Monday, May 23, 2011

THE PRESIDENCY: A BIT SHORT IS PAWLENTY

One thing is certain about Monday’s Presidential announcement by former Governor Tim Pawlenty:  he will not bring up the fact that he presided over one of the larger tax increases in Minnesota’s history.  Yes, that is quite correct.

During his two terms as Governor, property taxes rose a stunning $2.5 billion – more than the previous 16 years combined (see note below).

To further amplify this enormous growth consider this fact:  in the 8 years prior to Governor Pawlenty, property taxes rose some $716 million.  Compare this to the $2.5 billion increase during the Pawlenty years.  That is an approximate 250 percent increase.

But this data also illustrates the close relationship between state and local spending in Minnesota.  All too often, state budget cuts simply translate into increased local costs.  This is particularly true when considering school financing and local government aids.

It would be a bit akin to President Obama announcing that he will cut federal funding for highways.  This would reduce the federal budget by over $40 billion and may produce some solid conservative sound bites.  But, unfortunately, the cost of those highways does not disappear.  Rather, it will show up in strained state and local government budgets.

Without reform, spending cuts all too often reappear as cost increases elsewhere.  The sad and tragic reality is that this is what happens when politics and simple slogans become the prime concern rather than quality long-term budgeting.

Further evidence of this can be seen in the fact that from 2003 to today, Minnesota has been rolling from deficit to deficit and in spite of warnings from Moody’s concerning the folly of short-term fixes, Governor Pawlenty continued to achieve budget balance by employing the following:

Borrowing over $1 billion from the tobacco settlement – money designated for health care.
Taking over $2 billion from the federal stimulus funds.
Borrowing over $1.4 billion from K-12 education funding.
Borrowing over $400 million from the Healthcare Access Fund for low-income families.
Accelerating tax payments.
Delaying bill payments.
Engaging in accounting shifts.

In the process, Moody’s lowered Minnesota’s bond rating.

And, much of this activity preceded the recession of 2007 and no borrowed monies have been paid back thereby leaving Minnesota with a $5.1 billion deficit – the 7th most severe in the United States.

It is my belief that the President we elect in 2012 should have compelling leadership skills and a demonstrated background of financial excellence.  This requires not only an appreciation of America’s financial problems but also a willingness to place the nation’s long-term well being ahead of short-term political gains.

Unfortunately, Governor Pawlenty falls short of this expectation.  There is nothing personal in my assessment.  He is smart and pleasant.  I appointed his wife to a state judgeship and I supported his first run for Governor.

However, I come from the more traditional wing of the Republican Party and truly believe in fiscal discipline and that the office of the Presidency should go to our nation’s best and brightest and not its most ambitious.

Note:   Property tax numbers trail by one year – hence Pawlenty’s years total 7 years since the 2011 figures are not yet in.