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Editorial: Pawlenty's quick fix leaves future problem

Relying on one-time money only pushes the problem ahead.

Last update: March 7, 2008 - 6:40 PM

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GOVERNOR'S PLAN

To erase a $938 million projected deficit in the state's current biennial budget, Gov. Tim Pawlenty would:

• Cut spending $341 million

• Tap reserves and special funds, $592 million

• Close corporate loopholes, raise other revenue, $157 million.

• Cut taxes, $88 million.

• Increase spending, $62 million.

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If Minnesotans don't look past June 30, 2009, they probably won't much mind the way Gov. Tim Pawlenty proposes to erase the red ink that has appeared again in the state budget.

His prescription includes no new taxes, no K-12 education cuts, and no painful elimination of existing health care or welfare benefits to the poor. It does recommend a tiny sales tax rate cut -- 0.125 percent -- which the Republican governor advertised as an economic stimulus, a payback for DFL-backed increases in transportation taxes, and a down payment on tax reform yet to come.

But take a longer look, and the recommendations Pawlenty made Friday for solving this biennium's $938 million problem aren't as attractive. The governor asks the Legislature to leave for their 2009 successors a big unsolved problem: a 2010-11 budget with what looks to be a $1.7 billion hole, or about 5 percent of the state's total budget. (That figure includes inflation's expected impact on both state revenues and expenditures.)

That's the out-years implication of Pawlenty's proposal to make heavy use of one-time money to correct the state's immediate problem. He proposes drawing down reserves, using special-purpose health care and welfare funds, and accelerating tax collections, for a $614 million, one-time-only gain by June 30, 2009.

A long-term perspective also puts in a dim light proposed higher education cuts -- $54 million in the current biennium, $108 million in the next. The University of Minnesota and Minnesota State Colleges and Universities were treated much as any other state agencies by the governor, who recommended about a 4 percent appropriation cut for most offices.

The problem with that is that the University of Minnesota and MnSCU aren't ordinary state agencies. They are the vessels in which ride the Minnesota dream of prosperity built on brainpower. Only in the last two years have those state-sponsored schools been able to rein in tuition increases that rose at a double-digit pace in the first half of this decade.

Cuts of the size Pawlenty proposes "are a momentum stopper," said University Vice President/ Chief Financial Officer Richard Pfutzenreuter. If that's true for the university, it's also true for Minnesota -- that's how entwined are higher education and the state's future.

DFL legislative leaders voiced receptivity to the governor's ideas, and muted their criticism. They may already see that it won't be easy to find a more politically palatable fix for the immediate problem than Pawlenty proposed. But the governor and a third of the Legislature aren't yet at the midpoints of their four-year terms. It's in their own interest, and the state's, to find budget solutions in 2008 that serve 2009 and 2010 as well.

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