After legislative Democrats in Minnesota got what they wished for in terms of a Supreme Court decision undermining Gov. Tim Pawlenty's unallotment authority, they are now scrambling to plug a budget hole approaching $3 billion. Their first instinct? A $400 million job-killing income tax increase, of course.
Gov. Pawlenty, a Taxpayer Protection Pledge signer, has stated his firm opposition to any tax increases to balance the budget, and vetoed the measure today. He realizes that the budget crisis is a consequence of overspending. The parallel could not be any clearer in this instance, where the legislature reversed principled spending cuts made last year and saw their deficit grow nearly six-fold.
Conservatives nationally should take notice as Pawlenty suffers the slings and arrows of outrageous claims that big government, not the private sector, should be the engine of economic growth. This will be an epic battle with a Democratic majority hell-bent on raising taxes by arguing that they've spent themselves so deeply into the red that the only solution is higher taxes. Gov. Pawlenty has pledged to stand firm and call them on that bluff.
In doing so, he is sketching the conservative blueprint to budgetary reform: an unapologetic reduction in the size of government, a strong cap on the growth of government spending, and a lower, flatter, fairer tax burden. Moving forward, Gov. Pawlenty will have the battle scars to prove his devotion to the cause.
To see ATR's letter to the legislature urging them to adopt the Governor's position, see below. For a PDF version, click here.
May 11, 2010
Last week’s Supreme Court decision undercutting Gov. Pawlenty’s unallotment authority has dire implications for taxpayers, as it will cause the state budget deficit to explode to nearly $3 billion. Legislative Democrats who filed an amicus brief in support of the Court’s decision got what they asked for last Wednesday: more spending, more deficits, and a prolonged recession in Minnesota.
This does not have to be the case. Gov. Pawlenty’s principled and appropriate unallotments brought the budget into balance without punishing tax increases. In the wake of the today’s veto of $400 million in punishing income tax increases, the legislature should take the following actions to affirm the governor’s position that spending, not revenue, is the problem:
- Ratify last summer’s unallotment cuts. Last year’s cuts were made by virtue of economic necessity. The state literally does not have the money in the midst of this recession to pay for their reinstatement.
- Categorically reject any tax increases. Overspending fueled by high taxes is the problem, not the solution, in Minnesota. The recent $400 million tax increase would have only exacerbated that problem. With jobs scarce and the economy stagnating, punishing the private sector to pay for government exorbitance is the wrong approach.
- Pursue meaningful tax reform. A package of modest tax cuts passed early in the session is a step in the right direction, but does not go far enough. The legislature should pass serious tax cuts; the 20 percent corporate income tax reduction proposed by Gov. Pawlenty in February is a meaningful reform.
Spending is the driving force behind Minnesota’s budget woes. Between 1960 and 2003, state spending grew by an average of 20 percent per biennium. Bringing unallotted outlays back from the dead is a tangible example of government frivolity leading to budget deficits and calls for painful tax increases. Not only should the legislature uphold the Governor’s unallotments, it should also enact a meaningful cap in spending growth.
Private sector-led economic growth is the prescription for prosperity in Minnesota. Big government – financed partially by the 3rd highest corporate income tax in the country – is an impediment to the type of job creation Minnesota needs. It is time for the legislature to come to terms with economic reality and restore Gov. Pawlenty’s unallotments while eschewing any talk of higher taxes.