Pawlenty plays budget hardball in Minnesota


he sky is not falling. That was the mantra from Gov. Tim Pawlenty one day after the legislative session ended with no resolution to a nearly $3 billion budget deficit. “The legislators are gone, and they’re not coming back,” he gleefully told reporters at the Capitol yesterday during a noon briefing.

Which means the endgame is now in Pawlenty’s hands. He’s vowed not to call a special session or permit a government shutdown. Instead the governor intends to unilaterally slash $2.7 billion from the budget for the next two years through budget gimmickry and what’s known as “unallotment.”

Exactly where he plans to cut won’t be known until at least July 1 when the budget kicks in. But the Republican governor said at yesterday’s press conference that he expects to hold the line on cuts to K-12 education. Which means that local government aid, health and human services and higher education are almost certainly in for additional budget bloodletting. Pawlenty’s budgetary gambit also means that the political consequences for how the fiscal mess is ultimately resolved — for better or worse — will largely be his to bear.

DFL legislative leaders embarked on their on publicity tour yesterday, scheduling seven stops across the state to spin the legislative showdown. Their message: Pawlenty is behaving like a dictator and putting his own political ambitions ahead of the best interests of the public.

“I commend the legislators from both parties for their hard work throughout the session,” said DFL chairman Brian Melendez, in a statement. “Unfortunately, Gov. Pawlenty was unwilling to participate in the process. His national ambitions kept him away from the table.”

Rep. Laura Brod, who has emerged as one of the most prominent GOP voices in the House, counters that the Democrats simply refused to responsibly deal with the budget at a time of economic peril. “They can make whatever assertions they want, but to me it all boils down to how do we jump-start our economy,” says Brod, of New Prague. “It certainly wasn’t necessary to have the legislative session end this way. Everybody knew what would be acceptable to the governor and what would not be acceptable to the governor.”

A quick recap of the state’s current fiscal woes. The budget deficit was initially projected to reach $6.4 billion for the biennium that begins July 1. Disbursements from President Obama’s stimulus package, however, trimmed that figure down to $4.6 billion. The DFL-controlled legislature and Pawlenty then both signed off on additional cuts that cleaved the deficit by roughly another third. Finally Pawlenty used his line-item veto authority to eliminate the state’s General Assistance Medical Program, slicing another $381 million from the budget hole — and knocking more than 30,000 destitute single adults off the health-care rolls.

Pawlenty’s strong-arm tactics haven’t gone unnoticed by national political players. Americans for Tax Reform — arguably Washington’s most zealous anti-tax organization — recently named him a “hero of the taxapayer.”

“I think this was the signal that he’s not running for governor again,” says David Schultz, a political science professor at Hamline University. “He’s running for national office, or thinks he is.”

But how Pawlenty’s budgetary hardball will play at home is tough to say. The DFL has picked up numerous legislative seats in the last two election cycles and nearly swept the state’s constitutional offices in 2006, with the notable exception of the governorship. Pawlenty’s approval ratings recently have hovered on the wrong side of the 50 percent threshold, typically a sign of vulnerability for an incumbent. And by going it alone on budget cuts, he risks taking the entire blame if popular programs are cut.

“When he does unallotment he’s going to have to own the entirety of it, and I think finally people will hold him accountable,” says Rep. John Lesch (DFL-St. Paul). “This time, because he’s out there all alone acting like a monarch, he’s going to be surprised by the response.”

Schultz figures 50 percent of the blame for the budget meltdown can be pinned on Pawlenty’s national ambitions, but he argues that DFL ineptness is equally at fault. “When the Governor releases his budget what do the Democrats do first? They go away for three weeks and do a listening tour,” Schultz says derisively. “They essentially let the Governor set the agenda.”

Rep. Jim Abeler, a moderate Republican who has bucked his party in the past, also argues that Democrats failed to make the hard decisions necessary to deal with the budget. “At a time like this you have to make choices and set priorities,” says Abeler, of Anoka. “I don’t think the majority was able to do that.”

That could have consequences for the DFL leadership, particularly those that harbor grander political ambitions of their own. Three members of the legislature — Sens. Tom Bakk and John Marty, and Rep. Paul Thissen — are actively exploring gubernatorial bids for 2010. And at least two members of the DFL leadership, House Speaker Margaret Anderson Kelliher and Senate Assistant Majority Leader Tarryl Clark, are on most political observers’ (not-so-short) lists of Democrats eying the Governor’s Residence.

“I think all the major leadership comes out of this looking damaged,” says Schultz. “This wasn’t a good session for them.”

As chairman of the influential Taxes Committee, Bakk is a powerful broker at the Capitol. He was one of the most vocal Democrats throughout the session in insisting that some tax increases would need to be part of any budget solution. The Senate passed legislation that included $2.2 billion in revenue increases, substantially more than the House ($1.5 billion) or the legislature as a whole ($1 billion).

“Maybe I could never get to be governor talking like that,” says Bakk, speaking by cell phone as he drove back to his hometown of Virginia. “If people aren’t quite ready for it then I guess I will lose and I will retire. We just can’t continue kicking the can down the road.”

When it became clear in the waning days of the session that Pawlenty and the DFL leadership were at an intractable stalemate, Bakk tried to negotiate a resolution on his own. On Friday he had breakfast with state finance commissioner Tom Hanson, and then the next evening he met face-to-face with Pawlenty. Bakk set forth a new proposal for closing the budget gap — which included a one-time, five-percent surcharge on state income taxes — but got no response from the governor.

“I guess I tried to do what I could do,” Bakk says. “I never heard back.”

The acrimonious end to the session, with substantial cuts to health and human services funding, ensures that such programs will be at the heart of the 2010 gubernatorial debate. Republicans repeatedly argued that increases in the human services budget, roughly 15 percent annually in recent years, aren’t sustainable and that the agency requires a systematic overhaul.

“There are just some realities that the legislature needs to come to grips with,” says Rep. Paul Kohls (R-Victoria), “the most significant being that the cost increases are not sustainable.”

Pawlenty took the most dramatic step by using his line-item veto authority to eliminate the General Assistance Medical Program, which provides insurance to single adults without children who earn less than $8,000 a year. In an emotional debate on the House floor on the next to last day of the session, Democrats excoriated the governor for balancing the budget on the backs of the state’s poorest and most vulnerable citizens.

“I think the outrage that Minnesotans are going to feel once the full impact of that comes into play will change the dynamic,” says Thissen, chairman of the Health Care and Human Services Policy and Oversight Committee. “What we saw play out this session is going to be what the next elections are going to be about.”

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