By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
At the godforsaken hour of 2:53 in the morning, Tim Pawlenty moved through the shriveling victory balloons and wadded cocktail napkins inside the Grand Ballroom at the Sheraton Bloomington hotel and ascended the stage for his first speech as the re-elected governor of Minnesota. For eight solid hours at this GOP election night bash, the phalanx of television screens in and around the ballroom had shown the political carcasses of Republicans piling up like cordwood from coast to coast. Among the races thought to be competitive in Minnesota, Pawlenty was one of the precious few Republican survivors. The shell-shocked die-hards left in the audience may not have known whether to cheer or cry, but Tim Pawlenty remained the once and future Boy Wonder.
In securing his razor-thin margin of victory, Pawlenty had once again leaned on his common-man folksiness and affability, subtly reinforcing the autobiographical flourishes of his first campaign, when he introduced himself as the son of a milk truck driver from South St. Paul, a boyish go-getter who had put himself through college and could still be enticed into a game of pickup hockey. But this time out, he had a record to defend. By "solving" a $4.5 billion budget deficit without raising taxes, Pawlenty had thrown tens of thousands of people off state-supported health care, plunged hundreds of schools into a state of chaos and ceaseless budget-cutting, broken the "Minnesota Miracle" compact of responsible revenue-sharing between state and local governments, and intensified the gridlock of our transportation system. Literally dozens of Pawlenty's Republican colleagues in the state Legislature went down to defeat embracing his agenda.
But not Pawlenty. When his DFL opponent Mike Hatch accused him of "pulling the ladder of opportunity up behind him" by letting the cost of in-state college tuition skyrocket, Pawlenty genially acknowledged that not raising taxes during a budget deficit caused some investments to lag—and proposed that all Minnesota high school students in the top quarter of their class get a year's free tuition. When Hatch claimed Pawlenty was being duplicitous in his no-tax pledge by imposing more than $1 billion in fees and forcing the tax burden to devolve to local property tax rolls, the governor deftly proposed a cap on property taxes.
In the crucial final weeks of the campaign, Pawlenty relied on television ads showing him in casual work clothes, strolling off a rural porch toward the camera while thanking the voters with doe-eyed sincerity for allowing him the opportunity to serve them. Meanwhile, another ad campaign, mostly funded by $500,000 from one of the Texas-based ringleaders of the Swift Boat attack ads against presidential candidate John Kerry two years earlier, depicted Hatch as a nasty, spiteful son of a bitch. Right on cue, frustrated by a gaffe from his running mate for lieutenant governor, Hatch reportedly called a male member of the media a "Republican whore" at the exact point in the campaign where it would be the voters' final impression. Throw in a nerdy third-party moderate who siphoned a lot of anti-Pawlenty votes from Hatch, and Pawlenty was able to ride out the Democratic tsunami by a margin of less than 22,000 votes—out of more than two million ballots cast.
Those who stuck around to see Pawlenty's arrival on election night were bleary, bewildered, and belligerent, primed to seize upon the rhetorical red meat that is a staple of these victory speeches. Instead, the governor delivered a muted personal address that immediately engendered buzz about a "new" Tim Pawlenty.
"I want to start by asking you for your help. This is a time tonight to be humble. It is a time to be grateful," he said. "And it's a time as a state and a nation to come together, and I think we need to do our part to start here and start now, tonight. And over the next four years it is going to be different than the last four years. We have different leadership in Congress. We have different leadership in St. Paul. We have big challenges ahead of us.... In the coming weeks, we are going to build a common agenda to make Minnesota an even better place. It's going to include improving education and health care and the job climate and roads and many other things."
Less than a week later, during a speech at the Midwest States Health Reform Summit in Minneapolis, Pawlenty stunned his supporters and opponents alike by announcing that "Minnesota should move toward universal [health insurance] coverage," and that "moving toward a cover-all-kids program in the next legislative session is a good next step." For those who couldn't believe their ears, he spelled out his intent with specific numbers. "We have an opportunity in Minnesota, we have between 70 and 90 thousand uninsured children. About 60 percent already qualify [for health insurance] and then beyond that, we now have the resources to provide coverage for those children."
It seemed an epic reversal. During his bloodletting 2003 budget session, this same governor threw an estimated 38,000 Minnesotans off the state-supported health care rolls and snatched $192 million from a fund specifically dedicated to providing health care to the working poor. Two years later, Pawlenty castigated hundreds of thousands of MinnesotaCare enrollees for accepting what he called "welfare health care." These were parents and children from working families who paid discounted monthly insurance premiums to the state because the coverage offered by their employer was either too expensive or nonexistent. Yet that same year, the state's infamous government shutdown was triggered in part by Pawlenty's desire to again raid MinnesotaCare's dedicated funding source to pay for general fund budget items.
By the end of his first term in office, Pawlenty had reliably opposed numerous bills specifically aimed at expanding health care coverage for children and other Minnesotans offered up by DFL legislators. He had diverted approximately $580 million in health care access fund money into the general fund. And according to numbers compiled by the Children's Defense Fund, there had been a 15 percent rise in uninsured children under the age of six from 2001 to 2004.
While fiscal conservatives howled over the perfidy of Pawlenty's embrace of uninsured children, others gleaned a mixture of political calculation and perhaps a pang of conscience in his new stance. As one commentator put it: "The last election affected Tim Pawlenty the way Marley's ghost affected Scrooge." But it took the "new" Pawlenty less than 60 days to reveal himself as more cunning and two-faced than any redeemed Scrooge. In health care, as in education, transportation, and most every other bread-and-butter issue affecting Minnesotans, the budgetary priorities of Tim Pawlenty continue to make it more likely that the Tiny Tims of this state will have to fend for themselves.
"Healthy Connections" was the name of the plan Pawlenty unveiled at a January 11 press conference. But connecting children to health insurance was suddenly no longer high on his priority list. Pressed for details, the governor was forced to acknowledge that only about 13,000 of the 70,000-90,000 uninsured children he had cited would gain coverage from his plan, which carried a price tag of more than $40 million a year. "I won't have a fixation on access to a system that is broken," he vowed. But he'd used almost the exact same words back in his November speech, and then still claimed that there would be, and should be, enough resources to cover all kids. And what of the 60 percent—tens of thousands of children—the governor cited who already qualify for state-supported health care but aren't receiving it? Two years ago, Pawlenty cut $1.5 million (half of it federal matching funds) used for health insurance outreach in poor and immigrant communities. The size (from 4 to 26 pages) and frequency (from once to twice yearly) of the insurance application has also grown on his watch. But he didn't mention money for outreach at his press conference and there is no line item for it in his budget. (The governor's office did not return a phone call from City Pages requesting an interview for this story.)
There is, however, $31 million proposed in Pawlenty's "Healthy Connections" plan for the creation of a private Health Insurance Exchange, which would allow businesses who currently don't offer insurance to set up pre-tax accounts for their employees to purchase their own coverage. Pawlenty says this will reduce the "administrative burden" on companies, who will be mandated to offer these pre-tax plans for a minimal cost that he estimates at no more than $300 a year per company.
Another major component of Pawlenty's plan is dividing MinnesotaCare into two parts. Those at the upper end of the income eligibility scale would be given the option of MinnesotaCare II, which would feature lower monthly premiums but higher deductibles and more co-payments. Sen. Linda Berglin (DFL-Minneapolis), one of the founders of MinnesotaCare, said that when legislators were first structuring this national model back in the early '90s, a similar idea was considered and rejected. "One big reason is because we didn't believe enrolled families could afford high deductibles," Berglin says. "And if they could, that means we'd wind up with a lot of healthier people in one part of the plan and sicker people stuck in another part." This imbalance, known in the health care business as "adverse selection," can create volatile, expensive swings in monthly premium rates. Another danger of high-deductible plans, especially for people whose incomes are modest enough to be eligible for MnCare, is that rudimentary and preventative care is put off to avoid the high up-front cost, creating more expensive trips to the emergency room later on.
In other words, there is a great distance between the humble, conciliatory Tim Pawlenty of election night, the one apparently determined a week later to provide all Minnesota children with health insurance, and the architect of January's "Healthy Connections." The benefits of the governor's grand redesign of health care are skewed toward the middle class, the people most willing and able to take advantage of the tax breaks he offers. But it does little more than pay lip service to the youngest and most vulnerable citizens, the ones already disproportionately hurt by the budget-cutting of his first term.
Of course the most fundamental reason why Pawlenty didn't walk his talk on universal health coverage for children is because it is too damned expensive. Pretending to maintain Minnesota's tradition of shrewd government investments while holding firm on statewide income and sales taxes has made Pawlenty the latest exemplar of "compassionate conservatism," artfully obscuring the nasty fallout from his tight-fisted budgets with buoyant affability and can-do optimism. His recent re-election is a testament to the polish and charisma of his performance, especially when you consider that the DFL made its largest legislative gains in the suburbs, Pawlenty's traditional stronghold, where voters are increasingly concerned about core issues such as health care and education.
In health care, Pawlenty's response was to make a big splash with a feel-good policy proposal he must have known he couldn't honor. In education, the gambit is even more audacious: Deny adequate funding to the neediest schools as a tough-love incentive to improve their performance.
Many, if not most, Minnesota schools are facing huge financial challenges. First, there is the matter of basic education funding. Pawlenty contends that 2 percent increases in the school district formula for each year of the 2008-09 budget will keep pace with the rate of inflation. But the governor is using the Consumer Price Index (estimated to rise 2.1 percent in 2008 and 1.8 percent in 2009), and not the implicit price deflator for state and local government purchases. Economists believe this price deflator index is a better gauge of school expenditures, because it reflects a greater emphasis on the purchase of fuel and personnel costs than is faced by the average consumer. And the government price deflator is pegged closer to 2.5 percent annually during 2008-09, which, if true, means that Pawlenty's basic funding would leave the schools with millions of dollars in fresh red ink.
Of even greater concern is the rising cost of special education. By federal law, schools have to provide an equal and adequate education to all students. The federal government has never fulfilled its pledge to fund 40 percent of special education costs; currently they foot just 17 percent of the bill. The state of Minnesota has hardly picked up the slack. "The state has done just enough to avoid being sanctioned by the federal government," claims Scott Croonquist, executive director of the Association of Metropolitan School Districts. "The average school district is spending $500 per student in general education revenue to keep up with special education. That's $518 million of general education revenue statewide. And if we don't keep up with the federal mandates, we will be taken to court and we will lose."
The governor's proposed 2 percent hike in special education funding doesn't keep pace with the runaway cost, meaning that even more general education revenues will be thrown into the breach.
Pawlenty is well aware of the widespread public support for education, but his refusal to raise taxes hamstrings his budgetary options. His solution is to mount the accountability soapbox, offering $150 million in one-time moneys to be divided up as a reward among "Successful Schools" that meet the state's testing standards in reading or math under the federal No Child Left Behind law. More than 75 percent of the public schools currently would qualify. Most of the ones that don't are urban schools serving a higher percentage of impoverished and immigrant students, or are "alternatives schools" and "area learning centers" specially designed to deal with students who had difficulty in a typical school setting.
In other words, they are the schools most in need of some extra funding, yet under Pawlenty's "Successful Schools" initiative, they would be the ones specifically deprived of it. Pawlenty justifies this approach with a quote that he purposefully highlighted in press materials as the theme for both his State of the State speech and his biennial budget message: "Minnesota government should stop paying for good intentions and start paying for better performance."
Meanwhile, it is generally acknowledged that while Minnesota's composite test scores rank among the best in the nation, we have a significant "achievement gap" along class and racial lines. Despite its high overall marks, Minnesota ranks 40th in the nation in education spending as a percentage of personal income, and is right about at the national average in per-pupil spending for education.
"The governor's education budget comes down to those who do well getting some extra money and those not doing well getting screwed," says Senate Majority Leader Larry Pogemiller. "Even the suburban superintendents say that it appears his entire budget is structured to help those who are already successful. The biggest problem in our education budget is special education, and he is basically doing nothing. That makes it impossible to really reform high schools the way he wants. The reality is that the schools have basic infrastructure needs—special education, the cost of running buildings—that, to be addressed properly, need money in the formula. Otherwise, the things he is talking about sound good, but they are not real."
Among the many charming aspects of Tim Pawlenty's political persona is a lack of pomposity, the appearance that he doesn't take himself too seriously. Pawlenty speeches almost invariably begin with a self-deprecating joke. More recently, another staple of his remarks has been a plea for comity, and a humble acknowledgement that the public wants rival political parties and jurisdictions to work together.
What the "new" Pawlenty has not yet done is make a bold, magnanimous gesture that would give heft and meaning to his calls for conciliation. Agreeing to sign—or at least not to veto—a bill increasing the state gas tax for the first time since 1988 would qualify as such a gesture.
Two years ago, when bipartisan majorities in the House and Senate passed a gas tax and sent it to Pawlenty, he stamped VETO on the bill in huge red letters and called the legislators "dumb" for wasting his time. Since then, the state has embarrassed itself by asking contractors to temporarily fund their own highway construction work, by delaying some already approved projects to cobble together enough funding for others, and by jeopardizing the safety of its roadways by using highway maintenance money for new construction.
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."
"The raw numbers on revenue aren't what you look at," counters Jay Kiedrowski, former commissioner of finance under DFL Gov. Rudy Perpich and currently a senior fellow at the U of M's Humphrey Institute. "The real test is, what is the price of government as a percentage of your personal income?" And despite large increases in fees and local property taxes, the government is taking less per dollar than it was before. "Not all that long ago, we were at 17 cents. That has gone down, and if you look at 2010, 2011, it looks like it will go below 16 cents," Kiedrowski says. "We have traditionally been a higher-spending state but also traditionally a faster-growing state. That is a winning tradition we want to be careful about screwing up."
To some extent, it's already screwed up. For almost the entire second half of the 20th century, Minnesota's job growth outpaced the national average. But according to the latest Financial Report from the Minnesota Department of Finance, published in November 2006, "There are now 2.3 percent more jobs in Minnesota than at the start of the 2001 recession [the year Pawlenty was elected]; the national growth rate for that period is 2.4 percent."
Ultimately, the biggest difference between the "new" Pawlenty and the tyro first elected in 2001 has less to do with who he is or what he has done than about what he has become: a rising star in national politics. In August 2007, he will become chair of the National Governors Association, an august position that enhances his visibility among national political correspondents, improves his networking capabilities in states led by fellow Republican governors, and polishes his resume.
Next year, of course, Pawlenty will be hosting the Republican National Convention in St. Paul, where the party's presidential nominee will be chosen. He is currently co-chair—to date, the only co-chair—of John McCain's nascent "exploratory" campaign for president, and is almost unanimously regarded as McCain's most likely VP choice, should the erstwhile maverick bag the nomination.
Of perhaps even greater value than being linked with McCain, Pawlenty's buoyant demeanor has been likened to that of the Great Communicator himself, Old Dutch, by more than one national pundit. Back in November, Larry Sabato of the University of Virginia Center for Politics described Pawlenty as someone who "can appear almost Reaganesque. He's a solid conservative with a happy face put on it. He doesn't come across mean or antagonistic." Two months later, in a January 29 profile in the conservative bible the National Review, Pawlenty is described as someone who can "talk about challenging issues, and propose new ideas (sometimes even risky ones) but do so with a smile." Author John Hood also praises Pawlenty's ability to "exude a comforting confidence...think Ronald Reagan."
Approximately six years ago, Pawlenty abruptly abandoned his plans to challenge Paul Wellstone for a U.S. Senate seat, deferring to Norm Coleman and pivoting toward a run for governor after receiving a phone call from Vice President Dick Cheney. Last month, Pawlenty launched his 2007 State of the State speech with a lengthy tribute to the members of Minnesota's armed forces. He proposed a tax exemption for their military pension benefits, and a Minnesota GI bill for their college expenses. He endorsed full funding for the National Guard's budget requests, and "dramatic increases for Minnesota's veterans programs." He recommended that Minnesotans buy a "Support Our Troops" license plate, visit his website and sign up for his wife's Military Family Care Initiative, donate money to the Minnesota Military Family Foundation or the Minnesotans' Military Appreciation Fund, attend a welcome home ceremony, or just pick up the restaurant tab for "one of these heroes and their families."
But the key sentences in the speech were these: "We need to do our duty by supporting them and all members of the military with our words and our deeds. We need a surge of support for our military families and we need it now."
It was probably just coincidental that that very same week, President Bush was characterizing his troop escalation in Iraq as a "surge," and that the highest-profile defender of this overwhelmingly unpopular strategy among elected officials was John McCain. But if it wasn't a coincidence, then the smiling face of pain shamelessly carried water for his Arizona patron that day. It leads one to believe that long after Cheney and McCain have disappeared from the political landscape, updated versions of the "new" Tim Pawlenty will still be in play.