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Tim Pawlenty's Budget Busting Legacy

He's running for president. His state's running on empty.

| Thu Jun. 30, 2011 5:00 AM EDT

On Friday, barring a last-minute deal between Democratic Gov. Mark Dayton and GOP lawmakers, the Minnesota state government will officially go into shutdown mode. Portions of interstate highways will close. So will state parks, rest areas, DMVs, and the Minnesota Zoo (the animals will still be fed, per a judge's order).

The immediate source of the impasse centers on how to close the state's $6.2 billion budget deficit—the fourth largest in the nation, as a percentage of the overall budget. In many ways, it's a microcosm of the larger debate that's playing out in Washington, DC, with a wrinkle: The man who helped put the state into this mess is now running for president.

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Although Tim Pawlenty talks a lot about fiscal responsibility, critics in Minnesota—including Arne Carlson, another former two-term Republican governor there—are framing the looming shutdown as the ultimate legacy of his governorship, which drew to a close in January. They accuse his administration of fuzzy accounting that gave the illusion of austerity while setting the state up for disaster.

Pawlenty, who has promised to deliver China-like annual GDP growth of 5 percent if elected, has made his fiscal record in St. Paul the foundation of his campaign. "I've got experience in Minnesota as governor, in tackling spending, I've balanced budgets," he said on the Today Show last month. "When it comes to getting this federal government spending and deficit and debt under control, I've got a record of actually doing that." And he did it all, he likes to note, without once raising taxes.

But there is a catch: Although he did make plenty of "tough" (his adjective of choice) reductions in spending—cutting funding to public services like health care, for instance—he also adopted many of the same practices he accuses President Obama of using, like deferring the costs for spending projects onto future taxpayers.

Pawlenty turned in balanced budgets, Carlson explains, but only superficially. When he wasn't skirting his pledge not to raise taxes by using linguistic jujitsu—turning a sales tax increase on cigarettes into a "health impact fee," for instance—Pawlenty was simply redistributing the burden, from St. Paul to local authorities, or to the taxpayers themselves. According to Carlson, property taxes increased by $716 million in the eight years before Pawlenty took office; over his eight years as governor, they jumped by $2.5 billion. As Minneapolis Mayor R.T. Rybak, a Democrat, noted in April: "If the tea party really knew how much Tim Pawlenty raised taxes in Minnesota, they would throw him in Boston Harbor."

Those stealth tax hikes were buttressed by accounting gimmicks. In some cases, payments would be pushed back a few days until after the start of a new fiscal year, creating the false impression that the deficit had in fact been erased. In other cases, he stole from Peter to pay St. Paul. Pawlenty raided the coffers of select state agencies in order to provide a short-term patch for others—a strategy the Minnesota Taxpayers Association has called "budgetary duct tape." Pawlenty took $1 billion from a settlement with tobacco companies that had been earmarked for health care services and used it for the general budget. He borrowed another $1.4 billion from the state's K-12 education fund. And he quietly accepted $2.3 billion in stimulus funds while publicly lambasting the American Recovery and Reinvestment Act.

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