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Pawlenty proposes 9.3 percent budget boost

ST. PAUL Gov. Tim Pawlenty's proposed budget would provide the fourth smallest increase since 1960, but it is one he says is the right size and big enough to give some property tax relief.

ST. PAUL Gov. Tim Pawlenty's proposed budget would provide the fourth smallest increase since 1960, but it is one he says is the right size and big enough to give some property tax relief.

"The budget we are unveiling today likely will be criticized on the left as not enough and on the right as too much," Pawlenty said Monday in announcing a $34.4 billion, two-year budget plan.

The Republican governor was right, to a certain extent. Democrats were strong in their criticism they said they would look over the budget carefully but many conservatives were upset that the budget would increase 9.3 percent. The proposal must be reconciled with yet-to-be-announced budgets from the House and Senate in the main task of the 2007 legislative session.

Pawlenty manages the increased budget without raising taxes, and, in fact, calls for what Democrats call a small step toward property tax relief.

"It would be pretty light in what we really need to do," Rep. Paul Marquart, DFL-Dilworth, said of the property tax plan.

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The good news, the property tax committee chairman said, is that the House and Senate leaders and the governor all would include more Local Government Aid a state payment to cities on their priority lists. All three say that should decrease the amount of property taxes cities need, thus cutting the tax. Pawlenty suggests increasing the local aid $20 million on his budget.

"How much is going to be the debate," Marquart said.

Smaller budget

The 9.3 percent Pawlenty budget plan increase compares with a 12 percent increase put into the current budget, which ends June 30, and a 5.6 percent increase in the 2004-05 budget. But is smaller than most other budgets in recent years which generally have been between 10 and 20 percent since 1980 and were in the 20 percent and 30 percent range in the 20 years before that.

The state controls how the $34.4 billion general fund is spent. However, when federal and other funds out of state control are included, the budget balloons to $55 billion for the two years beginning July 1.

Education gets the biggest increase in the Pawlenty plan $714 million for K-12 and $414 million for higher education. Health care reform would receive $274 million more in the next two years.

For many, the biggest disappointment in the Pawlenty budget was what they saw as lack transportation spending.

"There are ways that we can pay for this stuff that is not going to break the taxpayer," said Senate Transportation Chairman Steve Murphy, DFL-Red Wing.

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Murphy has a bill to increase the gasoline tax a dime a gallon, but he does not expect that big an increase to pass.

"We will build a bill around the majority of the people in the Senate and the House," Murphy said, suggesting a 5-cent-a-gallon increase may be palatable.

Borrowing moneyThe governor suggests borrowing $1.7 billion over the next decade, plus putting $67 million more into transportation from a motor vehicle leasing tax that now goes into the state's general fund.

Experts say state and local roads need nearly $2 billion a year to remain in the same shape as today.

Murphy said borrowing the money is not the answer.

"We are pushing massive amounts of debt into the future," Murphy said.

Pawlenty emphasized that in many areas, but mostly education, he expects increased performance before the state spends money. He pointed to items he already has proposed, such as giving high schools more money if they develop more relevant and rigorous curriculum.

Pawlenty complained that $1 billion of the budget is "on autopilot" and cannot be controlled. Much of that goes to the state's poor.

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Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, borrowed Pawlenty's term and said that property taxes, college tuition and fees that have risen under Pawlenty also are on autopilot and need to be stopped.

However, Pawlenty said he thinks fee increases in his new budget of $47 million "are at or near a historic low."

Finance Commissioner Tom Hanson, a Mahnomen native, said money going to research renewable energy is a vital part of the budget.

"It takes us a long ways in the production of energy," Hanson said.

Tax reliefThe budget would spend 12 percent of its new funds on property tax relief.

Overall, tax cuts would be $227 million, with $150 of that in property tax aid. Part of his proposal would limit how much property taxes could rise in 87 cities that receive more than a third of their budget from the state. That drew howls of protest, especially from rural Minnesota where many cities depend on the state's Local Government Aid.

"It is anti-rural," said John Sundvor of the Coalition of Greater Minnesota Cities.

Pawlenty-appointed Revenue Commissioner Ward Einess said that across the state the governor's proposals would chop in half property tax increases for homeowners, from the expected 6.3 percent to 3.2 percent. That relief should be especially large in rural areas, Einess said, because most homes there are lower value than in the Twin Cities. Low-value homes' property taxes had been expected to increase 7 percent, but under the Pawlenty plan, the increase would be 2.6 percent, Einess said.

The commissioner said the smaller tax hikes were based on the assumption that every dollar in increased Local Government Aid would translate into a dollar lower taxes.

Pawlenty would increase Local Government Aid $10 million annually, up property tax refunds $8.5 million and pay $40 million to help reduce school levies.

Davis works for Forum Communications Co., which owns the Grand Forks Herald. Forum Communications reporter Mike Longaecker contributed to this story.

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