Tim Pawlenty's New Deal

How Minnesota's new governor set the table for this year's budget-slashing "crisis" in state healthcare spending

There is good reason for the preemptive political strike. Gov. Tim Pawlenty has vowed not to raise taxes, despite the promise of a budget shortfall of at least $5.5 billion after inflation. And while everyone stands to suffer from the inevitable budget cuts, it's no secret that in order to stop the bleeding by 2005 the governor will look to curb Local Government Aid (LGA), a program that infuses Minnesota's municipalities with money from the state. Pawlenty, many new Republican legislators, and a powerful suburban electorate come from the suburbs that receive little LGA. Minneapolis, like a good number of older cities and rural towns, depends on it. (Last year Minneapolis received $89.8 million from the state, which made up nearly half of the city's general revenue base.)

That said, it is also widely known that one way to get money out of the state is to tap into the perception that public safety in this time of terror must be ensured at any cost--hence Rybak's appeal for a strike force and the city council's intention to position Minneapolis as the state's focal point for "emergency preparedness."

"We are facing the same financial constraints as anyone," Rybak said in his brief remarks. "But we are focused, first and foremost, on public safety."


Local government aid, created more than 30 years ago, is the state's largest assistance program for its cities--totaling more than $600 million this year. (Pawlenty floated the idea of having cities return some of that money to the state before he officially took office. It went nowhere.) The formula for calculating what a municipality receives has been unchanged since 1992 and depends in part on population, decline in population in the last 10 years, percentage of housing stock built before 1940, and percentage of commercial property tax.

Older cities, like Duluth, Rochester, and the Twin Cities, as well as first-ring suburbs and older, smaller towns, are largely dependent on LGA; newer, fast-growing suburbs, which are largely conservative, receive very little. Some believe the Pawlenty administration could cut as much as 20 to 50 percent of LGA across the board, which would spell doom for Minneapolis.

Over the past 20 years, Minneapolis has seen its stock fall at the state legislature. While out-state and suburban voters have become increasingly Republican and independent, Minneapolis has remained a bastion of DFL liberalism--a wasteful, flaky burden to the state that more and more legislators have come to treat with outright disdain.

In the past, Minneapolis leaders have rightly argued that this negative sentiment, while good fodder for political rallies, doesn't reflect reality. Minneapolis is an anchor for the rest of the state, after all. Aside from being a destination point for sports, arts, and entertainment, city leaders are quick to point out, some 200,000 Minnesotans come downtown to work each day.

Although Minneapolis leaders will continue to remind legislators that their city is an economic engine that drives the region, however, the message will be delivered with a different spin--one that focuses on helping surrounding municipalities in times of crisis. "What we're saying is that you should be interested in keeping Minneapolis healthy and able to respond to your disasters in Eagan or your fires in Edina," says Scott Benson, who chairs the city council's Intergovernmental Relations Committee. "You can look at a fine city like Minnetonka, but really, what is Minnetonka without Minneapolis? You have to have this city to make all the suburbs make sense.

"The gist of our message is where LGA goes in the city of Minneapolis," Benson adds, emphasizing that the city recently unveiled a five-year financial plan for the first time. "It's not that LGA is going to support development of Block E or build a Target store or whatever. LGA really does go to basic city services. And as far as emergency preparedness, Minneapolis serves the entire region."

"It's a strategy right out of the Republican playbook," says Larry Pogemiller, a DFL senator from northeast Minneapolis. "Show you can streamline government. Then make fighting terrorism on a local level a political priority because it's in vogue. How prepared can you be? Is that the major issue for the city? Heavens, no."

Despite his distaste for the strategy, Pogemiller concedes that tacking to the right might be the best hope for Minneapolis, especially given the nature of the legislature and the suburban sentiments of the new governor. What's more, Pogemiller notes, the mayor and many council members were new to office a year ago, and have since learned some lessons; their public-safety agenda is meeting with positive reviews. (It's also worth noting that 70 percent of the city's general fund is used to pay for police, fire, and infrastructure.)

"Last year I was inundated with anti-Minneapolis comments," recalls Rybak. "Now I'm saying, 'Don't carry that history. We have created a tough five-year financial plan; we've dealt with immediate cuts.' Last year we made promises, this year we have a track record."

Still, Rybak and others admit to a certain discomfort with this year's pitch. Last year's "priority issues" for the city were affordable housing and transportation. This year those two "liberal" issues have been relegated to secondary agenda items. This year's priority issues are LGA, public safety, and "accountability and results."

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