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We'll get through this, governor says

Governor Tim Pawlenty said there are challenges ahead for state government but expressed confidence the state will balance its budget and put Minnesota on sound financial footing.

"This is a tough challenge for all of us, but we can do this," Pawlenty said Monday at a Dakota County Regional Chambers of Commerce lunch at the Farmington Eagles Club.

The Governor addressed the state's $5 billion budget deficit and the steps state government is taking to address it. He also took questions, including one from Farmington mayor Todd Larson, who asked about the state's decision to cut Market Value Homestead Credit aid to cities including Farmington. Locally that means a $350,000 hit to the budget after the city had set its tax levy for 2009. That cut has forced the city to make cuts including reduced summer hours at city hall and wage cuts for many employees. The city may also have to eliminate some positions.

"We have to figure out what services to cut. We have to either cut employees ... or raise property taxes," Larson told the governor.

Pawlenty said the MVHC cut was necessary because the state had cut local government aid to some Minnesota cities. The timing was a result of different budgeting schedules from city to state.

"On a going forward basis you might be able to better plan for it," Pawlenty said.

Pawlenty spoke about the need to make Minnesota a state where businesses want to locate. If Minnesota were a country, he said, it would have the third highest business tax rate in the world.

He also talked about improving the performance of the state's school. That includes tying education funding to results in the classroom.

"We need to align the money we spend with the results we expect," he said.

Ultimately, Pawlenty said he is confident the state can get its financial house in order.

"This is a tough challenge for all of us, but we can do this," he said.