State economist: A thorn in governor’s philosophy

  • Article by: MIKE KASZUBA and PAT DOYLE , Star Tribune staff writers
  • Updated: November 27, 2009 - 10:45 PM

Pawlenty shuns views of longtime state economist.

State economist Tom Stinson

Photo: David Brewster, Star Tribune

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The last person Gov. Tim Pawlenty may want to see rising to speak these days is Tom Stinson, a slightly hunched-over figure with a monotone delivery who, nonetheless, is much in demand.

For two decades Stinson has been the state's economist, delivering good news when times were fat and bad news that once led Gov. Rudy Perpich to claim he could do a better job because Stinson was too pessimistic.

In an office piled high with economic charts and devoid of a single picture, Stinson these days is delivering an even more unpleasant dose of news that once again puts him at odds with the state's top elected official.

Minnesota faces a never-before-seen "structural budget deficit" that reaches far into the future, Stinson warns -- a phenomenon wrought by an aging workforce and slowing revenue growth that will hamper the state's ability to provide the services taxpayers have come to expect. There are no short-term answers, he said, and no single approach, such as tax increases or spending cuts, will by itself solve the problem.

That ominous message sets Stinson, a contract employee who earns $101,271, squarely against Pawlenty, who rapidly is becoming a national figure largely on the strength of his no-taxes, leaner-government philosophy.

Stinson will spend the next two days putting the finishing touches on one of the most grueling tasks he faces: compiling the semi-annual economic forecasts that project expenses and revenues two years out.

But even before the forecast's Wednesday release, economic and political experts ranging from former Republican Gov. Al Quie to Edward Foster, an economics professor who helped form the state's Council of Economic Advisors, already are nodding in agreement with Stinson's view that the state's troubles go well beyond the current recession.

No growing out of it

"We are unlikely -- very unlikely -- to grow our way out of the problem," Stinson told legislative leaders this fall.

In his presentations, Stinson has prominently featured an uncomfortable nugget of information for government-spending-is-the-problem adherents: State and local governments take a smaller bite of Minnesotans' personal income now than at any time in the last 15 years: 15.5 percent in 2008, down from 17.9 percent in 1993.

Stinson, who has served under DFL, Independent and Republican governors, has gone further out on the ledge, openly praising the federal stimulus program that he says has tempered the state's economic slide, but which Pawlenty has lambasted.

As Pawlenty, who is eyeing a possible White House bid, attempts to sell his tough-love, belt-tightening approach to a national audience, Stinson has become exactly what the governor doesn't need.

As the state's budget deficit ballooned into billions of dollars, the Republican governor blamed DFLers, who he says would rather raise taxes than rein in spending. In the process, Pawlenty has barely mentioned Stinson and rarely talks to him.

Meanwhile, Stinson, 67, continues to quietly, insistently point out other factors that far transcend the politics of the moment.

"This notion that there's some cataclysmic, insurmountable crisis looming four years from now is speculative at best," said Pawlenty, responding to a DFL-led budget summit two months ago that featured Stinson. "It's not unmanageable."

When pressed later on whether he publicly disagreed with the state economist, Pawlenty sidestepped the question. "We're not talking about Stinson," interrupted Brian McClung, Pawlenty's spokesman. Despite several requests, Pawlenty's office has not said whether it has economic experts who differ with Stinson's long-term view of Minnesota's economy.

Even as Pawlenty recently unveiled a proposed constitutional amendment to cap state general-fund spending, the governor seemed to take a slight poke at Stinson.

There are, said Pawlenty, "wise people [who] come to the podium and say, 'I think the revenues for the next two years and four years are going to look like this,' and sometimes they do -- but most times they don't."

Tom Hanson, Pawlenty's top budget official, likewise has downplayed Stinson's 20-year view as an interesting exercise, but hardly infallible. "This notion that the whole world is going fall apart in '12 and '13 -- I don't think so," Hanson said.

A downward trend

For the moment, there appear to be plenty of economic experts -- including Republicans -- who agree with Stinson that something serious is amiss in Minnesota.

"I can't imagine that there's any reputable economist that's saying anything different," said John Gunyou, who served as state finance commissioner under Gov. Arne Carlson, a Republican.

Over the past two decades, Stinson has had his own swings and misses. In 2006, he wrote a paper titled, "Sources of Error in State Revenue Forecasts, or How Can the Forecast Possibly Be So Far Off?" In it, he examined the unexpected 2002 revenue shortfall and blamed inaccurate data, imperfect models and unrecognized changes in the economy's structure.

"The nature of being a revenue forecaster is you're always going to be wrong," Stinson said, with a shrug and a smile.

Art Rolnick, director of research at the Federal Reserve Bank in Minneapolis, said he has had his disagreements with Stinson and differs on the value of the federal stimulus. But on Minnesota's long-term deficit, Rolnick said, Stinson is on "pretty good footing," noting that "I tend to be the optimist much more than Stinson does."

mkaszuba@startribune.com • 651-222-1673 pdoyle@startribune.com • 651-222-1210

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