While state officials balanced the books without tax increases in 2003, when the state last faced a major deficit, that isn’t going to be nearly as easy this time around. Six years ago, the state had a much larger rainy day fund and a $1 billion tobacco settlement, not to mention large surpluses in a whole host of state accounts, all of which were tapped to ease the pain. Even so, the pain was enormous, especially for local units of governments which experienced steep cuts in local government aid.

Unfortunately, the situation today is far worse. The $155 million budget reserve left by legislators and the governor last spring won’t make much of a dent in the huge deficit forecasters now predict. The easy pickings, like the tobacco settlement dollars and other state reserve accounts, are all or mostly gone.

Gov. Tim Pawlenty will undoubtedly seek to solve the state’s budget mess solely on the expenditure side. He’s already dismissed income tax increases on the state’s top earners as a way to solve the budget problem. He’s right that new taxes by themselves won’t solve the problem, but they should be part of the solution. To a large degree, it’s simply a matter of equity. As Pawlenty’s own Revenue Department acknowledges, those at the very top pay the smallest percentage of their income in state and local taxes of any income group in the state. And given that those CEOs and top executives have gobbled up the vast majority of new income in the state in the past several years, asking them to pay an equal share along with the rest of us hardly seems unreasonable. And boosting the top rate from the current 7.85 percent to 9 percent would generate close to half a billion dollars, hardly an insignifcant number.

For years, Republicans like Pawlenty and George W. Bush, have argued that tax cuts for millionaires spur job creation. If that were true, we would be awash in jobs right now, rather than staring into an economic abyss. The fact is, growing income inequality in the US is a major factor behind the worsening economy and Pawlenty’s tax policies have exacerbated those negative effects.

We won’t fix the situation without a fairer tax system. And we certainly won’t help matters by taking a meat axe to the state budget. Indeed, at a time when the federal government is dramatically boosting spending in order to stimulate the economy, it would be counterproductive for St. Paul to impose steep spending cuts that will have the exact opposite effect. The state spends most of its money on wages, either directly or indirectly, so when budgets are slashed, jobs are slashed at the same time. That’s not a recipe for economic recovery. It’s the definition of Hooverism. Pawlenty’s skinflint approach to the public sector has already contributed to anemic job growth in the state even before the worst of the recession took hold.

Fortunately, there is one major budget cut that could be made without impacting jobs. By repealing the 2001 takeover of education funding, state officials could cut the budget gap in half in a single move without eliminating jobs. While the repeal would put a portion of school funding back on the local property tax, most Minnesotans would barely notice the difference. That’s because the tax benefits of the repeal accrued overwhelmingly to the owners of expensive homes. The former Wally Jones residence on Birch Point, for example, saw taxes fall by $5,000, while the average homeowner in Tower or Ely saved barely $40. It was another huge windfall for those at the top.

We’ve had enough of destructive Bush/Pawlenty policies that reward the wealthy at the expense of everyone else. Minnesotans, like the rest of country, voted for a change in direction. It will be up to the Legislature to force a reluctant governor to make the turn.