~ Aligning expenditures with current revenues would limit state government spending ~

Saint Paul – In order to limit state government spending, ensure balanced budgets, and force lawmakers to prioritize limited resources, Governor Tim Pawlenty today proposed an amendment to the Minnesota Constitution that would cap the state general fund budget at the level of revenue actually received during the previous budget period.

Under Governor Pawlenty’s proposal, Minnesotans would vote on the proposed “Spending Accountability Amendment” during the general election on November 2, 2010.

“For 40 years prior to my inauguration as Governor, Minnesota government spending increased by an average of more than 10 percent per year,” Governor Pawlenty said. “During my time in office, we slowed that to just over 2 percent per year, and cut spending for the first time in the history of the state. However, limiting government spending growth should not be a once-in-a-century event. We should let Minnesotans decide if government should live within actual revenues collected instead of predictions. Doing so would force government to live within its means and stop the seemingly unending desire for more programs and more spending that put pressure on taxpayers’ wallets.”

In addition, Governor Pawlenty said Minnesota’s current budget system features spending commitments being enacted into law while revenues to pay for these legally-binding commitments in the future are only estimates.

“Basing legally-binding spending commitments on guesses about revenue is like building a house on shifting sand. It is unwise,” Governor Pawlenty said. “This proposal is a better way to budget.”

The proposed constitutional amendment question on the 2010 ballot would read as follows:

Shall the Minnesota Constitution be amended to require that state government general fund expenditures be limited to the amount of actual general fund revenues received by the state in the previous two-year budget period?

The constitutional amendment language would include a provision allowing for additional expenditures to provide for the public peace, safety, or health in the event of a declared national security or peacetime emergency.

“This is a common sense idea – state government should budget based on the amount of money that has come in, not on some amount of money politicians hope we might have,” Governor Pawlenty said.

Had this amendment been enacted in 1960, general fund spending since then would have been reduced by over $22 billion, or about 7.5% – an average of more than $900 million per state budget period.

Under Governor Pawlenty’s proposal, revenues collected above the budgeted amount would be set aside and could only be used for one-time purposes such as increasing the state’s budget reserves, tax rebates, or one-time capital expenditures. The Governor is proposing to first build budget reserves to 5% of biennial general fund spending, as recommended by the state’s Council of Economic Advisors.

                                                   Click here to listen to the Governor's Press Conference