ST. PAUL, Minn. -- Staring at a giant deficit, Gov. Tim Pawlenty on Thursday previewed an upcoming Minnesota budget that would slice spending, slash business taxes, tie school dollars to student performance and impose wage freezes on government workers.
The details made their way into Pawlenty's State of the State address in which he described Minnesota's condition as "challenged."
"But overcoming challenges is what Minnesota does best," the Republican governor said. "So let's get at it."
Minnesota faces an estimated $4.8 billion deficit, a problem expected to grow more acute when the next economic forecast is released in early March.
Hours before Pawlenty took the podium in the Minnesota House chamber, state economist Tom Stinson dourly assessed the financial times at a legislative hearing.
"This is a serious recession. It's likely to be the longest recession and deepest recession since World War II," Stinson said. He doubted, though, that it would reach the magnitude of the Great Depression because there are more dual-income families to weather the upheaval.
In his speech, Pawlenty implored legislators to avoid compounding the problems of workaday Minnesotans.
"By our words and actions, let's not add to the confusion and doubt," he stressed. "Let's give Minnesotans confidence. Let's show them that we understand what they face and that we will make the hard choices to lead Minnesota forward."
The speech's distinct focus on the homefront attempts to answer critics, who have accused Pawlenty of caring more about his national standing than Minnesota's struggles. He was a contender for John McCain's vice presidential slot and traveled often in 2008 promoting the GOP ticket.
With a bit of humor, Pawlenty referenced his time in the limelight, comparing it to another 48-year-old Minnesota governor last century who died shortly after his national ambitions were nipped.
"To my good friends in the Legislature, you may not be so lucky," Pawlenty said. "My health is pretty good."
Pawlenty braced constituents for the budget he will release in less than two weeks. He promised "significant reductions" in state spending. He asked lawmakers to order government entities that receive state money to keep wages flat. And he warned public college leaders that he will try to enact a firm cap on tuition increases, which are often a resort when state aid diminishes.
But he pledged to spare some areas from cutbacks.
Pawlenty said he wouldn't shrink eligibility for children on public health insurance even as other social programs are trimmed. He also declared programs for military families and veterans off-limits.
Schools, he suggested, would be in line for more money as long as they meet certain conditions. Pawlenty said he will recommend boosting aid to schools by 2 percent per student in districts showing reasonable growth in achievement.
His most detailed offerings are in the tax area.
Pawlenty said he will propose cutting the business tax rate in half over the next six years -- taking it from 9.8 currently to an eventual 4.8 percent.
"This will take us from having one of the worst business tax rates in the country to having one of the best," he assured. "It will help us keep and attract more jobs."
The second-term governor said he also wants to establish a $50 million pool of tax credits aimed at leveraging $100 million in new investment. He said small businesses would benefit from a proposed 25 percent tax credit for certain investments and he advised freeing companies from paperwork requirements when they seek a total sales tax exemption for large equipment purchases.
As he has in past State of the State speeches, Pawlenty drew on inspirational and innovative people from Minnesota's past. The moral of those tales is that the state persevered through its darkest days -- something Pawlenty said will happen again.
Portraying Minnesotans as gathered around a kitchen table, he said, "There's fear and worry at that table, but there's also hope, and optimism. In our own modest way, Minnesotans have a confidence that we can find a way and make it work. We always have."
(Copyright 2009 by The Associated Press. All Rights Reserved.)
