Al Quie has sympathy - and advice - for Tim Pawlenty, Legislature

Al Quie can be forgiven for feeling a bit of déjà vu these days.The man who served as Minnesota’s 35th governor, from 1979 to 1983, has been watching the state’s escalating budget crisis with a sense that he’s seen it all before.

Because, for all intents and purposes, he has.

It was in June 1980, a year and half into Quie’s single term as governor, that he got the first whiff of a looming financial crisis in the state.

In spite of the nationwide recession, “We seemed to be going along swimmingly until we hit the first evidence that there was going to be a shortfall,” the 86-year-old Quie recalls.

Before that, complacent from Minnesota’s years of prosperity, “We couldn’t imagine that there would be a shortfall. It just didn’t dawn on us.”

But officials from the revenue and finance departments paid the governor a visit in June and warned him that the numbers were showing worrisome signs of a deficit: General-fund receipts for that month were almost $70 million below the amount that had been estimated six months earlier, and more than $90 million below earlier estimates for the end of the fiscal year.

In early July, Quie called a meeting of state agency heads, legislative leaders and the media to report the state’s worsening financial condition. He ordered a revised revenue forecast and told officials in local governments and school districts that a “significant shortfall” in revenues could result in reductions in state aid.

Although general fund revenue receipts for July came in more than $1 million above revised estimates - and the ending cash balance was $170.2 million - the Department of Finance issued a revised general fund forecast three weeks later, showing a net shortfall of $198.8 million for the biennium.

And so Quie made the decision to unallot, 29 years before fellow Republican Gov. Tim Pawlenty did the same thing last summer to the tune of $2.7 billion.

“No, it was not a popular decision at all,” Quie remembers today. “But my reason for unallotting was because the DFL controlled the Senate, and the two parties were evenly divided in the House. I figured I’d save Republican legislators from facing this so we could try to get a majority in the election that year.

“And that was a big mistake.”

Quie says he elected to go the unallotment route rather than calling a special session of the Legislature to solve the shortfall after observing what happened to one of his predecessors, Gov. Wendell Anderson. In 1971, Anderson called a special session at the end of the regular legislative session on May 25; however, legislators recessed from July 31 until Oct. 12, resulting in a 157-day special session that didn’t end until Oct. 30.

“The watchword was out there: Never call a special session,” Quie says.

That fall, instead of using Quie’s unallotments as a bargaining chip to earn votes, some campaigning Republican lawmakers came out against those cuts. “They were protecting their own hides,” Quie says. “I was trying to save them, and they were going to use it as ammunition. That made a big division here.”

As a result, Quie believes, the DFL took over control of the state House that fall, leaving the Legislature in the same situation as the current one: a Republican governor, and DFLers in charge of both chambers.

Quie’s desire to avoid a special session quickly fell by the wayside. Between June 1981 and December 1982, the embattled governor was forced to call the Legislature back no fewer than six times.

Although none of those sessions came anywhere near the seemingly interminable duration of 1971,  the third of them - called to fix an estimated revenue shortfall of $869 million - ran from Dec. 1, 1981, until Jan. 18, 1982, and resulted in a package of tax increases, cuts in appropriations, a payment shift and an acceleration of tax collections, along with a temporary 7 percent surtax on individual income taxes.

(In terms of scale, the 1981-83 crisis was unprecedented at the time. The $869 million shortfall represented about 6 percent of the total general fund. But that’s significantly less than the 10-12 percent deficit for 2010-11 that existed at the outset of the 2009 budgeting session.)

Those budget-balancing moves marked the beginning of the end of Quie’s tenure in the governor’s office.

Quie had campaigned on the promise that he would not raise taxes as governor, and if he did, he wouldn’t seek a second term. Immediately after the tax-increase special session adjourned, with a blizzard in the weather forecast, Quie and his wife, Gretchen, headed for their home in Marine on St. Croix.

Quie says he spent several days “meditating and praying” before deciding to return to St. Paul and announce that he wouldn’t run for re-election. He remembers the date: Jan. 26, 1982.

“To me, it was like the resurrection,” Quie remembers. “I was free.”

Three more special legislative sessions followed during Quie’s time in office. Two of them were called to deal with record-high unemployment in the state; the final one came in December 1982, as Quie was preparing to leave the governor’s office to the man who both preceded and followed him in the Capitol’s corner office, DFLer Rudy Perpich.

During that special session, legislators fixed another revenue shortfall with $342 million in appropriation cuts and spending, and tax increases on top of tax increases, voting to hike the earlier 7 percent income tax surtax to 10 percent, and an earlier temporary sales tax increase from 4 percent to 5 percent.

Looking back on his tumultuous four years as Minnesota’s chief executive, Quie draws parallel after parallel with the increasingly dire financial situation facing the state now. But he says Pawlenty and the current Legislature have an advantage that wasn’t available to their early-1980s predecessors: “We went through it with much more ignorance than they have now, because two earlier recessions had missed Minnesota entirely. We didn’t have any experience dealing with it,” he says. “We were flying blind.

“Nothing’s exactly the same as it was before, but now we know more.”

Quie says he’s discussed the situation many times not only with legislative leaders, but with Pawlenty. “He got [my advice] whether he wanted it or not,” he says, chuckling.

But although he’s mum on what he said to Pawlenty, and what the governor said to him - “I assured him and his wife that I was not going to talk about it” - he has no qualms about declaring what he believes are the main stumbling blocks in St. Paul.

“Here’s the biggest problem: trust,” Quie says. “It’s not there.

“There’s nothing more important in a person’s life than respect. People will vote for you if they respect you, even if they disagree with you.”

Pawlenty’s insistence on sticking to his own no-new-taxes campaign pledge will not serve him well in the end, Quie believes: “What Gov. Pawlenty needs to do is not just say ‘no taxes,’ although I can understand from a Republican perspective that you don’t want to add taxes to people,” he says.

Instead, Quie says, a sales tax on clothing should be imposed immediately, and the tax credit on home loans should be reduced to a level that would bring in enough to eliminate $500 million of the deficit. Additionally, he suggests reducing income tax deductions to the tune of close to $1 billion in revenue.

In the longer term, he says the Legislature should “revamp” itself so that members serve on fewer committees and thus become more knowledgeable about particular issues.  He believes that a greater focus on children is necessary; he suggests creating a new state office of early childhood learning so at-risk children can be identified and helped before it’s too late. “The biggest crime we commit is in the neglect of our children,” he says. “And we are committing that crime right now in Minnesota.”

And any short-term solutions to the budget deficit will ultimately be useless, Quie believes.

“You can’t just cut back and hope and wait for the day when the economy will recover,” he says. “It won’t happen for a while. You have to do things in a different way.  That’s the only way government can work.

“It doesn’t work now because we put our institutions and ourselves ahead of the people. … You have to look at this and tell yourself that you aren’t a superhuman being. I’ve watched people who are in office, and that becomes the most important thing they ever did, because it gives them authority. But that is worthless authority. Authority really has to come right out of your gut, and out of integrity, or it means nothing.”