~ Governor says forecasted spending “irrational;” renews call for Spending Accountability Amendment ~

Saint Paul – With a projected $399 million balance at the end of the current two-year budget cycle, Governor Pawlenty will conclude his term with a budget surplus.

“Our plan to control government spending, stop tax increases and support private sector economic development has worked,” Governor Pawlenty said. “Every budget during my time in office has been balanced, we leave with money in the bank and one of the lowest unemployment rates in the nation. If government lives within its means, the next budget is manageable.”

The Governor pointed to several key indicators that show Minnesota is on the right track.

• Minnesota is the 7th best state in the nation for holding the line on General Fund spending since 2003, limiting the average annual increase to less than 1 percent.
• Minnesota employers have added jobs at triple the pace of the U.S. rate in the past year, leading the national rate of growth in eight of 11 industry sectors.
• Minnesota has the 12th lowest unemployment rate in the country, and 2.5 percent below the nation’s unemployment rate.
• Minnesota is out of the top ten states in taxes, a goal unachieved by other governors.
• State government FTEs have remained flat since 2003.
• Minnesota’s wage growth rate for 2010 is 3.5 percent, better than twice the national average of 1.4 percent.
• Minnesota has maintained a top bond rating.

“Before I took office, state spending was averaging double-digit increases every two years since 1960. For the first time in modern history, we actually cut spending in the current budget and slowed it dramatically in previous budgets,” Governor Pawlenty said.

The Governor said the projected future budget deficit can be eliminated if state government simply limits its spending increases to no more than 5 percent over the next two years.

“That’s not too much to ask when families and businesses are tightening their belts and living with little or no increase,” Governor Pawlenty said.

Governor Pawlenty also noted that a substantial portion of the projected deficit could be erased by making his unallotments permanent and by declining participation in Obamacare. Governor Pawlenty requested that the DFL-controlled legislature enact these changes permanently and they refused.

The Governor also called for reforming Minnesota’s budget process to shut off automatic spending increases.

“State government spending on autopilot is ridiculous and irrational. It is out of control and needs to be fixed,” Governor Pawlenty said. “With revenues projected to increase 5 percent, it is absurd that state government is on track for a whopping 27 percent jump in spending. That’s why the next governor and legislature should reform this broken process by passing my Spending Accountability Amendment so Minnesotans will never face this problem again.”

Spending Accountability Amendment

In order to limit state government spending, ensure balanced budgets, and force lawmakers to prioritize limited resources, Governor Tim Pawlenty 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 in an upcoming general election.

The proposed constitutional amendment question 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.

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.