Government has to reflect economic realities

Published 8:44 am Wednesday, February 4, 2009

A time management expert once said, “Planning is bringing the future into the present so that you can do something about it now.”

My 2010-11 budget proposal brings the future into the present so we can tackle two major tasks: balancing our state budget and strategically positioning Minnesota for success in a changing world.

It’s a responsible budget that reflects the realities of the economic situation everyone now faces. Minnesotans are tightening their financial belts and government must do the same. Government should not send taxpayers a bigger bill by raising taxes when almost no one is experiencing increases in their paychecks — if they have a paycheck at all.

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Critics will argue we should raise taxes and continue “business as usual,” even in these challenging times. That would be the wrong move.

Even President Obama recognizes that raising taxes would be unwise in this economy. He has backed off, at least for now, his proposals to increase taxes. In fact, he is proposing to cut taxes.

We need to take a number of steps to balance our budget and prepare Minnesota for the future.

We should freeze state government wages for the next two years and pass legislation to require a wage freeze for any Minnesota government entity that accepts state money. This is consistent with what’s taking place in the private sector and it will help minimize layoffs.

My budget also decreases spending by 2.2 percent from the current two-year budget. It’s a reasonable adjustment in light of the economic realities we face.

While many areas are reduced, the budget maintains or increases funding for priorities including military and veterans programs, state public safety programs, K-12 education, and job growth initiatives.

Having a good job is the quality of life cornerstone for Minnesotans. It’s what sustains them and their families, as well as our communities. That’s why we need to make Minnesota a more attractive place for job providers.

A study by the Tax Foundation says Minnesota has the third highest business tax rate in the world, adding together state and federal burdens. The Small Business & Entrepreneurship Council ranked Minnesota 46th of the 50 states in their Small Business Survival Index.

My budget plan includes the “Minnesota Jobs Recovery Act” — a series of tax cuts and incentives designed to unleash creativity, innovation, entrepreneurship, and job growth, and to pump some life into small businesses. This includes cutting the business tax rate in half over six years, converting the capital equipment sales tax refund to an upfront exemption, and a number of other initiatives.

To remain competitive, we will also need an educated, skilled and productive workforce. That’s why I’ve proposed increasing K-12 education funding, even with a budget deficit. However, increased funding should be linked to better results.

To invest in key areas, we’ve got to reign in the out-of-control growth in health and human services. If we don’t, health and human services will soon suffocate the rest of the state budget. Left unchecked, health and human services is projected to grow by 18.9 percent. Under my plan, it’ll still be the fastest growing part of the budget with a 9.6 percent increase. We are slowing down the rate of increase to a more sustainable level.

Changes to Minnesota’s expansive publicly-subsidized health care programs will mean some adults won’t be eligible, but the total number of people on these programs will increase under my budget, not decrease.

And while the state is not able to subsidize local governments at the same levels as in the past, we were careful to spread the impact by capping city aid cuts at 5.1 percent in the first year and 10.5 percent in the second year of a city’s levy plus aid.

Whenever Minnesotans have been tested by adversity, we’ve seized the opportunity to innovate and transform to make our state stronger than before. We’ll do it again this year. My budget strikes the right balance between dealing with our current crisis and preparing Minnesota for the future.

Tim Pawlenty, R-Eagan, is the governor of the state of Minnesota.