Amid Minnesota Crisis, Pawlenty Faces Scrutiny
Ruth Fremson/The New York Times
Tim Pawlenty in the state capitol in St. Paul, Minn., in 2007.
Now, Mr. Pawlenty’s fiscal record as governor is drawing closer scrutiny.
By TRIP GABRIEL
Published: July 13, 2011
On the presidential campaign trail, Tim Pawlenty, who in January completed two terms as governor of Minnesota, runs largely as an implacable foe of government spending, saying he drew “a line in the sand” in his home state and stood tough against Democrats during a government shutdown in 2005.
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Now, with Minnesota struggling through Week 2 of another government shutdown over a budget shortfall, Mr. Pawlenty’s fiscal record as governor is drawing closer scrutiny. And while Mr. Pawlenty did face economic and political challenges in balancing the state’s budget each year, his record includes what critics say was an overreliance on one-time accounting maneuvers that failed to address the underlying problems.
The current shutdown, with interstate truckers barred from rest stops and 22,000 state workers placed on furlough, is over how to close a $5 billion deficit that the state finance department says is largely the result of holes left by Mr. Pawlenty’s final budget.
Minnesota’s bond rating was downgraded last week by the national firm Fitch Ratings, which cited the current shutdown as well as “nonrecurring balancing tools” in earlier years that have left the state on shaky financial ground.
“That’s the classic definition of how you kick the can into the future,” said Arne Carlson, a former Republican governor of Minnesota who is a critic of Mr. Pawlenty’s fiscal management. “He basically reduced the weight in Pocket A and increased the weight in Pocket B, and said, ‘Look at what a great job I did.’ This was all sleight of hand.”
Mr. Pawlenty pushed back aggressively on the suggestion that he bore any responsibility for the current crisis, in which his Democratic successor, Gov. Mark Dayton, is deadlocked with Republican majorities in the Legislature. “Everybody is responsible for the budgets on their watch,” Mr. Pawlenty said in an interview. “I’ve been gone for six months, and the last budget on my watch is in the black.”
Dismissing the budget projections showing a large shortfall, he said, for example, that about $2 billion could be trimmed by continuing to delay state aid to public schools into the future, which Democrats have agreed to.
Many other states used one-time accounting maneuvers to balance their budgets during the recessions of the last decade. In addition to delaying money owed to schools, Minnesota under Mr. Pawlenty balanced its books by using money from a tobacco industry settlement meant for health care and $2.3 billion from the federal stimulus.
“They were like drowning sailors looking for stopgap measures, hoping the economy would rebound and revenue would increase,” said Lawrence R. Jacobs, a political scientist at the University of Minnesota.
Mr. Pawlenty points to having significantly reduced the growth rate of state spending as governor for the first time in Minnesota history and balancing budgets without new taxes.
But though he largely held the line on increasing state taxes, residential property taxes soared by 38.2 percent during the Pawlenty years, as cities and towns sought to maintain services like police forces and schools, according to Minnesota 2020, a progressive research group.
Mr. Pawlenty is hardly alone among presidential aspirants in having a record as governor that complicates his efforts to advance a clear-cut image. Mitt Romney is shadowed by the health care plan he signed in Massachusetts. Jon M. Huntsman Jr. may come under scrutiny by conservatives for advancing civil unions for same-sex couples in Utah.
Mr. Pawlenty inherited a deficit in 2003, his first year in office, and his attempts to balance budgets while fulfilling a no-new-taxes pledge were checked by Democratic or split Legislatures, which accused him of undermining schools and social services.
“I love my state, it’s a beautiful state, but it’s a very liberal place,” he said. “That’s the tradition I was trying to break. We didn’t finish it, but I moved it in the right direction.”
In many ways Mr. Pawlenty’s final budget, in which he outflanked the Democratic Legislature, was his signature moment.
Minnesota enacts budgets on two-year cycles. In the spring of 2009, Mr. Pawlenty signed every spending bill that Democratic lawmakers sent him, surprising opponents.
“As this thing progresses, he’s going to outmaneuver us,” Dick Cohen, a Democratic state senator, recalled thinking at the time.
Mr. Pawlenty then vetoed the Democrats’ revenue bill to pay for the programs, including a tax increase primarily on the wealthy. Next, after the Legislature adjourned, he invoked emergency powers to balance the budget by making $2.7 billion in unilateral cuts, including from the University of Minnesota and health care programs. “He outfoxed them,” said Patrick Garofalo, a Republican state senator.
Tom Hanson, Mr. Pawlenty’s budget commissioner at the time, said the strategy highlighted his boldness. “He’s not afraid to battle for something, even with an uncertain outcome,” he said.
But in May 2010, the State Supreme Court ruled that his unilateral cuts violated the State Constitution.
“It feels like the last eight years we’ve been in constant crisis management,” said Tom Bakk, the minority leader of the State Senate, who squared off against Mr. Pawlenty on many budget issues.
Mr. Bakk pointed to the government shutdown in 2005, a confrontation that Mr. Pawlenty is invoking on the campaign trail as an example of his toughness. A television advertisement in Iowa bluntly concludes, “Pawlenty won.”
But at the time Mr. Pawlenty described the resolution of the shutdown more generously, in terms that may be out of fashion now: “It was a true bipartisan compromise,” he said. Largely a dispute over health care costs, the nine-day shutdown ended when Democrats abandoned a plan to tax the wealthy and accepted Mr. Pawlenty’s proposal to add 75 cents to a pack of cigarettes. The governor labeled it a “health improvement fee,” but he was blasted by antitax activists, who said it was a tax increase.
“There is no way to put lipstick on that tax-increase pig,” Grover Norquist, the president of Americans for Tax Reform, an influential antitax group, said at the time. “No. You cannot do that. This will not fly.”
Mr. Pawlenty never again agreed to increase state revenues in a way that could be interpreted as adding taxes. This included vetoing a transportation bill financed by a gasoline tax that even the pro-business Minnesota Chamber of Commerce favored.
Mr. Bakk, a member of the Senate tax committee, said that when he tried in later years to convince Mr. Pawlenty to accept tax increases, the governor would bring up the health improvement fee, which he called the “HIF.”
“It was that personal to him that he gave it an acronym,” Mr. Bakk said. “He said to me in his office he’d paid quite a price with the real fiscal conservatives.”
The current shutdown, with interstate truckers barred from rest stops and 22,000 state workers placed on furlough, is over how to close a $5 billion deficit that the state finance department says is largely the result of holes left by Mr. Pawlenty’s final budget.
Minnesota’s bond rating was downgraded last week by the national firm Fitch Ratings, which cited the current shutdown as well as “nonrecurring balancing tools” in earlier years that have left the state on shaky financial ground.
“That’s the classic definition of how you kick the can into the future,” said Arne Carlson, a former Republican governor of Minnesota who is a critic of Mr. Pawlenty’s fiscal management. “He basically reduced the weight in Pocket A and increased the weight in Pocket B, and said, ‘Look at what a great job I did.’ This was all sleight of hand.”
Mr. Pawlenty pushed back aggressively on the suggestion that he bore any responsibility for the current crisis, in which his Democratic successor, Gov. Mark Dayton, is deadlocked with Republican majorities in the Legislature. “Everybody is responsible for the budgets on their watch,” Mr. Pawlenty said in an interview. “I’ve been gone for six months, and the last budget on my watch is in the black.”
Dismissing the budget projections showing a large shortfall, he said, for example, that about $2 billion could be trimmed by continuing to delay state aid to public schools into the future, which Democrats have agreed to.
Many other states used one-time accounting maneuvers to balance their budgets during the recessions of the last decade. In addition to delaying money owed to schools, Minnesota under Mr. Pawlenty balanced its books by using money from a tobacco industry settlement meant for health care and $2.3 billion from the federal stimulus.
“They were like drowning sailors looking for stopgap measures, hoping the economy would rebound and revenue would increase,” said Lawrence R. Jacobs, a political scientist at the University of Minnesota.
Mr. Pawlenty points to having significantly reduced the growth rate of state spending as governor for the first time in Minnesota history and balancing budgets without new taxes.
But though he largely held the line on increasing state taxes, residential property taxes soared by 38.2 percent during the Pawlenty years, as cities and towns sought to maintain services like police forces and schools, according to Minnesota 2020, a progressive research group.
Mr. Pawlenty is hardly alone among presidential aspirants in having a record as governor that complicates his efforts to advance a clear-cut image. Mitt Romney is shadowed by the health care plan he signed in Massachusetts. Jon M. Huntsman Jr. may come under scrutiny by conservatives for advancing civil unions for same-sex couples in Utah.
Mr. Pawlenty inherited a deficit in 2003, his first year in office, and his attempts to balance budgets while fulfilling a no-new-taxes pledge were checked by Democratic or split Legislatures, which accused him of undermining schools and social services.
“I love my state, it’s a beautiful state, but it’s a very liberal place,” he said. “That’s the tradition I was trying to break. We didn’t finish it, but I moved it in the right direction.”
In many ways Mr. Pawlenty’s final budget, in which he outflanked the Democratic Legislature, was his signature moment.
Minnesota enacts budgets on two-year cycles. In the spring of 2009, Mr. Pawlenty signed every spending bill that Democratic lawmakers sent him, surprising opponents.
“As this thing progresses, he’s going to outmaneuver us,” Dick Cohen, a Democratic state senator, recalled thinking at the time.
Mr. Pawlenty then vetoed the Democrats’ revenue bill to pay for the programs, including a tax increase primarily on the wealthy. Next, after the Legislature adjourned, he invoked emergency powers to balance the budget by making $2.7 billion in unilateral cuts, including from the University of Minnesota and health care programs. “He outfoxed them,” said Patrick Garofalo, a Republican state senator.
Tom Hanson, Mr. Pawlenty’s budget commissioner at the time, said the strategy highlighted his boldness. “He’s not afraid to battle for something, even with an uncertain outcome,” he said.
But in May 2010, the State Supreme Court ruled that his unilateral cuts violated the State Constitution.
“It feels like the last eight years we’ve been in constant crisis management,” said Tom Bakk, the minority leader of the State Senate, who squared off against Mr. Pawlenty on many budget issues.
Mr. Bakk pointed to the government shutdown in 2005, a confrontation that Mr. Pawlenty is invoking on the campaign trail as an example of his toughness. A television advertisement in Iowa bluntly concludes, “Pawlenty won.”
But at the time Mr. Pawlenty described the resolution of the shutdown more generously, in terms that may be out of fashion now: “It was a true bipartisan compromise,” he said. Largely a dispute over health care costs, the nine-day shutdown ended when Democrats abandoned a plan to tax the wealthy and accepted Mr. Pawlenty’s proposal to add 75 cents to a pack of cigarettes. The governor labeled it a “health improvement fee,” but he was blasted by antitax activists, who said it was a tax increase.
“There is no way to put lipstick on that tax-increase pig,” Grover Norquist, the president of Americans for Tax Reform, an influential antitax group, said at the time. “No. You cannot do that. This will not fly.”
Mr. Pawlenty never again agreed to increase state revenues in a way that could be interpreted as adding taxes. This included vetoing a transportation bill financed by a gasoline tax that even the pro-business Minnesota Chamber of Commerce favored.
Mr. Bakk, a member of the Senate tax committee, said that when he tried in later years to convince Mr. Pawlenty to accept tax increases, the governor would bring up the health improvement fee, which he called the “HIF.”
“It was that personal to him that he gave it an acronym,” Mr. Bakk said. “He said to me in his office he’d paid quite a price with the real fiscal conservatives.”
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