Pawlenty economics: Little hope for success

Minnesota was the state where government worked. Notice the past-tense. Our government has been sawed apart, leg by leg, over the past decade under the direction of Tim Pawlenty. Minnesota is now the state of feast and famine. Our budget deficits lurch from one economic crisis to another. As I write, the state legislators are holding 11th hour meetings to try and force a tax plan out of Pawlenty's bear claws. If history is a guide, there is little hope for success.

In 2003, when our state faced a $4.23 billion dollar deficit, Pawlenty finagled his way out trouble with gimmicks: a billion dollars worth of one-time money here, accounting shifts over there, and budget cuts to all sectors. He then paraded around the state saying that he fixed the deficit without raising taxes.

Pawlenty's first budget reduction left Minnesota with a $700 million dollar deficit two years later. Now we're $4.6 billion in the hole with the governor pressing for an economic plan that DFLers claim leaves Minnesota $2.5 billion dollars in debt at the start of the next two years.

This is a man planning his economic policy with an eye on the Iowa primaries.

This is a governor whose national ambition conflicts with the needs of his state.

It is all about posing as a conservative while sticking somebody else with the tab in a few years. You may recognize it's eerie similarities to Bush Economics.

"Windfall conservatism."

One-time use spending is a stunningly simple concept: It's money you use once. The prudent planner uses this for one-time expenditures--think of mom's bonus that she used for the family vacation to Disney World.

Pawlenty takes the opposite approach: his one-time use funds go toward ongoing expenditures.

This year is like no other. Federal money is making it rain like Lil Wayne at a strip club. And again, Pawlenty is using it to duct-tape the holes in his budget. The majority of his budget this year is crafted with one-time use funds.

"The only problem is that he's run out of duct-tape," says Senator Richard Cohen (DFL) and chair of finance.

Part of his current economic plan infuses K12 education with stimulus money. It's great for the next two years, but after that... well, our legislators and schools ought to hope that Obama really is a socialist, because otherwise the bottom drops out.

"Could I borrow the credit card? I need to pay off my other credit card."

For the current session, Pawlenty needed a way to pay off debt. So he decided to create a billion dollars with an accounting trick. He wants to raise money by selling close to a billion dollars worth of state bonds, then plans to repay the funds over the next decade with ... even more tobacco settlement money.

If you're not getting it, there's a simple way to describe this fancy accounting alchemy: borrowing.

To climb your way out of debt with borrowing, at the state level, is, in the words of noted economist Axl Rose, an appetite for destruction.

"There are three ways to address budget deficits," says former Republican Governor Arnie Carlson," You can raise revenue, cut spending, or borrow. Of the three, borrowing is the worst thing you can do... it's borderline criminal."

Borrowing for long-term projects, like highways and bridges is fine. But borrowing for operating purposes is just poor financial practice and a mis-allocation of resources, according to a high-level government official.

"Read my lips: No new taxes. Fees? I didn't say anything about fees."

T-Paw will not raise taxes. T-Paw is against the idea of over taxation. T-Paw will not solve the budget crisis through taxing the working class.

But a fee... that's just fine. Fees are great. In no way are fees a monetary contribution forced upon you by a government. Wink. Fees are voluntary. Wink. Wink. You can choose to pay extra for a pheasant hunting license, to use a state campground, get a pregnancy health screening, or get a marriage license. That's why T-Paw increased fee of all those and many more.

Since he entered, fees in Minnesota are up 20% across the board. This ain't a good substitution for taxes. "The overall impact of his policy has done nothing to ameliorate the increasing concentration of wealth in Minnesota," says Dane Smith, President of Growth and Justice. "His tax policies have exacerbated inequality."

"Stick cities with the tab."

The Pawlenty administration has a strange addiction to cutting local governmental aid, a revenue stream that helps pay for police and fire fighters. The result of such cuts forces the cities to increase their property taxes. That shifts the brunt of the economic pain to low-income homeowners. They now pay a higher percentage of their monthly income to taxes.

When Pawlenty took office, state aid accounted for 39.7% of the Minneapolis general fund. Six years later, it hovers around 20%. Meanwhile, property taxes jumped from 25.4% of the general fund to roughly 45%.

And when a city mayor like RT Rybak is forced to deal with the cuts by considering a trim to law enforcement (something he's been able to avoid in this budget cycle) Pawlenty slams him in the press, even if it's a direct result of Pawlenty's own decisions.

"Governor Pawlenty has caused massive increases to property taxes. He needs to own that and we need to hold him accountable," says Mayor Rybak. "I am responsible with my decisions to raise property taxes. But the governor needs to be responsible for the massive local government aid cuts."

"What did I drink?"

Currently, T-Paw is continuing to try everything in his power to prevent a tax. He wants to tell voters that under his watch, state taxes didn't go up. And he'll probably do it via a town hall meeting in Iowa, as Pawlenty Economics have a hell of a lot more to do with Pawlenty than with Minnesota's economy.