Tim Pawlenty: Finally -- see spending match with revenue

  • Article by: TIM PAWLENTY
  • Updated: November 9, 2009 - 11:03 AM

 Minnesota has a lot of great traditions. Unfortunately, limiting the growth of state government spending isn't one of them. From 1960 to 2003, state general fund spending increased by an average of more than 21 percent per two-year budget cycle.

To put that in perspective, per capita income in Minnesota typically grows at about 5 percent per two-year budget cycle. State government spending grew more than four times faster than per capita income. That's unsustainable and reflects an ever-growing appetite for more and more government spending at a rate that's far outpacing private sector growth.

We've put the brakes on state spending during my nearly seven years in office, limiting annual spending growth to an average of 2.2 percent. But there's no guarantee that kind of discipline will continue.

That's why I'm proposing we let Minnesotans vote on a "Spending Accountability Amendment" to the state Constitution that would cap spending at the level of revenue actually received during the previous budget period.

I know what you're thinking -- that sounds pretty simple. What I'm proposing is state government change our budgeting practices from what politicians want to spend to what the state actually has available.

Here's one way to think of it. A truck driver who makes $45,000 this year doesn't plan to spend $50,000 or $55,000 next year, hoping to get a raise. He or she makes future spending decisions consistent with actual earnings. How about we make state government do the same thing?

Here's another analogy: When you get a $50 gift card during the holidays, it's not redeemable for $51. You can't spend more than you receive. Similarly, government needs to live within its means. (That one came from a person commenting on the Star Tribune's website.)

With this amendment we can end state budgets that are based on hope, rather than reality, and allow the public to hard-wire fiscal discipline into state operations.

Had the "Spending Accountability Amendment" been in place in 1960, general fund spending since then would have been reduced by more than $22 billion, or about 7.5 percent. The amendment has a limiting effect on government spending, but it's far from extreme. It would include a provision allowing for additional expenditures for public peace, safety or health in the event of a declared national security or peacetime emergency.

In addition, if revenues exceed the budgeted level, those additional funds would still be available under my plan for building up rainy day funds, providing tax rebates or other one-time uses.

This new system would also reduce volatility in the state's budget forecasting process by basing spending decisions on actual revenues, rather than basing them on estimates of future revenues. The days of billions of dollars in surpluses or deficits would largely be over.

Nevertheless, critics will call this proposal "severe" or "inflexible." That's a mistake. While this measure would finally match expenditures with revenues, the Legislature and the governor would still have the flexibility to address future state needs while forcing lawmakers to prioritize and hold programs accountable for results.

After more than 40 years of mostly explosive growth, it's time the state budget had more backbone. Status quo defenders will cite bureaucratic reasons why it can't work. But they're wrong. Minnesotans look at their checkbook balance before they write a check. State government should do the same.

Tim Pawlenty, a Republican, is governor of Minnesota.

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