Thursday, January 15, 2009

State of the State. I don't think one would have had to watch, listen to, or read Governor Pawlenty's State of the State address to know the state of the state. It's bad.

In today's "dog bites man" story, it was revealed that Minnesota is looking at some major challenges. State government is sitting with a revenue shortfall of just over $5 billion that will likely get worse as job losses continue to mount. With Baby Boomers poised to retire, stress on a number of state services will also rise, hitting the budget crisis from the expenditure end. The phrase "perfect storm" has become more than a bit cliched, but it's hard to describe our current predicament in any other way.

I have to give the Governor credit. He's an upbeat guy and it sounds as though he is willing to tackle this crisis with a smile on his face and a song (hopefully not a funeral dirge) in his heart. He also put forward an olive branch to the DFL-controlled Legislature and urged bi-partisanship as steps are taken to correct the state's budget woes. Of course (not trying to sound like a cynic), bi-partisanship is a lot easier to talk about in the second week of January than it is in the third week of May, but the feeling I get during the first two weeks of the session is that there is a tone that may lend itself to avoiding the type of partisan breakdowns that plagued the last two sessions. It's a simple fact that the budget rock is so big this year that no one arm of the decision-making process can successfully get it up the hill. To try would be to be flattened by the rock as it rolls backward.

The problem will be to come to agreement on how to solve the budget crisis and the Governor laid out some proposals today that may make agreement difficult. First, the Governor's economic stimulus package--the Minnesota Job Recovery Act--contains several tax cuts that have arched more than a few legislative eyebrows. The most prominent of these proposed tax cuts is a phase-down of the Minnesota corporate income tax rate from 9.8% to 4.8% over the next six years. There has been a long-standing debate over the efficacy of corporate income tax rates (which I will probably cover in a future blog entry), but this move would likely take revenue off the bottom line in the next fiscal year or two. The Governor's other suggested tax cuts are a $50 million tax credit for small businesses, a 25% refundable tax credit for small business owners who re-invest quickly in their businesses, a capital gains exception for investors in eligible Minnesota companies, and a 100% exemption from the sales tax on business equipment purchases as opposed to a six-year deprecation schedule.

I'm not going to say that tax cuts won't (or will) help the current situation, but state government does not have the latitude that the federal government has in addressing economic challenges. The state budget has to be balanced every year while the federal government can run a deficit (don't we know that!) . The Governor's proposed changes may help the long-term economic health of the state, but the short-term effects may simply add another stream of red ink to a lake of it that has spilled over its shores. It's going to be an interesting debate.

The Governor also made some recommendations regarding K-12 education, including putting more money into the system. The Governor made five points regarding education and education funding. They are:

  1. More exhaustive teacher preparation programs with minimum standards for teachers.

  2. Implementation of QComp in all districts.

  3. Revenue to districts with high test scores and/or test score growth

  4. Binding arbitration for district/teacher negotiating impasses.

  5. Implementation of a comprehensive shared services purchasing program (SF 10)

In addition, the Governor called for a pay freeze for all units of government that accept state money, including schools.

There was a bit of a miracle today in New York City when a plane, under duress, landed in the Hudson River. The biggest surprise is that there were no casualties (at least at this writing). To accomplish this, it took a set of pilots and passengers who were cool under pressure and worked together to avoid tragedy. Everyone who knows me know that I can't help but belaboring an obvious analogy, but when I heard about that plane crash, I couldn't help but think of the similarities between that plane and the Minnesota ship of state. Like that plane, we as Minnesotans need to land our state safely and to do that, we--and I mean all of us as providers and consumers of services and as taxpayers, along with state government--have to remain cool under this pressure, use our creativity, and put ourselves down safely. Big challenge.

(Photo credit: Julie Pukelis & CNN)

Link for 2009 State of the State Address:

MSBA Convention. I got to spend most of the afternoon at the MSBA convention and it was great to see so many of you there. It looks like MSBA has done another great job of putting together a conference full of valuable and interesting speakers and pull-out sessions.

One of the highlights of MSBA's January conference is that awards are given to board members and school boards for outstanding performance and completion of board training classes. It was great to see so many SEE-member districts featured in the awards section of the program. The following is a summary of those in SEE districts who were recognized:

2009 All-State School Board: Cary Linder, Dassel-Cokato; Elizabeth Lawson, Stewartville.

District Award of Distinction: Faribault

MSBA Service Awards--30 Years: Robert Shuey, Pine City.

MSBA Service Awards--20 Years: Donna Setter, North Branch; Jackie Magnuson, Rosemount-Apple Valley-Eagan.

Advanced Board Academy Graduates: Clark Johnson, Cambridge-Isanti; Sue Nelson, Faribault; Richard Olson, Faribault; Kirby Ekstrom, North Branch; Deb Henton, North Brach; Kim Salo, North Branch; Karen Saltis; North Branch; Katy Botz, Pine River-Backus; Dawn Rubner, Pine River-Backus.

2008-2009 Ambassadors: Dr. Teri Wallace, Owatonna.

President Awards: Sue Nelson, Faribault; Jack Nelson, Hinckley-Finlayson; Kay Snuggerud, LaCrescent-Hokah; Steve Odegard, Pine City; Jim Fisher, Pine Island.

Director Awards: Deb Davis, Faribault; John Lorenz, Faribault; Deb Pauley, Jordan; Chester Hoernemann, Lester Prairie; Kirby Ekstrom, North Branch; Katy Botz, Pine River-Backus; Nadine Schnettler, ROCORI

Leadership Development Certificates: Anthony Cuda, Braham; Daniel Klemz, Braham; Craig Hammond, Braham; Pat Dougherty, Cannon Falls; Suzanne Berger, Faribault; Michael McGraw, Hutchinson; Ed Trager, Maple Lake; Karen Steinbrecker, Ogilvie; Rebecca Schumann, Pine Island; Nadine Schnettler, ROCORI; Lisa DeMuth, ROCORI; Ellen Ayers, South Washington County; Bettie Lechtenberg, Stewartville; Scott Papke, Stillwater; George Hoeppner, Stillwater; Natalie Fleischman, Stillwater.

Congratulations to all of you!

Bill Introductions.


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