When Gov. Tim Pawlenty gives his State of the State address to the Legislature today, he is expected to offer up a fiscally Spartan vision that centers on major reductions in state spending and lower corporate tax rates to spur job growth, according to sources familiar with briefings Pawlenty has given.
Details won't emerge until Pawlenty releases his budget proposal later this month, but the spending cuts are expected to include massive reductions in health and human services, while preserving K-12 school funding.
As an additional spur to business growth, Pawlenty will propose a 100 percent up-front sales tax exemption for some business purchases and other tax changes, sources said.
But the centerpiece will be a significantly shrunken state government, already hobbled by a nearly $5 billion deficit that is expected to climb in coming months.
"He'll jolt us into reality," said House Minority Leader Marty Seifert, R-Marshall. Seifert said that while he did not know definitively what Pawlenty would propose, "I've met three times with him in the last week and I know he wants his message to be about spending cuts and growing jobs."
What is not in the mix, apparently, is any kind of tax revenue increase. That will set Pawlenty in direct conflict with a DFL-controlled Legislature.
House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, has said that while DFLers are aware of the need for spending cuts, the state's economic condition is too grave to rule out a combination of cuts and some tax increases. The demand on state services, from unemployment funds to health care, all typically rise as the economy worsens.
But Pawlenty has said that tax increases would cripple the state's ability to compete for what little business activity is out there, and that in addition to state government doing more with less, it would simply have to do less, despite the need.