The Smiling Face of Pain

The "new" Tim Pawlenty looks a lot like the old one

A few years ago, the Minnesota Department of Transportation estimated that beginning in 2007, it would require $1 billion a year for the next two decades in order to address the state's transportation needs, a number that has surely climbed amid the prevailing political paralysis. Pawlenty has consistently, and unsuccessfully, asked the Legislature to borrow $2 or $3 billion and pay it off over a 20- or 30-year period, without specifying a dedicated funding source. This year, a transportation bill that includes a gas tax, a reinstatement of progressive license tab fees once cut by former Governor Ventura, a wheelage tax, and some borrowing has been introduced in the House by Republican Ron Erhardt and in the Senate by DFLer Steve Murphy. Although there is some quibbling over the details, even business groups such as the Chamber of Commerce and the Minnesota Business Partnership support an increase in the gas tax to pay for road construction. Yet the governor has once again said he'll veto it. So much for working together in a bipartisan spirit.

"It isn't even bipartisan; it should be nonpartisan, because it benefits everybody," growls Erhardt. "So, what the hell's wrong with Pawlenty? I don't know. In my current bill, we have a billion dollars in borrowing over the next 10 years but we also have the base funding to take care of the debt service. One of the governor's bills borrowed over 30 years [without the base funding]; you pay half again as much in borrowing costs, and chew up your maintenance and construction funds."

"The transportation issue is a microcosm of what is wrong with this administration," says John Gunyou, the former state finance commissioner under Republican Gov. Arne Carlson and currently the city manager of Minnetonka. "Pawlenty is looking for every way possible not to raise taxes, whether it makes sense or not. I have sold a lot of bonds in my day, and I am big on debt too, but if you are going to do it for ongoing needs, you need an ongoing stream of money. You don't borrow to satisfy the first five years and pay it back over 20. I heard a statistic the other day—that if we raised the gas tax 7 cents, we'd get back to the borrowing power of the 1990s. We'd be behind the times."

As the paralysis over transportation funding increases, it also heightens the fiscal tension between the state and local units of government. It is now fairly well known that Pawlenty's huge cuts in local government aid in 2003 and the state's gradual reneging on its commitment to take over education funding compelled local governments in many areas around the state to offer fewer services and raise property taxes. But in recent years, the state's refusal to confront its transportation needs has also raised havoc with local units of government, who also rely on the gas tax to maintain their city and county roads.

"In Minnetonka, we put about $4-$5 million a year into our roads," says Gunyou. "But our share of the gas tax has been flat at about $1.5 million for the last 10 years, and our only other option is to raise property taxes. We have doubled the amount of property taxes we spend on roads. Two-thirds of our last property tax increase went for roads. And you are seeing that everywhere around Minnesota."

"We have over a billion dollars per year in property taxes being raised statewide by cities and counties for transportation purposes," Erhardt concurs. "That means, instead of taxing the user of the service, the little old lady sitting in the house who hasn't driven in 10 years is also paying for roads. We have just begun to talk about that recently because it has gotten so large."

Pawlenty is all too aware of how much he was tarred by rising property taxes in the last election, and does a pretty good job of hiding his pique. One could even detect a little devilish humor in his "compromise" proposal to limit property tax caps to only those units of government who get more than a third of their revenue from the state, and his stated desire to make Minneapolis spend all of its LGA money on public safety. His point, of course, is that property taxes are generally the province of local government officials, but if he's going to get blamed for them, he wants some input on both the tax and spend sides of the equation.

For now, anyway, regardless of what he says about accommodating the Democratic tsunami in Washington and St. Paul, or insuring all the kids, the "new" Pawlenty is as unwilling to compromise on taxes as the old Pawlenty. Even as the fissures begin to crackle in our health care, education, and transportation systems, he pastes on his best pained smile and delivers a no-tax pitch aimed squarely at Minnesota-Nice moderates who want to do their part but not get hosed.

Cleverly including the billion dollars in one-time revenue to the ongoing tax-and-spend equation during his 2007 State of the State speech, Pawlenty announced that there would be "about a 10 percent increase over the current budget. Ten percent growth is more than most Minnesotans will see in their paychecks and it should be enough growth for their government too. I've said it before and I'll say it again: Minnesotans are not under-taxed."

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