The no-tax pledge taken by Gov. Tim Pawlenty and many fellow Republicans was probably a foolish promise to make in the face of a $4.56 billion deficit.
While Minnesota certainly can't tax its way out of its current economic disaster, a legitimate case can be made that certain taxes should be raised. The state's gas tax, which hasn't been raised since 1988, immediately comes to mind. This tax is akin to the user fees charged for hunting licenses and other services the state provides. We're not sure how the no-new-tax pledge signers feel about raising revenue from those sources but we would hope they would consider it, where appropriate.
The gas tax proceeds go directly to building and maintaining roads and bridges so that products reach their markets quickly and efficiently and travelers can reach their destinations safely. It's an important tool in refurbishing the state's woefully neglected transportation infrastructure. Even many of Minnesota's most vocal business lobbyists, no fans of state taxes, favor a hike in the gasoline tax.
But Pawlenty and many of his Republican colleagues were elected to office on a no-tax pledge and they're committed to balance the state budget without additional taxes. Because of that pledge and because Republicans control the House and the governor's post, any political realist would have to conclude that the only budget package that will emerge from the Legislature and signed by the governor is one with no new taxes.
Since that's the case, it's clear that there's no way to balance the state budget without adopting the Senate Republicans' plan to freeze the wages of public sector employees. It's an ambitious proposal and while Republicans say it will save $1 billion to $1.5 billion over two years, it will no doubt raise the hackles of many hardworking public employees. Still, when private businesses are faced with hard times a wage freeze is the first tactic that's applied. The premise behind this practice, that it's better for all involved to have a wage freeze than to have massive layoffs, is hard to argue against.
The enormity of this fiscal problem is such that cutting programs and eliminating waste alone will not solve the deficit. And we're not alone. Pay freezes for government employees are under discussion in Iowa. Idaho has already imposed one. Layoffs are expected in Wisconsin and Connecticut while layoffs and salary freezes will be used in Oregon.
The Minnesota Taxpayer Association, formerly headed by Department of Revenue Commissioner Dan Salomone, offered a plan in December that would not only freeze public sector employees' pay for two years but would eliminate employer pension contributions and increase employee health contributions.
Does an employee pay freeze fall disproportionately on the backs of government employees? Yes. But state employee wages, just like the personnel costs in private business, are the dominant cost factor in state government. As bank robber Willie Sutton said about why he robbed banks: "That's where the money is."
A 2000 state legislative auditor report concluded that, with certain exceptions, the average wage of state government workers was higher than that of workers in private industry. That may be a situation we can no longer afford.
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