Pawlenty to DFL: Any tax hike will get vetoed

Like most states, Minnesota has found itself in a large budget hole after the economic collapse last year.  Like many states, its legislature has prepared a raft of tax increases to close the gap.  Unlike most states, Governor Tim Pawlenty has given the DFL-controlled legislatures an ultimatum to cut spending, or else:

After remaining mostly silent while the Democrats who control the Minnesota Legislature wrote their tax and spending bills, Gov. Tim Pawlenty on Thursday broke his hush with a bang, blasting DFLers for failing to rein in soaring health and welfare spending and making it clear he will veto any tax increase bill that reaches his desk.

But Pawlenty said the gap between his and the Democrats’ budget-balancing plans is “closable” and they can finish their work by the May 18 constitutional deadline.

Democrats have proposed increasing taxes by $1.5 billion to $2.2 billion over the next two years to help plug a $4.6 billion hole in the state budget.

“They’re going to be very disappointed if they send me bills that increase taxes. They’re going to get vetoed,” Pawlenty told reporters during a briefing in his Capitol office.

“The Democrats need to stop thinking up a tax increase every day and start focusing on how they can contain and reduce spending.”

Pawlenty has to make a decision soon about running for a third term as governor or taking a break and looking for an opening on the national stage in 2012, either in a Senate run against Amy Klobuchar or a presidential run.  This position doesn’t hurt Pawlenty either way.  Minnesotans would wind up, as Pawlenty points out, having two of the highest state tax brackets in the nation if the state Senate passes the bill, and while Minnesotans might have been happy to pay taxes when times were good, right now they need capital in the market and not in the state capital.

Contrast this with the direction other governors have taken to close budget gaps.  Arnold Schwarzenegger, who is nominally Republican, beat up his own party in order to get approval for tax hikes — and then had to deal with a miscalculation of the budget immediately afterwards.  Most states have hit the panic button, including Florida, where Republicans have cut the budget but also imposed highly regressive “sin taxes,” including cigarette and tobacco sales.  They’re now worrying about the state’s bond rating in the Sunshine State.

Pawlenty, at least for now, has drawn a line in the sand.  We’ll see if the DFL tests him, and whether he’s bluffing or not.

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