Legislator calls cuts a temporary fix
Senate Tax Committee Chair Tom Bakk said earlier this week that while Gov. Tim Pawlenty's unallotment cuts may balance the budget they're only a temporary solution. The cuts do nothing to fix the next biennium's ongoing structural deficit of between $4.4 and $4.5 billion, the Cook DFLer and gubernatorial candidate said in Brainerd.
"The problem with a shift is that you can only do it once," he said. "That's just not responsible. We have a fiduciary responsibility to hand off to the next Legislature, the next governor, a balanced budget."
During the last legislative session Bakk suggested reversing the income tax cuts that were adopted in 1999 and 2000, when the economy was going well. The Senate budget plan, he said, called for the addition of a fourth income tax tier for married couples earning more than $250,000. That tax increase, Bakk said, would have affected about 80,000 households out of 2 million tax returns. The Senate plan would have balanced the budget with what roughly amounted to a three-way split with $2.2 billion in tax increases, $2.1 billion in cuts and about $2 billion in federal aid.
Tom Bakk
The tax chair said the Legislature had little appetite for Pawlenty's suggested revenue stream, which would have been generated by borrowing through the sale of state bonds and subsequently paying interest fees.
"I think it's poor policy," Bakk said. "You create bigger budget problems."
He admitted that advocating for a tax increase was no easy sell either.
"There's nothing easy about raising taxes on people," he said.
Pawlenty's use of the unallotment is unprecedented in its size and its timing, according to Bakk. Previous unallotments were done in the second year of a biennium, while this one will go into effect on the first day of the first year of the biennium, Bakk said. The earlier unallotments were about $1.3 billion compared to this year's $1.8 billion, the state senator said. Pawlenty is unilaterally imposing his budget on the state, Bakk said.
"An unallotment has never been used this way," Bakk stated.
Bakk said local units are going through a difficult time now and he predicted property tax increases would result from Pawlenty's cuts. He cited a study showing that counties and cities generally levy back two-thirds of the amount of state cuts.
"There are going to be property tax increases," he said. "It comes out of people's pockets the same way taxes do."
The earlier than planned elimination of General Assistance Medical Care will affect a population that Pawlenty's own Health and Human Services commissioner has termed "the poorest of the poor and the sickest of the sick," Bakk said. He noted that about 70 percent of those served by the program have some sort of mental disability or chemical dependency.
"The majority don't work because they can't," he said.
When state money is cut to programs like GAMC, Bakk said the recipients still seek medical care and the cost is passed on to hospitals.
"They end up raising fees on all customers," he said.
Turning to his bid to be the first Democrat and the first rural Minnesotan elected governor since 1986, Bakk said the most important issue to families is a steady paycheck.
"My main focus is on jobs," he said. "There needs to be more focus on that. It hasn't been a priority for Gov. Pawlenty. For me it's a huge priority."
Economic development is particularly critical in Minnesota's small towns, Bakk said, noting that schools are dependent on young families with children.
"In order to have that you need jobs in your community," he said.
Democratic candidates, in Bakk's view, have done a poor job in reaching out to business. He says that's a stigma he hopes to avoid.
"You can't grow jobs in this economy without a healthy business community," he said.
While Minnesota has seen a population shift from outstate to the Twin Cities Bakk doesn't feel that the message of a rural Minnesotan won't resonate with voters.
"All those people who live in the Twin Cities - they weren't born there," he said.
Even though a state economist predicts unemployment in Minnesota may hit 10 percent by 2010, the former labor representative for the United Brotherhood of Carpenters said most state residents are upbeat about the prospects for recovery.
"People are generally hopeful that something, someone can change things around," he said.
Bakk, who was first elected to the Minnesota Senate in 2002, had previously served four terms in the Minnesota House. He is a past president of the Iron Range Building Trades and a former volunteer firefighter. He earned a bachelor's degree in business administration from the University of Minnesota-Duluth. He and his wife, Laura, have four adult children.
MIKE O'ROURKE may be reached at mike.orourke@brainerddispatch.com or 855-5860.