If he seeks higher office on a platform of fiscal conservatism, Tim Pawlenty will have the battle scars to prove it.
As governor of Minnesota, the only state Reagan lost in his 1984 re-election bid, Pawlenty has worked to reverse a culture of big government that saw spending increase an average of 21 percent per budget biennium from 1960 until his inauguration. He has been successful in keeping the state budget in balance throughout his tenure while keeping the pledge he made to constituents never to raise their taxes.
One tool at his disposal to check the growth of government is known as unallotment – an authority unique to Minnesota that allows the governor to make unilateral spending cuts even after a budget is passed and signed into law. Pawlenty has used his unallotment authority multiple times during his governorship, most notably last summer, when he cut $2.7 billion in spending to reflect the reality of the economic downturn. Where Democrats in the legislature sought to raise taxes to eliminate the shortfall, Gov. Pawlenty correctly observed that spending, not revenue, was the problem plaguing Minnesota’s state budget.
A recent Minnesota Supreme Court decision threatens to reverse many of last year’s unallotments. Employing a healthy dose of judicial activism, the Court ruled 4-to-3 that Pawlenty exceeded his authority in cutting some $5 million from a state diet program, potentially opening the door to a flood of lawsuits seeking to restore unallotted funding. As a result, the state budget deficit ballooned from some $500 million to roughly $3 billion.
Gov. Pawlenty reaffirmed his aversion to higher taxes in an already oppressively overtaxed state when the Democrat-controlled legislature promptly passed a budget with a $400 million income tax increase. The governor happily vetoed.
Pawlenty’s argument to Democratic leadership, who argued in favor of the Court’s ruling in an amicus brief, is simple: You got what you asked for. By calling on the Court to reverse last year’s principled unallotments, they have neatly made the case Americans for Tax Reform and others have been making for years: Spending, not revenue, is the driver of budget deficits. Those who expressly advocated for higher spending have promptly and voluntarily increased the state budget hole nearly six-fold.
The overspending problem has become a topic of national conversation with respect to the federal government, but it is even more pressing at the state level. State government frivolity during periods of economic boom have led to full-on crises in the midst of this recession, with appropriators unable to fulfill obligations like lavish public sector wages, benefits, and pensions or automatic increases in education budgets. Exacerbating the problem is the fact that almost every state – including Minnesota – has a constitutional obligation to balance its budget. Unlike the federal government, states cannot print money.
That means one of three options: higher taxes, more borrowing and budget gimmicks, or spending reductions. Governors like David Paterson, Mark Parkinson, Charlie Crist, and Ted Strickland have opted to raise taxes to fund their spending addictions. Blue state governors like Chris Christie and Tim Pawlenty have made the commonsense argument that the last way to promote economic growth is to pass anti-growth tax hikes.
Looking forward to 2012, few potential candidates in the Republican field will have been as battle-tested as Pawlenty. Rather than apologize for principled spending cuts brought on by virtue of economic necessity, he continues to push for structural budgetary reforms such as a constitutional cap on government spending and a 20 percent cut in Minnesota’s sky-high corporate income tax rate.
Pawlenty recently won his showdown with the state legislature on the tax-and-spend issue by securing passage of a budget deal that ratifies most of last year’s unallotments and balances the budget with no tax increases. He has officially solidified his fiscally conservative credentials leading up to a probable 2012 candidacy. And with a president in the White House who has repeatedly violated his “firm pledge” not to raise taxes on families making under $250,000, Pawlenty presents a clear and welcome contrast. He’s promised not to raise taxes and followed through time after time.
Joshua Culling is state affairs manager at Americans for Tax Reform, which fights for lower, flatter and fairer taxes. He coordinates ATR’s advocacy efforts in 17 states.