The last gasp for a major tax increase this session was likely breathed on the House floor Sunday night, when an attempted override of Gov. Tim Pawlenty's May 9 veto of a $1 billion, two-year tax increase failed on an 85-49 vote. That was five votes shy of the 90 needed to pass the bill over Pawlenty's objection.
The failure of the long-shot override attempt leaves the DFL-controlled Legislature and Republican governor with just one more day before the constitutionally mandatory adjournment to find a mutually agreeable remedy for $6.4 billion projected deficit in 2010-11. Lawmakers have already agreed to cut $1.5 billion in spending, and to take advantage of $2.6 billion in one-time federal money; gubernatorial vetoes have trimmed roughly an additional $400 million. All parties now seem willing to delay school payments to close much of the remaining gap, though that one-time fix has been resisted all session by the Senate. Pawlenty also favors borrowing up to $1 billion against future state revenues -- an unprecedented and short-sighted step that legislators in both parties have rejected.
All that one-time money in 2010-11 spells trouble ahead in 2012-13. But excessive use of spending cuts to balance the state budget is also bad news, in the nearer term. The only Ph.D. economist in the Legislature, DFL Rep. Julie Bunn of Lake Elmo, advised the House that the job losses that will result from an additional $1 billion in spending cuts will greatly exceed that caused by the increase in income taxes for the affluent included in the vetoed tax bill. Cutting state spending leads to job loss in both the public and the private sectors; many of the consequent pink slips will be issued in the health care industry.
Pawlenty appears poised to score a big victory over the Legislature's DFL majories by making his no-new-taxes rule stick during the worst fiscal storm in state history. But the storm isn't over. Neither will this legislative session be finished when the gavel comes down Monday night. Seldom have Capitol observers been more conscious of the constitutional fact that legislative sessions are two years long. This, the 86th session in state history, will resume in early 2010. Legislators will go home early Tuesday with an economy still ailing, a budget still wobbling, and much more work to do in 2010.
