Pawlenty proposes legacy which undermines public debate on the budget

This morning, Governor Pawlenty announced a proposed constitutional amendment to limit state spending to the amount of revenues that were brought in the door during the previous two-year budget cycle. This proposal would limit the flexibility of policymakers to respond to changing circumstances and maintain funding for such areas as schools, health care and services that help the unemployed get back to work. And it also reacts to a non-issue in Minnesota – there is no taxpayer revolt or out-of-control spending in our state.

The exact language the Governor proposes: “Shall the Minnesota Constitution be amended to require that state government general fund expenditures be limited to the amount of actual general fund revenues received by the state in the previous two-year budget period?”

Governor Pawlenty immediately made clear that his proposal isn’t the Taxpayer’s Bill of Rights (TABOR), a tax and expenditure limiting proposal that has been circulating around the country. He’s right…it actually appears to be more strict in some ways. Tax and spending amendments like TABOR usually allow government expenditures to increase by some formula (usually inflation and population growth). Governor Pawlenty’s proposal wouldn’t allow any increase in spending until two years after the revenues increase. No increases. We collect $31 billion in FY 2010-11…we can only spend $31 billion in FY 2012-13.

What are the practical implications of his proposed amendment? Right now we are facing at least a $4 billion deficit for FY 2012-13. That assumes the state will be collecting a projected $34 billion in revenues in FY 2012-13. If the Governor’s constitutional amendment were in place, the state would only be allowed to the amount of revenues we collected in FY 2010-11 – about $31 billion. That would add an extra $3 billion to the $4 billion deficit – and suddenly policymakers would be forced to cut $7 billion from the state’s budget. $7 billion in budget cuts. On top of the painful cuts to services for the disabled, higher education, and health care that we saw in 2009. Policymakers would have to leave that extra $3 billion just sitting on the table until the FY 2014-15 biennium. Even if policymakers chose to raise revenues as part of a balanced approach to the budget shortfall, they would not be able to spend it until FY 2014-15.

Bottom line…this is a bad idea. The balance of revenues and expenditures in our state should not be rigidly set by the constitution because the economy, the population and other important aspects of our state are continually changing. Instead, Minnesota’s elected representatives must bear the responsibility of adjusting the balance of revenues and expenditures in response to an informed and public debate. A constitutionally-determined budget limit severely limits that debate and takes away the flexibility of future legislatures or local government officials to carry out their responsibility to react to unexpected circumstances and changing conditions and for the public to participate in the budgeting process. It is interesting the Governor is recommending this course just as he prepares to leave office – he would not have to govern under its arcane restrictions.

Budget expenditure limits aren’t even popular anymore. The Governor says this isn’t TABOR, but it sure is TABOR-like. Colorado was the first to adopt TABOR back in 1992. It has also been the last state (plus, Colorado voters acted to lessen its restrictions in 2005). Tax and spending limit ballot initiatives were just rejected on Tuesday in both Maine (60 percent opposed it) and Washington (55 percent opposed it). So far, serious efforts to pass similar initiatives have failed in 20 states. Growth & Justice just posted a blog on the failure of TABOR.

And its unlikely to be popular with Minnesotans. In fact, Minnesota voters have recently demonstrated that they support tax increases when they are needed – note the recent successes just this week of school referenda.

Although the Governor may be proposing this amendment, in Minnesota, he actually plays no role in amending the state’s constitution. The only path to the ballot is through the legislature. A constitutional amendment must be approved by both bodies of the legislature, just like any other session law. The Governor, however, does not need to sign it and cannot veto it. Once it has been passed by the legislature, it is placed on the ballot during the next general election. In order to succeed, a constitutional amendment must be approved by a majority of those voting in the election (not just a majority of those who vote on the amendment).

We developed materials about tax and spending limit proposals when this issue first came up in Minnesota in 2006 and the Center on Budget and Policy Priorities also has helpful resources.

-Christina Wessel

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About Christina Wessel

Christina served as the Minnesota Budget Project's deputy director until January 2014.
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