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Saint Paul – In his 2009 State of the State Address today, Governor Tim Pawlenty implored legislators to keep in mind the hopes and fears of Minnesotans at kitchen tables across the state as lawmakers work to balance the state’s budget and position Minnesota for future success.

“The couple at the kitchen table begins by setting priorities,” Governor Pawlenty said in the speech. “What’s most important? What can we afford? What do we give up? How can we do things different? We need to ask and answer the very same questions.”

Governor Pawlenty said, “The state of our state is challenged, but overcoming challenges is what Minnesota does best. So let’s get at it.”

Among the proposals outlined in the speech, the Governor included a package of tax cuts and incentives, called the “Minnesota Jobs Recovery Act,” designed to unleash creativity, innovation, entrepreneurship and job growth.

The “Minnesota Jobs Recovery Act” includes:

• Business tax rate reduction – cutting the state’s business tax rate from 9.8 percent to 4.8 percent over six years

• Job Growth Investment Tax Credit – providing incentives for investments in regional funds, stimulating investment dollars for emerging businesses

• Small Business Investment Tax Credit – providing incentives for investments in certified capital companies that would be required to invest in Minnesota businesses with less than 100 employees each

• Reinvestment Tax Credit – providing a 25 percent refundable tax credit for small business owners that reinvest in their businesses quickly

• Capital Gains Exemption – for qualifying investments in small businesses in Minnesota

• Upfront Sales Tax Exemption – for purchases of capital equipment

• One-Year Deduction for Equipment Purchases – currently when a business buys certain pieces of equipment, it typically writes them off over time through depreciation

“I know these tax cuts and incentives may seem aggressive in the context of our budget challenges,” Governor Pawlenty said. “But we simply have to take dramatic measures to improve our job climate and kick-start job growth in Minnesota.”

Among the priorities Governor Pawlenty outlined in his speech:

• Maintain our commitments to the members of the military, their families and veterans

• Protect state public safety programs and funding

• Unleash creativity, innovation, entrepreneurship and job growth by reducing the costs employers bear to create and keep jobs in Minnesota.

• Enhance Minnesota’s green and renewable energy industries by creating Green JOBZ tax-free zones to encourage new renewable energy jobs across the state.

• Make Minnesota the nation’s leader in teacher preparation and training by passing the “Teaching Transformation Act.”

• Expand Q Comp to every school district and charter school in the state to provide additional funding to schools and continue the transition to paying for performance.

• Provide additional K-12 education funding through a new program that will provide up to an additional 2 percent per student for every student meeting standards to showing reasonable growth towards achievement.

• Fix the current teachers union-school district labor system that allows teachers to strike by using a fair arbitration process. Only 13 states allow public school teachers to strike.

• Pass school district shared services legislation to save on purchases of IT, food services, textbooks and supplies and put more money into the classroom.

• Move our higher education system more aggressively toward online learning and pass a tuition cap to hold down increases in higher education costs.

• Freeze all state government wages for the next two years and pass legislation to require a wage freeze for any Minnesota government entity that accepts state money.

• Incentivize counties to combine their human service operations into no more than 15 regional enterprises to save money on back-office operations.

Governor Pawlenty also highlighted Minnesota National Guard Sergeant Chad Malmberg of St. Paul, who was the first Minnesota National Guard member since World War II to receive the Silver Star.