Politics & Policy

A “Taxing” Time For Pawlenty

The Minnesota governor, and presidential hopeful, has a chance to do the right thing.

The worst-kept secret in Minnesota is that Gov. Tim Pawlenty aspires to be the next president of the United States. Although he faces a 2006 reelection campaign before he can run for the Oval Office, if all goes as planned, Pawlenty will be a formidable contender in 2008.

Before he starts shoring up out-of-state support, however, the governor has some important business at home. In fact, the biggest obstacle to Pawlenty’s presidential aspirations may be the ongoing special session of the Minnesota legislature. Currently, legislators are working to bridge the gap between the Democrat-controlled state senate’s request for roughly $1 billion in new spending ($797 million for K-12 education and about $200 million for health care) and the governor’s proposed budget.

Pawlenty made the first major misstep of his career recently in offering an olive branch to Democrats by proposing a 75 cent-per-pack tax hike on cigarettes that would have hit smokers for $380 million over two years.

Worse, rather than coming clean about his newfound willingness to raise taxes, he insisted on calling it a “health impact fee.”

The governor’s left turn on taxes is quite out of character. Unlike other supposedly conservative tax-hiking Republican governors — Mitch Daniels, Bob Taft, Bob Riley, and Kenny Guinn to name just a few — Pawlenty signed a no-new-taxes pledge and has been a proven leader in previous tax battles. His signature achievement as governor was closing a $4.5 billion budget gap during the 2004-05 cycle, without raising taxes. In a sign of his dedication to taxpayers, he even used his 2004 State of the State speech to call for a constitutional amendment to limit the growth of overall state spending to population growth plus inflation. Prior to this special session, the governor continued his support of taxpayers by vetoing legislation that would have raised the state’s gas tax by 50 percent, from 20 to 30 cents per gallon.

Instead of embracing the governor’s tobacco tax-hike proposal as “proof” of a consensus on tax hikes, Democratic lawmakers allowed Pawlenty’s proposal to land with a thud. The Democratic chair of the state senate’s Health and Human Services Budget Division, Linda Berglin, had the temerity to argue that the governor’s plan was unacceptable because the $380 million in added spending from the tobacco tax hike should have been piled on top of the $1 billion demanded by Democrats.

Clearly, there is no reasoning with the tax-and-spend crowd. So, if Pawlenty stands against higher taxes, he will have restored himself to a firm footing in both current and future tax debates. Plus, he will hopefully have learned a valuable lesson: No amount of taxing and spending is enough for the left, so olive branches are useless.

It is a myth that Minnesota needs higher taxes; indeed, the state’s overall tax burden is already much heavier than the national average. According to data from the Tax Foundation, Minnesota’s state and local combined tax load was 10.7 percent of average income in 2004. That percentage stands at 10th highest nationally, well above the national average of 10.1 percent. Overall, Minnesotans pay $4,409 per capita in state and local taxes.

Despite recent moderate growth in the state, Minnesota’s government has grown rapidly in the last few years. Between fiscal year 2000 and 2005, total spending and transfers have risen by more than 50 percent. Even after accounting for inflation, Minnesota’s government is set to grow by a remarkable 40 percent in just the first six years of this decade.

Disaster may yet be averted in the budget debate, but this is not the only tax-trap facing Pawlenty and Minnesota taxpayers. The Twins and Vikings are looking for taxpayers to build them new stadiums. Although Pawlenty is on record as supporting taxpayer funding for new stadiums, he has also demanded voter approval via referendum. This is the bare minimum that taxpayers should expect and Pawlenty will need to keep legislators’ feet to the fire in coming weeks to ensure that taxpayers are indeed given the final say.

If Gov. Pawlenty makes it past this special session without sticking residents of his state with higher taxes, the road to reelection will look smooth and his presidential aspirations will look plausible. The next few weeks, however, will present him with a challenging obstacle course that taxpayers are hoping he’ll navigate successfully.

Paul J. Gessing is director of government affairs for the National Taxpayers Union.

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