Pawlenty's 'no new taxes' has hurt Minnesota When Gov. Tim Pawlenty announced he was not running for a third
term, he also claimed that he’d made a positive difference in Minnesota
by bringing more competitiveness to the state through keeping it out of
the “top 10” in taxes.While
Pawlenty can be a very personable politician, I couldn’t help but
wonder if Minnesota is truly better off because of his administration. It
is true that the size and scope of Minnesota’s government is smaller
now than it was in the 1990s. According to Minnesota Management and
Budget Department, that is mainly due to the income tax reductions at
the end of that decade which benefited mostly high income earners. This
was followed by the governor’s “no new taxes” approach to balancing
budgets. So in 2006, as a percentage of personal income, Minnesota’s
state and local government expenditures did drop in rank to 30th in the
nation. How we compare Did
our smaller government bring more competitiveness to Minnesota compared
to the rest of the nation? Did our rank in employment growth improve?
How about our rank in median income growth? Did we rank lower in our
unemployment rate? The answers are discouraging. By
2006, Minnesota’s performance declined and deteriorated relative to the
rest of the nation in all of these categories. This is particularly
true for employment growth — even before the “great recession.”
(Minnesota 2020 Research Report: Minnesota’s Slip Toward Mediocrity”) Reducing
taxes has not made us more competitive. Pawlenty tried to sell tax cuts
and small government to Minnesota as a jobs-producing strategy, but the
reality demonstrates it didn’t work. There
are other indications of deterioration in our state. Fair taxation has
gone by the wayside. People earning more than $350,000 pay 3 percent
less in state and local taxes than most of the rest of us. Meanwhile,
Minnesota 2020 reports property taxes for all of us (at least in the
St. Cloud area) have increased 35 percent since 2002 in
inflation-adjusted dollars. Other effects On
top of this, responsible fiscal budgeting and accounting procedures
have been pushed aside. State budget transparency has been minimized by
accounting for inflation in estimating revenue but not in expenditures.
State debt has been “hidden” by pushing it to lower governmental units
like school districts through “accounting shifts” — which cost school
districts like St. Cloud hundreds of thousands of dollars.
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