Wednesday, January 28, 2009

Pawlenty's budget: cuts, increases, shifts and no tax increases

Governor Pawlenty released his 2009-11 budget yesterday. It deals with the projected $4.8 billion deficit by cutting projected spending by $2.4 billion, accounting shifts of $1.3 billion, selling bonds for nearly $1 billion and expecting about $990 million from federal government stimulus bill. The budget actually increases K-12 education spending and doesn't raise taxes.

I'm sure there will be things everyone will disagree with. Cuts in health care coverage will mean 55,000 Minnesotans will be cut from state programs this year and 29,000 next year. University of Minnesota faces cuts of $153 million over the next two years and the other public colleges and universities face $145 million in cuts. Local government aid was cut while the governor proposes cutting the business tax rate for six years.

It proposes a 2.2% cut in the size of the state's budget; the first decline in size since 1986 when it dropped 1.5%

One question I have is does this address the projected $4.6 billion deficit in the next biennium. Or will we start over again in two years.

It's amazing how big government has become and all the things it's involved in. The current debate will force people, implicitly and explicitly to decide what government should and should not be doing - or at least less of.

Overall, his commitment to not raise taxes and getting our financial house in order is critical. Failure to do the latter will make future decisions even more difficult. Will this cause people to not always look to government as the first recourse for assistance? I hope so.

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