Pawlenty outboxes the DFL on tax hikes, spending
posted at 2:00 pm on May 24, 2009 by Ed Morrissey
See what happens when I leave Minnesota for a vacation? Republicans start acting like … well, Republicans, and the legislature gets its ears pinned back for trying to raise taxes in a recession. Kimberly Strassel profiled Governor Tim Pawlenty’s political victory this week, and his gamble that Minnesotans have had enough of free-spending legislatures when families have to watch their own spending (via Power Line):
Like most states, Minnesota has been facing a huge budget shortfall — an estimated $4.6 billion over two years. These dire financial straits didn’t deter the DFL-controlled legislature (the DFL is Minnesota’s chapter of the Democratic Party), which got to work on big new spending bills. Included were not just the usual increases in appropriations but gems like $1.2 million in grants for TV and film producers and $200,000 for a youth environmental education program. Recession? What recession?
To fill in the hole they’d blown in the upcoming fiscal budget the DFL then proceeded to float every tax hike known to Garrison Keillor. A short list: A new top income tax rate of 9% (the fourth highest in the nation); across-the-board income tax increases; sales taxes on Internet downloads; the end of the local property tax cap (enacted only last year); alcohol taxes; cigarette taxes; eliminating the deduction for an organ donation (no joke); and killing the home mortgage interest deduction.
Throughout this spectacle, Mr. Pawlenty kept voicing three simple principles. “Number one, we must have [because of the constitution] and should have a balanced budget,” he told me. “Number two, the state government needs to live within its means, just like everybody else. Number three, we shouldn’t raise taxes in the worst recession in 60 years.” Minnesota already has one of the highest tax burdens in the nation.
The DFL wasn’t listening. As the clock wound down (the session ended at midnight this past Monday), the legislature sent Mr. Pawlenty one large spending bill after another. The assumption was he’d veto them, be forced to call a special session, and then be negotiated into tax hikes. That’s when the governor got Minnesota nice.
Upon receiving the last spending bill, he announced that he would exercise the power of “unallotment,” which has been on the books since 1939 and which has been used four times. Under it, the governor is allowed to “unallot” (take away) any state spending for which there is no money to pay. Panicked, the DFL passed tax legislation to cover its blowout spending bills, 10 minutes before the session’s end. Too late. The governor said he’d veto the bill and would not be calling back the legislature to do any more mischief.
Pawlenty plans to stop $2.7 billion in state spending this year alone through “unallotment”, which will actually shrink government. Unallotment is similar to a line-item veto in that the governor can choose which spending to end. The DFL’s short-sighted thinking — and the end of the legislative session — allowed Pawlenty to play this trump card, and while the DFL is screaming foul over it, they have no options left. Unless Pawlenty calls a special session of the legislature, they cannot do anything until they return.
Contrast this with California. Instead of sensing the rising tide of disgust from the electorate, Sacramento passed more tax hikes and demanded more spending while the recession drove business and jobs from the market. They refused to cut government and paid a huge price at the ballot box last week, and now they have no choice but to start trimming. Unfortunately, their governor and most of the legislature have no real desire to do so, except for scare tactics to panic voters into allowing them to continue their free-spending ways.
Minnesota DFL leaders want to instill that same sense of panic here, but as Pawlenty points out, $2.7 billion from a $36 billion budget isn’t a terribly deep cut. In a deep recession, government should look for opportunities to cut spending rather than throw money at new programs like “environmental education” and cash grants for Hollywood productions. Pawlenty called fiscal responsibility a “fundamental tenet” of the GOP, but unfortunately that has only rarely been true over the last decade. Pawlenty deserves cheers for reminding Republicans of that core value, and of once again confounding nearly veto-proof majorities of the legislature to return to fiscal sanity.