State of State: Farewell, with a few surprises

Minneapolis and St. Paul mayors should fully control their schools, the governor said.

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Minnesota Governor Tim Pawlenty delivers the State of the State address Thursday in the House of Representatives Chamber.

Photo: Jerry Holt, Star Tribune

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Gov. Tim Pawlenty began his long goodbye to Minnesota on Thursday and asked for a few parting gifts.

In his final State of the State speech, Pawlenty said he wants to put Minneapolis and St. Paul mayors in "full control" of their cities' school districts, create a tax-free zone for St. Paul's closing Ford plant, constitutionally cap state spending and cut business taxes.

Pawlenty said Minnesota is challenged by an "awful economy" but maintained that government is not the answer.

If government listens to those who create private-sector jobs, he told a crowded House chamber, "This is what it'll hear loud and clear: 'Get out of our way. Leave us alone. Make it easier, not harder.'"

DFLers who control the Legislature, were largely unimpressed with the 32-minute speech. Their leaders didn't say which proposals were dead on arrival but suggested that if he wants anything to pass, he'll have to do more than speechify.

"A lot of these ideas aren't new ideas," said Majority Leader Tony Sertich, DFL- Chisholm. "He seems to throw out an idea and then walk away for a whole year and then come to the State of the State and say, 'Can you please pass it?'"

The surprise gift Pawlenty wants came in education.

"I support giving mayors the accountability and full control, and I mean full control, of the Minneapolis and St. Paul school districts," Pawlenty said.

It's not clear exactly how that control would work and the school takeover idea creates some odd political bedfellows for the Republican governor. It would give more power to Democratic city mayors -- including one, Minneapolis Mayor R.T. Rybak, who wants Pawlenty's job -- and picks up on a proposal from President Obama's secretary of education.

It isn't something either mayor requested. Rybak's office didn't even know about it until a communication from Pawlenty's office after the speech had started.

St. Paul Mayor Chris Coleman said Pawlenty, a frequent basher of the state teachers' union, should start by offering teachers respect. Rybak said Pawlenty's focus was off. "Mayoral control is not the central issue," Rybak said.

New York, Chicago, Boston and Washington, D.C., have all taken over their schools in recent years, with mixed results.

House education committee chair Mindy Greiling said transferring control of schools would be foolish.

"Up until the '60s, St. Paul public schools were under the city and, sadly, it was a colossal failure," said Greiling, DFL-Roseville.

Jobs and budget

Pawlenty offered some hints on what will be inside the budget he will propose on Monday, including a "Jobs Creation Bill" that would cut the corporate tax rate by 20 percent and offer tax credits to spur investment and research and development. The bill, which has not been introduced, would also offer a 20 percent tax exclusion for small businesses and a capital gains exemption for some investors.

"This is how you unleash private investment," said Sen. Amy Koch, R-Buffalo.

General Mills spokesman Tom Forsythe said the tax cut proposals were needed. "Minnesota's corporate income tax is currently one of the highest in the world," he said.

It's unclear how much the mix of tax cuts and credits would cost the state, although estimates range in the hundreds of millions of dollars. The "angel investor" tax credit may have legs. It's an idea Pawlenty, along with some DFLers, has supported in the past but which has failed to come to fruition. Democrats are sponsoring similar measures this year.

Pawlenty may also find common ground with his proposal to revitalize the St. Paul Ford plant, slated for closure. He wants to create a special tax incentive zone around the plant, which he dubbed CARZ, aimed at retaining the nearly 1,000 jobs in the area. DFL legislators have been working to keep those jobs in the city.

The governor also renewed his push for a constitutional amendment to cap state spending at the revenue level of the previous two years -- a standard his earlier budgets would have failed. The proposed amendment, which has received mixed reviews nationally, would require approval from both the DFL Legislature and voters.

Fiscal legacy

Pawlenty appeared on Thursday to peg his legacy to Minnesota's shrinking government

"During my time as governor, we've dramatically slowed down state government spending and we actually cut spending for the first time in Minnesota history," he said.

The line, which Pawlenty's used during his political travels, met with a standing ovation from Republican lawmakers in the Minnesota House chamber. DFL legislators stayed quietly in their seats and Rep. Phyllis Kahn, a Minneapolis Democrat who has been in the Legislature since 1972, was seen paging through a list of bill introductions.

Last year, Pawlenty unilaterally cut $2.7 billion from the state's two-year budget after he vetoed the DFL's tax hike bill to pay for state's spending.

Those unallotments, as they're known, were struck down by a lower court as unconstitutional. Pawlenty has appealed that ruling to the state Supreme Court, which will hear the matter next month.

If the high court sides against Pawlenty, his budget-cutting claim may unravel, and he appeared to prepare for that on Thursday, asking the Legislature to "ratify" his unallotments.

"I know the unallotments I made last summer are controversial," Pawlenty said. But, he added, "I'm asking the Legislature to ratify those decisions. Those unallotments simply cannot be restored at this point."

Rachel E. Stassen-Berger • 651-292-0164 Baird Helgeson • 651-222-1288 Staff writer Norm Draper contributed to this report.

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