, his polices have hastened its demise.”

Then, Huntley fired the unkindest cut of all. He compared Pawlenty — unfavorably — with former Alaska Gov. Sarah Palin.

“At least Sarah Palin told the people of Alaska she was quitting as their governor,” Huntley said. “Tim Pawlenty quit on Minnesota a long time ago and working familes are paying the price.”

DFL legislative leaders were a little gentler. But it’s clear both they and the governor are in the same places they’ve been for the last seven years.

Pawlenty insists on no tax increases. The legislative leaders were calling for a combination of cuts, reforms and “new revenues” (taxes).

Mostly it was the same old grim story Minnesotans have become accustomed to.

Drs. Gloom and Doom
How grim was it?

The good news was coming from two people known as Dr. Gloom and Dr. Doom. Gloom is Stinson, the state economist. Doom is Tom Gillaspy, the state’s demographer.

Stinson/Gloom said the recession appears to be over.

But even that good news comes with a big dark cloud over it. Unemployment and wages will continue to flounder, he said. Employment won’t start picking up until the spring — and much of that employment boost will come via the Census, which will employ about 8,000 workers in temp jobs. Those jobs will pay more than the minimum wage.

State economist Tom Stinson
MinnPost photo by Craig Lassig
State economist Tom Stinson

Elsewhere, Stinson/Gloom expects some growth in the home construction business and manufacturing “will not continue to hemorrhage.”

“We’re gradually climbing out of a deep hole,” said Stinson/Gloom. But that, too, came with a caveat. The lower wages won’t snap back. Instead, they become the new base for what working people will be paid.

Gillaspy/Doom said that “Minnesota has a lot going for it relative to other places.” He noted that the state’s 7.6 unemployment rate is dramatically better than the national rate and it’s ratio of people working to unemployed is “one of the highest in the country.”

But Minnesota is in a relatively good spot, Gillaspy/Doom said, because it’s invested heavily in education in the past.

“The challenge will be to maintain our advantages,” he said.

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

Comments (20)

  1. Submitted by Howard Miller on 12/02/2009 - 05:09 pm.

    Can’t blame the governor for the rotten economy. But i do blame him for his rigid thinking about no new tax revenue sources when it comes to balancing the budget in the face of declining tax revenue.

    We can’t cost-cut our way to prosperity.

  2. Submitted by Bill Kellett on 12/02/2009 - 05:12 pm.

    “It’s just business cutting costs. It’s not a sustainable model.”
    Well said Gov. Cutting costs is not a sustainable model for Minnesota.

  3. Submitted by Paul Brandon on 12/02/2009 - 08:10 pm.

    Pawlenty is very much in tune with the season.
    Can you say ‘we’re getting Scrooged’?

  4. Submitted by Richard Schulze on 12/02/2009 - 09:31 pm.

    I know (virtually) nothing about Gov. Pawlenty. That said, it’s the ship that’s sunken; what difference does it make who’s to be made captain? We need a whole new forward-looking party and this isn’t it.

    Governors are by definition *local* politicians. Yet you cannot rise to federal high office if you hold views that are behind the times in the eyes of most of the electorate, nor can you represent the U.S. abroad if you hold views that are behind the times in the eyes of most other people around the world. “Conservatism”, as understood by its current proponents, is passé.

  5. Submitted by Eric Ferguson on 12/02/2009 - 11:30 pm.

    The problem isn’t that Republicans can’t see the disaster. It’s that they don’t mind the disaster. They want the government to fail anyway, so lurching from crisis to crisis until falling apart is just fine. They take comfort knowing that though the state’s finances are falling apart, their ideology is intact.

  6. Submitted by Wes Davey on 12/03/2009 - 09:03 am.

    It would be interesting to know what affect the national debt and eight years of unpaid for war will have on the Minnesota economy, given that no sales tax will be collected on Minnesota’s share of debt repayment (via taxes).

  7. Submitted by Paul Udstrand on 12/03/2009 - 09:54 am.

    The real question is whether or not voters are learning their lesson here. Do-nothing Republicans have been winning elections by promoting mediocrity and selling magic plans (cut taxes, privatize, and wait for the magic to happen)for a long time. This is the third wave of such stupidity I’ve seen in my lifetime ( 46 years old ). When are people going to realize that it’s really really really stupid to elect a bunch of people who have not interest in running government, and don’t even believe in government, to run the government?

    Maybe people will finally abandon the longstanding canard of Pawlenty’s “likability” after all. The guy has launched the most vicious and sustained attack on Minnesota’s weakest and poorest people in history, and he’s obviously still as committed to that assault as ever. I know what we call governors who think it’s better to kill their constituents than raise their taxes in my neighborhood, and it ain’t “likable”. The press should never have cut this sociopath so much slack in the first place.

  8. Submitted by Francis Ferrell on 12/03/2009 - 11:19 am.

    As often stated by commenters and pundits politically wiser than me, “…No use running for higher office if the present office, you’re in, isn’t in order.”

    At the present time Governor Pawlenty seems to be at his highest level of [political] incompetence. (Source: “The Peter Principle”) Thus, he is starting his 2012 Presidential Campaign with a state government hemorrhaging fiscal “red ink”!

    Is this governor portraying the new ‘Republicanism’? What ever happened to the true Republican political principles of fiscal balance and conservatism? Something is amiss with the Republican party and its founding political concepts. Governor Pawlenty is a prime example of Republican principles gone astray.

    Yes, things are bad in this state; however, with straight forward vision, dynamic leadership, and some tough problem solving Minnesota can get back in fiscal balance and on track to weather this national economic “depression”!

    Does the governor have the ‘chutzpah’ [chops] to put aside his political ambitions? Is he the stalwart Minnesotan he says he is to get Minnesotan back on fiscal track? Let’s hope so. Otherwise, the governor is in for a more lot of rougher and tougher questions to answer from the media and Minnesotans.

  9. Submitted by Henk Tobias on 12/03/2009 - 11:42 am.

    At least Sarah Palin had the decency to resign.

  10. Submitted by Paul Udstrand on 12/03/2009 - 12:35 pm.

    On the other hand, Bush proved that ones record as governor can be irrelevant if the media gives you a pass. He was lousy and governor and still got elected into the White House.

  11. Submitted by Jo Angela Maniaci, CMP on 12/03/2009 - 01:09 pm.

    There are many good quotes in this article about the GOP PresIDENTIAL candidate wannabee, but this exchange really struck a chord:

    “State economist Tom Stinson pointed out the reasons for that: Corporations are making money by reducing workforce and lower wages.

    “Gov. Tim Pawlenty ‘That’s not businesses doing well,” Pawlenty said of the relatively healthy bottom lines of business as opposed to the bottom lines of working people. “It’s just business cutting costs. It’s not a sustainable model.'”

    If T-Paw can see that this is not a sustainable way of doing business for the private sector, exactly what does he think he is doing to the state with his “cut, cut, cut” way of doing things. As he said, ” It’s not a sustainable model.”

    Well, DUH, T-Paw. What part of this don’t you understand? Yikes!!

  12. Submitted by Henk Tobias on 12/03/2009 - 02:19 pm.

    Jo,

    You are exactly right but T-Paw his Republican ilk would never see the inconsistancy in statements like the one you highlight. Irony and self awareness are comlex concepts that their limited intellects can not grasp.

  13. Anonymous Submitted by Anonymous on 12/03/2009 - 03:18 pm.

    Maybe TPaw is confused by the Mississippi River running through Minnesota and thinks he is the governor of that benighted state. At any rate, with his fiscal policies, Minnesota will resemble the southern state in every way but climate.

  14. Submitted by Jeremy Powers on 12/03/2009 - 03:31 pm.

    Considering his apparent ineptitude dealing with anything in the last six years, I’m not sure that Pawlenty remaining uninterested and out of touch may not be the best thing he can do for Minnesota.

  15. Submitted by Bernice Vetsch on 12/03/2009 - 04:16 pm.

    The media in Minnesota have been giving Pawlenty kid-glove / softball questions for years. I am so, so very happy to see that they seem to have gotten over whatever has made them reluctant to really criticize the governor when he has it coming.

    Like for the last seven years.

    I hope to see the national media see through the “charming young governor” facade pretty soon as well.

  16. Submitted by Joe Musich on 12/03/2009 - 10:12 pm.

    Can you say Huck-lenty. Oh pardon me. Or will Timmy’s pardon also catch up with him ?

  17. Submitted by Nancy Gertner on 12/05/2009 - 05:31 am.

    Touche, Dr. Huntley. Make him walk the plank, Sir!

  18. Submitted by Bill Opsahl on 12/05/2009 - 06:19 pm.

    This piece was good, factual stuff.

    That’s what I want. I can get “commentary” anywhere.

    Thanks.

  19. Submitted by Roger Iverson on 12/05/2009 - 08:25 pm.

    Palin for all her misstatements told the Alaskan people the truth: She was quitting.
    Pawlenty doesn’t have the honesty to come out and say he is done being our governor. In fact, he has not filled the traditional role of governor for a long time, refusing to work with the legislature in a sensible way. His illegal unallotment power grab is not being a governor, more like a would-be king: “Off with their heads!” And now Norm Coleman wants to jump in. As a Minnesotan, one word: “Uffda!”

  20. Submitted by Beryl John-Knudson on 12/06/2009 - 08:00 am.

    I most sincerely wish Pawlenty a safe trip south of the border however much I oppose his policies and his absentee governorship. However, South America is known for its not too gracious rogue business; kidnapping of the American tourist and diplomats for ransom.

    In this context, unacceptable indeed, yes…but if Pawlenty should ever become the victim of such an unsavory business practice while touristing below the border, the question rises…would, should he be rescued by Minnesota?

    Or would he become just another drag on the state’s budget; which of course is the hallmark of T’P’s governorship…no ransom paid; just another unalottment, and expendable?

    One elder mentor of mine once gave me sound advice…”Never look a stranger directly in the eye when walking down a strange street in a strange city.”

    Pawlenty would have little trouble following this advice. He usually looks above the crowd. Eye contact has never been his forte’ when it comes to budget cuts and looking into the eyes of the disenfranchised so brutally affected by his cut-backs…so much for unsavory business practices.

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