Summary of the Minnesota State of the State Address

Republican Gov. Tim Pawlenty sounded familiar themes in his final state of the state address, calling for cuts in business taxes and a cap on state spending.

Pawlenty, who declined to run for a third term, possibly in preparation for a presidential bid, also urged lawmakers to create a special tax-free zone at the St. Paul Ford Motor Co. plant as an incentive to keep the operation open and keep 750 jobs in the city.

He outlined a six-point plan he said would create jobs and make the state friendlier to business. The package includes a 20-percent cut in the corporate tax rate, a 20-percent tax exclusion for small businesses and an exemption from the capital gains tax for certain investors. Minnesota’s business tax climate is the 8th worst in the nation, he said.

He asked lawmakers for a constitutional amendment to require that future spending commitments not exceed revenues currently collected. “We can’t afford all of the spending that’s been promised and expected, even if we return to normal economic growth,” he told the Democratic-controlled legislature Feb 11.

Pawlenty said that from 1960, the year he was born, through 2003, the first year he became governor, state spending increased an average of 21 percent every two years. “That’s outrageous and unsustainable by any measure,” he said.

In a bid to reduce government spending at the local level, he also urged lawmakers to make permanent a cap on property tax set to expire after next year.

He said the budget he would propose in February would protect programs for the military, veterans, core public safety functions and K-12 classrooms, but that “nearly all other areas will be proposed for reduction.”

To balance the budget last year, Pawlenty relied on a controversial and rarely used tactic, called “unallotment,” to make the reductions to an array of programs without calling the legislature back for a special session. “Those unallotments simply cannot be restored at this point,” he said.

He also said he supported giving mayors the accountability and full control of the Minneapolis and St. Paul school districts to bring new leadership to what he called “persistently low achieving schools.”