Minnesota's budget shortfall

DFL leaders call for overhaul of state development agency

by Tim Pugmire, Minnesota Public Radio

DFL legislative leaders are blaming a lack of jobs for the state's staggering projected $5.2 billion budget deficit. They're also pointing fingers at the state agency responsible for job creation, calling for a major overhaul and new leadership. But the state official who runs that agency says he's ready to fight back.

St. Paul, Minn. — The most recent Minnesota employment numbers showed a loss of 7,500 jobs in October, and a seasonally adjusted unemployment rate of 6 percent.

When state finance officials released their latest economic forecast last week, they predicted Minnesota will lose another 58,000 jobs by the end of the current recession.

"We have a significant lack of jobs problem going on in this state," said DFL House Speaker Margaret Anderson Kelliher.

Kelliher has taken note of the numbers and, along with other Democrats, is now stressing a job-creation theme when discussing the state budget deficit.

During a recent MPR interview, Kelliher said it's time to reexamine the state's economic development efforts.

"The loss of jobs over the last few years would tell us we're not doing as well as we could," Kelliher said.

DFL Senate Majority Leader Larry Pogemiller also wants another look at jobs programs. But Pogemiller has already made up his mind about the need for big changes.

"I think it's pretty clear that our economic development strategy that we're on has been a failure, and I think we need a total revamping of that," Pogemiller said. "And frankly, I think we need some new leadership there."

Pogemiller is specifically targeting the Department of Employment and Economic Development and its commissioner, Dan McElroy, a former Republican state representative from Burnsville. McElroy also served as state finance commissioner and chief of staff to Gov. Tim Pawlenty.

The way Pogemiller describes it, Pawlenty has put too many former legislators on the state payroll, and he said the professionalism in state agencies is slipping.

"It's been a very successful jobs program for some -- leave the state Legislature and get a job in the bureaucracy," Pogemiller said. "But I think we have not seen this level of politicization of some of our agencies that have taken place in the last few years, and I think we need to address that."

Lawmakers merged the state's employment, trade and economic developments functions into one agency five years ago.

Commissioner McElroy said a lot of people are working hard in the department to help Minnesota, and he takes exception with the criticism he's heard from Pogemiller.

"They do a lot of wonderful things," McElroy said. "And I'm concerned that comments like this make the people who work here a little nervous about their agency and their jobs. They take great pride in what they do."

McElroy has tangled with DFL legislators before, trying to protect Gov. Pawlenty's signature economic development initiative, known as Job Opportunity Building Zones, or JOBZ.

The program provides tax breaks for business growth in rural Minnesota, but a critical review earlier this year by the Office of the Legislative Auditor questioned the effectiveness of JOBZ and recommended better focus and oversight.

McElroy said improvements were made and JOBZ is creating new jobs. Despite difficult economic times, McElroy said he thinks the state's economic development strategy is working. He said he welcomes a thorough debate with legislators.

"If the debate is about leadership direction, let's have that one, also," McElroy said. "I'm not sure that's a widely held concern. But the debate over what our economic development policy is is one we should always have. This is a democracy."

Gov. Pawlenty says he's also willing to look at the department and the effectiveness of its programs. But the Republican governor is questioning why legislators would target McElroy.

"In a world where we've got major problems, that would be a strange fight to pick," he said.

A Minnesota Senate committee has recommended McElroy's confirmation as commissioner, but the full Senate has yet to take a vote.

Last session, Lt. Gov. Carol Molnau lost her job as transportation commissioner after falling into disfavor with Senate Democrats.

A few years ago the Senate ousted Pawlenty's education commissioner as well. McElroy said he does not believe a similar fate awaits him in the 2009 session.

Broadcast Dates

• All Things Considered, 12/09/2008, 5:20 p.m.