House Speaker Margaret Anderson Kelliher (and late in the broadcast, Sen. Larry Pogemiller) joined MPR's Midday program this afternoon to answer questions about the DFL budget proposal unveiled today.
Q: How serious is the budget problem?
A: (Kelliher) As serious as I've ever seen it. If one of the other people affected by unallotment decided to sue for their money, we would not be able to pay that bill. Because the budget is unbalanced, it's difficult -- if not impossible -- to do any borrowing. This is a crisis situation.
This plan more than meets the governor, but it doesn't shortchange kids or people in nursing homes.
Q: Doesn't it set up the same dynamic that we've seen over the last few years. The DFL leaders are proposing a tax increase. The governor threatens a veto, and there you all sit?:
A: (Kelliher)The governor created this financial straitjacket. He's been raising property taxes. Those who've been doing well in this economy -- they're earning over $200,000 a year after deductions. It (the tax increase) is pretty reasonable to most people.
The governor by this delay is borrowing from school districts to float the state.
Q: You say Gov. Pawlenty has raised property taxes. Shouldn't local governments reduce spending rather than scream entitlement to state funding?
A: (Kelliher)A lot of what we ask counties to do is fulfillment of work we do at the Legislature. Cities and counties don't get to say "we're not going to do that anymore." We've had a lot of reductions to local government aid that holds down property taxes.
Q: Why not just adopt the unallotments the governor proposed and next year they'll be a a new governor and another Legislature?
A: (Kelliher) The problem is the budget wouldn't be balanced. It's kicking it down the road. You might have another $300 to $400 million to balance in January.
(Pogemiller) Even if we adopted all of the governor's recommendation -- which we're proposing doing by and large -- you're still short of solving the problem. The level of cuts we're adopting are almost equal to the governor's. The level of borrowing he's willing to undertake, we're willing to do that. And we're still $400 million short of solving the problem. You could adopt the entire proposal from the governor, it doesn't balance the budget.
Q: Why does the Legislature continue passing bills that will certainly be vetoed?
A: (Kelliher) We'd love for the governor come to the table and negotiate in good faith, but his answer is always "my way or the highway." The court said, "get in a room, work together, and get this done." We don't have enough votes for an override on our own, but if three Republicans want to come over to make sure we keep our kids learning and not losing money, then we would be interested in that. Last Friday, we voted on the governor's proposal and it had bipartisan opposition. The Republican leadership in both the House and Senate did not vote for it.
(Pogemiller) I understand people's frustration; that has to do with the messaging. There is no solution that is politically viable in which this problem is solved just with budget cuts. I'm concerned that this level of borrowing that's going on is very dangerous for the long-term fiscals of education. The property tax implications for this situation are very severe.
Q: Why not?
A: (Kelliher)When the rubber meets the road, the governor has made bad decisions and they know it, too.
Q: Why did you settle on an income tax increase rather than other proposals -- broadening the sales tax, for example?
A: (Kelliher) It's the most fair for most Minnesotans to understand. If Minnesotans want us to do more tax reform, it's going to take more time and a different governor.
Q: Why are we always looking to the wealthy to fund everything?
A:(Kelliher) Everyone is paying here. They're paying through property taxes. The cuts that have happened -- over $2 billion just this year -- will affect Minnesotans and it's a form of taxation when they don't get a good K-12 education or good services for their disabled child. The higher income Minnesotans have not been paying their fair share.
Q: If you've been spending our money wisely, how can you come up with $2 billion in cuts in the blink of an eye.
A:(Kelliher) We have seen a major fall-off in the revenue coming into the state. We are in the process of a continual restructuring of the services we are delivering.
Q: Don't we have a 'rainy day' fund?
A: (Kelliher) We still have the rainy day fund, it just has nothing in it. We've used that money already and the economy has not improved enough to pay into it.
Q: Would it be easier to reach an agreement if the governor wasn't running for president and you weren't running for governor?
A: (Kelliher) It's up to the governor to decide if his presidential ambitions are influencing how he's negotiating. My job is to put what's best for Minnesota above politics.
Q: Is there likely to be a special session or government shutdown.
A: (Kelliher) A government shutdown could happen immediately if someone who was unallotted now demanded to be paid. We have enough time to solve this problem.
Q: How do you get out of this mess?
A: (Kelliher) It'll take three courageous Republicans.
They should have spread tax increases more broadly, like down to the $100K level; or maybe to double the current median income.
No, we need to cute takes to reduce the deficit.
For every additional $1.00 in revenue, the DFL spends $1.20 to buy constituency. We need to reduce revenue as much as possible to reduce the deficit.