~ Governor outlines plan to use executive action to balance budget, says his preference is to sign into law a negotiated budget agreement ~

Saint Paul – At the State Capitol this afternoon, Governor Tim Pawlenty said, “Politics as usual around this place is over. The people of Minnesota expect and deserve timely and decisive action. I will not let the legislature’s work spill over into a special session. We are not going to waste taxpayer money with a costly overtime or have a state government shutdown, especially in this economy. My preference would be for DFL legislators to work with me on a reasonable budget solution, but if they can’t get that done I will take executive action to balance the budget.”

“A key principle is that the DFL-controlled legislature shouldn’t spend more money than the state has available,” Governor Pawlenty said. “Unfortunately, they have done just that and now I’ll fix it.”

Over the past week, DFL majorities in the Minnesota House and Senate passed budget bills that leave a $3 billion shortfall between spending and revenues.

Governor Pawlenty announced today that he would use line-item vetoes during the upcoming period and his unallotment authority in July 2009 to bring the state budget into balance.

“Passing a balanced budget is the legislature’s most fundamental job. Unfortunately, so far this year the DFL majority has failed to get the job done,” Governor Pawlenty said. “In January, I outlined a balanced budget that prioritized important areas like public safety, military and veterans, and K-12 education. Now we’re in the final days of this legislative session and it’s time to let the people of Minnesota know that this will be resolved. It should get done on time and I’m saying it will get done on time.

“If the DFL cannot balance this budget without reaching into Minnesotans’ pockets and increasing our already uncompetitive taxes in ways that will kill job growth, I’m prepared to make the tough decisions they’ve avoided and take action to balance the budget.”

The Governor said final decisions have not been made regarding possible impacts to state programs, but areas could include government-subsidized health care programs, welfare, and other social services; K-12 and higher education; and local government aid. In addition, state employee layoffs could be used to save additional funds. In Wisconsin, Gov. Jim Doyle has said approximately 1,100 state employees could be laid off as part of their budget cutting measures, along with 16 furlough days over the next two years.

A compromise offer from Governor Pawlenty to DFL legislative leaders earlier this week incorporated a House DFL position (a larger K-12 education shift than proposed by the Governor), a Senate DFL position (no funds included for the budget reserve, the Governor proposed $250 million for the budget reserve) and a reduction in a proposal that the DFL indicated they didn’t support (agreeing to use only half of the tobacco appropriation bond funds). Even though the Governor was willing to move in their direction in all three areas, DFL leaders rejected the offer.

Governor Pawlenty has also compromised during this legislative session by showing a willingness to work with DFL legislators regarding their proposed fee increases for the courts system, their lower levels of funding for K-12 education and their lack of interest in the Governor’s proposals to reduce business taxes to grow jobs and spur investment.

The Governor stated that he is unwilling to raise taxes on Minnesotans, especially as the state looks to grow jobs and recover from the economic recession. DFL legislators have proposed numerous tax increases this session, including:

 New top income tax rate of 9 percent, which would be fourth-highest in the nation
 New top income tax rate of 9.25 percent
 Across-the-board income tax increases
 New sales tax on Internet downloads, including music
 Elimination of the local property tax cap, enacted just last year
 Higher taxes on beer, wine and alcohol
 Higher taxes on cigarettes
 Allowing counties to increase the sales tax by 0.5 percent
 Eliminating home mortgage interest deduction
 Eliminating deduction when a person donates an organ
 Eliminating elderly or disabled income subtraction
 Eliminating child and dependent care credit
 Eliminating exemption for Minnesota state and municipal bonds interest income
 Eliminating long-term care credit

“I’m willing to work with the DFL on a reasonable plan, but I’m not willing to let them squeeze more money out of taxpayers and further burden job creators and employers in the midst of the toughest economy in more than 60 years,” Governor Pawlenty said. “One way or another, we will get the budget situation resolved, keeping taxpayers and families first in our minds.”