Comparing his duty to “walking a tightrope,” Gov. Tim Pawlenty announced his budget plan for the next two years – with $254 million less for higher education than last year.
Focusing on key budget goals – including not raising taxes, streamlining government spending and building the state’s reserves – Pawlenty said state spending has actually increased.
“The budget that we are proposing today is the largest budget in the history of the state of Minnesota,” Pawlenty said. “Ö Certain programs are growing so rapidly that other programs have to be pruned and trimmed and cut.”
One of those programs is higher education.
Despite two consecutive years of tuition increases at the University, Pawlenty downplayed budget cuts – estimated by University President Robert Bruininks at $185 million – focusing on the $60 million increase in the state grant program.
“We want to try to shield lower-income students, provide access and increase competition,” Pawlenty said.
Pawlenty also included a 15 percent “absolute ceiling” on tuition increases at schools in the Minnesota State Colleges and Universities system, encouraging the same at the University.
Sen. Sandra Pappas, DFL-St. Paul, and chairwoman of the Higher Education Budget Division, said she was “deeply concerned” by the governor’s cuts.
“Now is not the time to retreat from our commitment to higher education in this state,” Pappas said.
She said although the tuition caps Pawlenty proposed are good for students, program quality could diminish if the University cannot find money elsewhere.
Sen. Richard Cohen, DFL-St. Paul, and chairman of the Senate Finance Committee, shared Pappas’ concerns.
“If you take that money away from the institution, that makes it a lower-quality institution,” he said.
Pappas said she is also concerned about the impact of financial aid increases on middle-income students.
“Students would graduate with a huge debt, which would impede their ability to contribute to the economy,” she said.
Rep. Doug Stang, R-Cold Spring, chairman of the House Higher Education Finance Committee, said the numbers came as no surprise.
“The cuts are significant,” Stang said. “It’ll be a tremendous challenge for the University and for MnSCU Ö to see how we scale down these programs.”
Stang said the committee would likely follow the governor’s proposal despite “some differences on the overall numbers.”
Students, however, will not suffer exclusively; if Pawlenty is given his way, public employees will also see a two-year wage freeze.
“The fact of the matter is, we are in a time of crisis,” Pawlenty said. “We believe that this is appropriate to the times.”
Rep. Jim Knoblach, R-St. Cloud, chairman of the House Ways and Means committee, said there is support for the freeze in the Legislature.
“The Senate Republicans came out in favor of the freeze,” Knoblach said.
Pawlenty said a wage freeze would help prevent layoffs is in line with private sector wages and would help agencies control costs.
“It would give them the tools they need to contain costs, because they do not seem to be able to do that on their own,” Pawlenty said.
Prioritizing
Although K-12 education would receive less money than last year in the proposal, Pawlenty said the quality of public education would not suffer.
“He’s been very clear that protecting K-12 education is one of his priorities, and I think he’s done that,” Knoblach said.
In the proposal, per-pupil funding would increase 3.5 percent in the next two years, which Pawlenty said would be devoted to classroom expenses.
Other programs were not at the top of the spending list, such as health care.
“There is a public policy sumo wrestler in the room, and we have to tackle that down and that is health care,” Pawlenty said.
Pawlenty pointed out that Health and Human Services Department costs are forecasted to increase 20 percent. Cutting funding by nearly 33 percent, his solution included consolidating general care with MinnesotaCare, as well as changing the standards for who qualifies for state health care.
Other agencies – including those regulating gambling, amateur sports, campaign finance and racing – will switch to entirely fee-based systems, receiving no general fund appropriations.
Future planning
Building a $500 million budget reserve into his plan, Pawlenty also focused on cushioning future economic dips.
“We need to have proper reserves so that we can manage crises in the coming years,” Pawlenty said.
Finance Commissioner Dan McElroy added that the reserve was not meant for use by the Legislature.
“This is not money we’ve left for people to spend, this is money we’ve left behind for crises and to keep our bond rating,” McElroy said.
Despite the grim outlook, Pawlenty stood behind his pledge not to raise taxes, challenging legislators to streamline spending.
“We have a silver lining and that is the opportunity for change and reform,” Pawlenty said.
He criticized the Legislature’s high spending, which he said contributed to the current deficit.
“What is abominable are the spending commitments we made in the late 1990s,” Pawlenty said.
Cohen was not impressed by the extent of Pawlenty’s cuts.
“I am very surprised to the extent to which he budgets with accounting gimmicks and the use of one-time funds,” he said. “It’s clear that when it came to it, he didn’t make cuts.”
Pawlenty said legislators must work to meet the budget challenges, regardless of what they think about his proposal.
“They’re going to go around in their cars and hold hearings in towns that are affected by this, and talk about how horrible it is,” Pawlenty said. “But in the end they need to get their programs.”
Pawlenty was also confident of legislative support.
“Governors have a tendency to get what they want,” Pawlenty said. “And I expect the same treatment.”
