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The truth about Pawlenty's failed fiscal record

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As the Associated Press reports on Tim Pawlenty’s fundraising letter being sent to Florida Republicans, the Sunshine State deserves to know the truth about his failed fiscal record.

As Governor, Tim Pawlenty left Minnesota with a $6.2 billion projected deficit, making him the first Minnesota governor in history to pass on such a massive shortfall.  He shifted tax burdens to localities by cutting local funding, which resulted in 90% of Minnesotans seeing an increase in property taxes under Tim Pawlenty.  And during his entire tenure in Minnesota - eight full years - he created a mere 6,200 jobs while seeing a large spike in the jobless rate.

Pawlenty's Failed Fiscal Record                      

PAWLENTY’S FISCAL RECORD HAS HAUNTED HIM AS HE’S TRIED TO “ASSUME THE MANTLE OF FISCAL ‘TRUTH TELLER’”

Pawlenty’s “Quest To Assume The Mantle Of Fiscal ‘Truth Teller’” Has Been Nagged By “A Projected, Multibillion-Dollar Deficit In Minnesota.” “A projected, multibillion-dollar deficit in Minnesota, where Tim Pawlenty was governor until recently, has begun to nag at Mr. Pawlenty's presidential candidacy and his quest to assume the mantle of fiscal ‘truth teller.’ At a speech last week at the Cato Institute designed to showcase his fiscal rectitude, Mr. Pawlenty brought up the issue himself, defending his record in response to a question on Medicare from the audience. The projected-deficit issue followed him to a debate in South Carolina and to television interviews last week that preceded his formal entry into the presidential race.” [Wall Street Journal, 6/2/11]

  • Pawlenty Claimed Minnesota’s Deficit Is Based On “Autopilot” Spending Increases, But “The Red Ink May Prove Problematic For A Former Governor Running As A Fiscal Conservative Willing To Level With Americans About The Tough Choices Needed To Bring The Federal Deficit Under Control.” “Mr. Pawlenty said last week that the projected deficit was overstated, based on ‘autopilot’ spending increases that not even the state's new Democratic governor, Mark Dayton, was proposing. The end of federal stimulus spending will create ‘a bit of a hole,’ a Pawlenty aide said, but it shouldn't be difficult to fill. Still, the red ink may prove problematic for a former governor running as a fiscal conservative willing to level with Americans about the tough choices needed to bring the federal deficit under control.” [Wall Street Journal, 6/2/11]

Pawlenty “Balanced Each Two-Year State Budget” But “Critics There Say They Stem From Short-Term Funding Maneuvers That Were Used During His Tenure To Patch Over Shortfalls—And To Put Off Tough Decisions To Align Minnesota's Tax Base With Its Government Spending.” “Mr. Pawlenty balanced each two-year state budget when he was governor, and he left behind a surplus for the current fiscal year of $663 million, according to the most recent forecast by Minnesota Management and Budget, a state agency… But now, Minnesota faces financial problems. Mr. Pawlenty's critics there say they stem from short-term funding maneuvers that were used during his tenure to patch over shortfalls—and to put off tough decisions to align Minnesota's tax base with its government spending.” [Wall Street Journal, 6/2/11]

  • Minnesota Management And Budget Official: Pawlenty Did Lower Spending In Real Terms For The First Time Ever, But Only Because Of Shifted Education Funds And Billions From The Federal Government. “On the campaign stump, Mr. Pawlenty said that last year he lowered real spending in Minnesota for the first time ever, which [Minnesota Management and Budget office’s] Mr. Pollard said was true. But spending that year would have looked different if the state had not put off education payments and taken billions from the federal government.” [Wall Street Journal, 6/2/11]

Under Pawlenty, “Minnesota Lurched From One Deficit To Another” And The State’s Current Shortfall Is “Partly Attributable To Temporary Fixes He Either Proposed Or Consented To.” “Minnesota lurched from one deficit to another under his eight-year tenure. The state's books technically balanced when he left office in January, but by then a mammoth deficit was forecast for the first budget his successor would need to craft. Pawlenty distances himself from that projected $5 billion shortfall, but it's partly attributable to temporary fixes he either proposed or consented to. Schools are owed more than $1.4 billion in state IOUs, one-time stimulus dollars used to prop up ongoing state expenses are drying up and short-lived spending curbs Pawlenty first enacted using his executive powers are expiring.” [Associated Press, 5/25/11]

  • Pawlenty Balanced The Minnesota Budget With “Accounting Tricks, A Well-Timed Infusion Of Stimulus Money From Washington And Word Games.” “A no-new-taxes philosophy guided Tim Pawlenty's budget approach as Minnesota governor. Accounting tricks, a well-timed infusion of stimulus money from Washington and word games kept the Republican mostly on that course. The newly minted presidential candidate hopes Republican primary voters will see him as an economic pro accustomed to dealing with red ink and capable of confronting the nation's colossal fiscal problems.” [Associated Press, 5/25/11]

PAWLENTY LEFT MINNESOTA WITH A PROJECTED $6.2 BILLION DEFICIT

When Pawlenty Left Office, Minnesota Faced A $6.2 Billion Deficit For The 2012-2013 Biennium.“Minnesota is facing a $6.2 billion deficit in the upcoming biennium, up from earlier projections of $5.8 billion. The shortfall represents about 16 percent of the state's two-year budget.” [Minnesota Public Radio, 12/2/10]

  • Projected Minnesota Budget Deficit Shrank To $5 Billion From $6.2 Billion Because Of “Federal Action That Helped The Economy, Including A Payroll Tax Cut And Delay In A Capital Gains Tax Hike.”  “Minnesota's projected budget deficit shrank by a fifth to $5 billion on Monday, prompting Gov. Mark Dayton to withdraw his proposal for a 3 percent temporary surtax on top incomes that would have given the state the nation's highest income tax rate. The forecast from Minnesota Management and Budget officials showed the shortfall for the coming two-year budget was down from an earlier projection of $6.2 billion. State economist Tom Stinson attributed the improvement to federal action that helped the economy, including a payroll tax cut and delay in a capital gains tax hike.” [AP, 2/28/11]
  • Minnesota Budget Deficit Is Nearly 13% Of The General Fund.  “Dayton and lawmakers still face a mammoth budget problem. By the latest numbers, the deficit is nearly 13 percent of the state's general fund. The governor and the GOP-controlled Legislature are split on how to handle the shortfall, with Dayton pushing for new high-end income and property taxes and Republican leaders vowing to erase the deficit through spending cuts.” [AP, 2/28/11]
  • Minnesota Had The Fourth-Highest Projected Budget Deficit For 2012. “Minnesota's projected budget gap for fiscal 2012, expressed as a percentage of the state's total general fund, ranks fourth-highest in the nation, behind Alabama, Nevada and California, according to the nonpartisan National Conference of State Legislatures.” [Wall Street Journal, 6/2/11]

Star Tribune’s Lori Sturdevant: Pawlenty Is The First Governor In Minnesota’s History To Hand His Successor A $6.2 Billion Deficit Forecast. “No other governor in Minnesota's 152-year history has handed his successor a $6.2 billion deficit forecast along with the keys to the Capitol's executive suite. But if Pawlenty has any remorse or regrets about passing that much trouble along to the next occupant, he didn't display them.” [Lori Sturdevant op-ed, Star Tribune, 12/4/10]

PAWLENTY HAS BEEN REPEATEDLY CRITIZED FOR HIS FISCAL MISMANAGEMENT

National Conference of State Legislatures Report: Under Pawlenty, Minnesota Was Second Among States Relying On One-Time Budget Fixes. “Minnesota is second only to Alaska among states that relied on one-time fixes to close their budget gaps for this fiscal year, according to an update from the National Conference of State Legislatures...In Gov. Tim Pawlenty’s solo post-session effort to balance the budget last year, he relied on one-time solutions to close 41 percent of the state’s gap, mainly by delaying payments to school districts...Further, Minnesota faces a structural budget imbalance of $5.4 billion, not counting general inflation. In other words, the state has a chronic shortage of funds to meet obligations that have remained in place through several rounds of one-time fixes in which the decision makers have neither raised taxes nor formally cut the programs tied to those obligations.” [MinnPost.com, 2/2/10]

“Pawlenty Didn’t So Much Remake Minnesota’s Budget As Pull It Apart, Twist It Around, And Squeeze It Real Hard.” [National Journal, 4/11/11]

Pawlenty “Tried To Stop The Financial Bleeding With An Assortment Of Band-Aids, From Payment Delays To One-Time Federal Windfalls Of Cash” And “Now That Bag Of Tricks Is Just About Empty.” “Starting this week at the State Capitol, a new governor and new legislative leaders will attempt to dig Minnesota out of the $6.2 billion budget hole that it faces over the next two years -- and only exceedingly difficult decisions loom. Over the past few years, as a long, punishing recession sapped the state treasury, state leaders have tried to stop the financial bleeding with an assortment of Band-Aids, from payment delays to one-time federal windfalls of cash. Now that bag of tricks is just about empty. The easy and not-so-easy cuts already have been made.”

[Star Tribune, 1/5/11]

Star Tribune Editorial: Under Pawlenty’s Watch, Minnesota Experienced “Recurring Budget Shortfalls, One Government Shutdown, Unfinished Business And Unilateral Budget Cuts By An Uncompromising Governor.” “Crisis is not too strong a word to describe the situation that confronts the 2010 Legislature as it convenes Thursday in St. Paul. Not since the dark days of the 1930s have state and local government’s financial prospects, short and long term, been dimmer…The past decade produced recurring budget shortfalls, one government shutdown, unfinished business and unilateral budget cuts by an uncompromising governor -- all traceable at least in part to partisan polarization in St. Paul. Seldom did Minnesotans see their elected leaders come together to serve the common good. That pattern urgently needs to change. A $1.2 billion deficit in a biennial budget that’s already a quarter spent demands quick remedy. It won’t wait for the next election, or for another Washington bailout, to be set right. It ought not get kicked down the road with accounting gimmicks. The 2010 Legislature and Gov. Tim Pawlenty own this problem, and they owe it to Minnesota to cooperatively craft a lasting solution.” [Editorial, Star Tribune, 2/2/10]

St. Cloud Times Editorial: Pawlenty Has Shown That He Is “Content For State Government To Live Paycheck To Paycheck.” In February 2010, the St. Cloud Times editorialized, “Let’s be content for state government to live paycheck to paycheck, almost. That’s the message delivered from Gov. Tim Pawlenty’s proposals Monday to cover the state’s projected $1.2 billion shortfall for its 2010-11 budget. Pawlenty followed a familiar political pattern Monday in his budget solution. He wants deep cuts to Local Government Aid and health care and services for the poor. He relies on one-time (yet-to-come) federal money. And he cuts some corporate and small-business taxes. Combined with no mention of tax or fee increases, those ideas reflect similar political strategies Pawlenty has coveted for other state deficits. They also fit nicely with his not-so-subtle presidential ambitions and that he will not be around when his short-sighted solutions expire. Yes, his plan solves only the most dire short-term fiscal problems. And, yes, it does so by passing on the cost of public services to other levels of government and other governors and Legislatures, which ultimately means the pocketbooks of every rank-and-file Minnesotan.” [Editorial, St. Cloud Times, 2/17/10]

TAXES INCREASED UNDER PAWLENTY

Associated Press: Pawlenty “Highlights His Tall Pile Of Tax-Increase Vetoes” But “Taxes Did Rise In The Pawlenty Era,” Particularly Property Taxes, Which Increased Nearly $3 Billion. “On the campaign trail, the Republican eagerly highlights his tall pile of tax-increase vetoes. And he boasts of enduring a partial government shutdown as well as a workers' strike to contain costs. But his record also carries vulnerabilities for foes to exploit. There's the carefully crafted ‘health impact fee’ on cigarettes. It's a euphemism for a tax increase in the eyes of some allies and most opponents… Taxes did rise in the Pawlenty era, although his fingerprints aren't on them. His veto of a gas tax increase was overridden and voters raised the sales tax through a ballot measure. Property taxes shot up in the Pawlenty years, mostly those enacted by city, county or school governments as they coped with stagnant or falling state aid. The year he entered the governor's office, Minnesota land owners paid about $5.1 billion in property taxes; the total take topped $8 billion when he departed.” [Associated Press, 5/25/11]

Minnesota Public Radio’s PoliGraph: Claim That “Under Tim Pawlenty, The Average Tax Rates Went Up For The Bottom 90 Percent... Of Minnesotans [And] The Richest 10 Percent Had Their Average Taxes Go Down” Was “Close Enough To Be Accurate.” “Before former Gov. Tim Pawlenty arrived in Boston, Mass., a few weeks ago to speak at a tea party rally, Minneapolis Mayor R.T. Rybak gave his take on the former governor's record. ‘The facts are this: Under Tim Pawlenty, the average tax rates went up for the bottom 90 percent... of Minnesotans. The richest 10 percent had their average taxes go down,’ Rybak said during an April 14, 2010, conference call with Boston reporters… Rybak is talking about the effective tax rate, which is the ratio of taxes to income. Generally speaking, he's correct. Between 2002, the year before Pawlenty took office, and 2008, the wealthiest Minnesotans - the top 10 percent - saw their effective state and local sales tax rate decline slightly. Meanwhile, lower earners generally saw their rates increase slightly. And Pawlenty's policies played a role in that shift. For example, he supported cuts to Local Government Aid, which prompted some local governments to raise property taxes for many Minnesotans. That increase largely hit middle-and-lower income earners, according to the Minnesota Department of Revenue. A new cigarette fee backed by Pawlenty also changed effective tax rates. But something else happened during Pawlenty's time in office: The richest Minnesotans got richer, in part due to unusually high capital gains income. So, while taxes may have increased for everyone in the state, in terms of percent of income, those changes were less dramatic for the state's wealthiest. Rybak is correct that effective tax rates went up a bit for lower earners, and down slightly for higher earners. These changes have to do with how much money Minnesota's wealthiest made during Pawlenty's tenure, but they were also affected by changes in tax policy. Though Rybak didn't provide all the details in his conference call, his claim is close enough to be accurate.” [PoliGraph, MPR, 4/29/11]

Under Pawlenty, “The State Slapped Higher Surcharges On Everything From Speeding Tickets To Marriage Licenses” Though “None Was More Controversial Than The 75 Cent-Per-Pack Levy On Cigarettes.” “Then there are fees. The state slapped higher surcharges on everything from speeding tickets to marriage licenses. None was more controversial than the 75 cent-per-pack levy on cigarettes, which helped break the stalemate that pushed Minnesota to a government shutdown in 2005. Pawlenty insists the cigarette ‘fee’ is directly linked to health costs attributable to smoking, and the state Supreme Court vouched for that terminology when tobacco companies sued to block it. Anti-tax groups, including the Taxpayers League of Minnesota, regard it as clear blemish on Pawlenty's record. ‘I still call it a tax increase even though the Supreme Court blessed it as a fee, not a tax,’ said Phil Krinkie, the league's president and a former Republican legislative colleague of Pawlenty.” [Associated Press, 5/25/11]

  • 2005: Pawlenty Backed Increase In Cigarette Tax, Called It An “Impact Fee.” “The $9.3 billion health and human services bill was passed in the House on an 88-40 vote and in the Senate on a 60-6 vote. The bill, which provides for a 15 percent, two-year increase in health care and welfare spending, was controversial because it contained Pawlenty’s new 75-cents-a-pack cigarette ‘health impact fee.’ ‘I don’t believe anyone in the state of Minnesota, outside the governor’s office, does not believe this health impact fee is really a tax,’ Rep. Phil Krinkie said. Pawlenty, who signed a no-new-taxes campaign pledge in 2002, has insisted that the charge is properly labeled a fee. He demanded that lawmakers designate the charge as a fee in statute books. Krinkie, R-Lino Lakes, in the House and Sen. Michele Bachmann, R-Stillwater, in the Senate unsuccessfully tried to strip the tobacco charge from the health and human services bill.” [St. Paul Pioneer Press, 7/14/05]
  • WCCO’s Reality Check: “You Are Paying Billions Of Dollars More In Fees On A Long List Of Items, Including Cigarettes, Parking Tickets, Marriage Licenses, Building Permits, Court Cases, College Tuition And Hundreds Of Other Higher Fees On Pawlenty’s Watch.” “Minnesota Governor Tim Pawlenty says the 2010 legislative session ended well for Minnesota taxpayers. The governor, who is a possible candidate for president in 2012, said he’s held the line on taxes and spending since his election 8 years ago. But is it true? …He also claims credit for lower taxes, too. ‘We did,’ he said. ‘We recently got Minnesota out of the top 10 in taxes.’ That’s MISLEADING. The credit is, at the very least, shared with a previous governor. Independent Governor Jesse Ventura’s income tax cuts pushed Minnesota off the Top 10 list during Pawlenty’s term. Pawlenty never cut income taxes, but he didn’t raise them, either. However, it doesn’t mean we aren’t paying more. Here’s what you NEED TO KNOW. You are paying billions of dollars more in fees on a long list of items, including cigarettes, parking tickets, marriage licenses, building permits, court cases, college tuition and hundreds of other higher fees on Pawlenty’s watch. Here’s more REALITY. Since 2003, state budget cuts mean Minnesotans pay significantly more in property taxes. And next year, for the first time in 15 years, property taxes in Minnesota will exceed the income tax.” [WCCO, 5/18/10]

August 2002, Pawlenty: “You Can’t Run Around The State And Say I’m Not Going To Increase Taxes And Then Cut LGA In A Way That Drives Up Local Property Taxes.” [Associated Press, 9/29/06]

  • Under Governor Pawlenty, Property Taxes Were Up By Nearly $2.7 Billion. Under Pawlenty, total statewide property taxes have increased by nearly $2.7 billion from 2003 to 2009 or 53.8 percent. [Minnesota House Research Department, Property Tax Simulations – 9A6, 1/7/10; 8A4, 1/8/10; 7A5, 9/27/07; 6A5, 8/18/06; 5A4, 9/19/05; 4C6, 12/29/04; 3G1, 8/26/03]

Since 2002, Property Taxes Have Increased By Over 25 Percent For The Average Homesteader Due To Reductions To Local Government Aid By State Government. “Since 2002, Minnesota property taxes, in general, and homeowner property taxes, in particular, have increased rapidly. The cause of the statewide growth in property taxes is not growth in local government budgets. These property tax hikes are the result of state policies that require more public costs to be borne by property taxpayers and a larger share of total property taxes to be borne by homeowners… While the average Minnesota homestead property tax has increased by over 25 percent from 2002 to 2008, per capita county, city and township and per pupil school district revenue have all fallen. If growth in local government budgets does not explain the growth in property taxes, what does?  State policies have caused property taxes, generally, and homestead property taxes, specifically, to increase rapidly since 2002. The primary cause of statewide property tax growth is reductions in state aid to local governments.  From 2002 to 2008, state aid to local governments declined by $2.4 billion in 2008 dollars.  In response to these aid reductions, local governments increased property taxes and cut spending.” [“Minnesota Property Taxes by the Numbers: 2009 Edition,” Minnesota 2020, 4/09]

  • Star Tribune Editorial: “Pawlenty Demonstrated That, In The Republican Vernacular, ‘No New Taxes’ Means No Boost In State Tax Rates. Local Taxes Rose Dramatically On Pawlenty's Watch, Spurred By State Aid Cuts But Not Easily Pinned On State Politicians.” “Raise taxes or not? That's the not-quite-accurate way that some Minnesotans describe the quarrel that has held up biennial budget-setting at the Capitol this spring…Former Gov. Tim Pawlenty demonstrated that, in the Republican vernacular, ‘no new taxes’ means no boost in state tax rates. Local taxes rose dramatically on Pawlenty's watch, spurred by state aid cuts but not easily pinned on state politicians. Local elected officials were cast as the heavies who pull the tax trigger. That political reality, dressed up as a preference for local control, may explain why today's Republican legislators shrug off the property tax implications of their budget bills while mightily opposing Dayton's income tax alternative.” [Editorial, Star Tribune, 6/1/11]

DESPITE HIS RHETORIC, PAWLENTY RELIED FEDERAL STIMULUS MONEY TO BALANCE THE BUDGET

Pawlenty “Opposed The Stimulus But Accepted The Funding.” Politico reported that Gov. Tim Pawlenty “opposed the stimulus but accepted the funding on the grounds that ‘Minnesota is a net donor to the federal government,’ making the payments only fair.” [Politico, 4/10/09]

  • 2010: “Nearly One-Third Of [Pawlenty’s] Budget Fix Would Rely On $387 Million In Federal Stimulus Money.” In February 2010, the Star Tribune reported that “nearly one-third of the governor’s budget fix would rely on $387 million in federal stimulus money. That money isn’t yet in the bank and, if it doesn’t come through, the cuts could be far deeper.” [Star Tribune, 2/16/10]
  • 2009: Pawlenty’s Proposed Budget Counted On At Least $920 Million In Federal Stimulus Funds. “Pawlenty is also counting on at least $920 million in federal stimulus funds to help the state out of its deficit hole. The figure is actually expected to be much higher -- about $3 billion or more -- but Pawlenty pointed out that fully half that money may go to ‘shovel-ready’ projects that will benefit the state's economy, but not its budget. Whatever additional money comes in, he said, could serve as a cushion against the deeper declines expected in coming months.” [Star Tribune, 1/28/09]
  • Minnesota “Received A Total Of $5.9 Billion, Including Funding For Programs, Unemployment Benefits And Medical Assistance, According To The Minnesota Management And Budget Office.” “Pawlenty, like other Republican candidates, has often derided the stimulus — a $787 billion package of federal grants, benefits and tax breaks signed by President Obama in 2009. Pawlenty has called it ‘reckless,’ ‘irresponsible,’ and ineffective at creating new private sector jobs. But he has also used the money. In Minnesota, where Pawlenty was governor until January, the state used $2.3 billion in federal stimulus money to balance its budget during the two-year budget cycle ending this June. The state received a total of $5.9 billion, including funding for programs, unemployment benefits and medical assistance, according to the Minnesota Management and Budget Office.” [Boston Globe, 5/26/11]