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SPEAKER: Well, the Minnesota legislature is heading down the home stretch. There are still several major issues left to resolve. But apparently, at least, there is light at the end of the tunnel. Governor Arne Carlson has been good enough to stop by today to discuss the legislative session and to take your questions on issues facing the state. Well, Governor, before we go to our first caller, I wanted to ask you, what do you see as the major things the legislature still has to deal with before the legislature adjourns? Obviously, a lot of things percolating up there, but.

ARNE CARLSON: Sure. Well, at this point, virtually all major bills are pending. And by and large, we don't have agreement between the House and the Senate. But my biggest concern is the vast difference in the amount of money being spent. And bear in mind, the more money we spend today, the less money we're going to have available in January of 1995.

Right now, the House is spending about $554 million than I recommended and the Senate is spending about $221 million more than I had recommended. And that spending will continue and grow over the next two years, putting us in a deficit position by January of 1995. And we're going to have to figure out some strategy to reconcile differences. But at the moment we are far apart.

SPEAKER: Now, we theoretically have a, what is it, a $623 million surplus.

ARNE CARLSON: That's right.

SPEAKER: Wouldn't that cover the difference?

ARNE CARLSON: No, not at all. Here's what's happening. And you can start to see it. Just before I came on, I listened to you talk to someone else about the economy. Interest rates were bumped yesterday. I think we're going to see a slowing down of job growth. Our analysts tell us and tell every other state that revenues today, for instance, in Minnesota, are growing at about 14.6%. So that's pretty high and it's giving us a surplus of 623 million.

But by 1995, the growth is going to return to normal down to 7.2%. That's about a 40% differential. Now, we could take that 623 million and spend it today. But that would be like treating it like a Christmas bonus and pretending that the Christmas bonus comes once a month. It doesn't. It's just a one time shot in the arm.

And what I want to do is smooth that out over the next three years so that we can avoid having to have cuts in spending in January of 1995 or increased taxes in January of 1995. So if we don't save a large part of that money and protect our Reserve fund, we're going to have deficits. Right now, if we were to execute the House plan, we would end up with a deficit of $946 million.

SPEAKER: Vetoes likely?

ARNE CARLSON: If they miss the spending targets, yes, vetoes are very likely.

SPEAKER: Is there some wiggle room?

[LAUGHTER]

Some wiggle room here?

ARNE CARLSON: I'll give you $1 or 2. Not much more than that. No, it's skinny. And I think what's starting to grow in the legislature, and on a bipartisan basis, is the realization that we don't need annual sessions anymore. I think legislators increasingly have become tired of it, because all we do is come together every year, open up the budget as if it's a full budget year, and it not a budget year. The budget was resolved in 1993. We increase our spending, spend ourselves into a pickle the following year. When I came into office, the legislature had spent us into a $2 billion deficit.

And right now, we could go as high as close to $1 billion deficit if this spending continues. And it's very unsettling to the taxpayer, who, frankly, is tired of tax increases and wants discipline. Roger Moe a little over a week ago suggested maybe we should abolish annual sessions. I wrote him a letter and said, you bet your life I'll join you on it and talked with him yesterday about it, and he would be very supportive of a movement to end annual sessions, and so would I.

SPEAKER: What would you have to do? Pass a Constitutional Amendment to do that?

ARNE CARLSON: Yes, yes. And then you could always bring the legislature back for a special session just for very specific items, whatever the emergency may be. But what increasingly has happened is that we're treating the second year of a legislative session as just another spend and tax session. And that's precisely what we promised the voters in the 1970s would not occur. And every spending system is right there now petitioning for more spending.

You read the editorials in the Star Tribune, for instance. They start out by they say, make sure there's no tax increase. And then since that time, they've editorially supported every spending bill that's come along. And the truth is, we can't afford it. But it's very difficult for a legislative body, which is up for election in November, to say no in April. But the consequences are that we will work ourselves into a very serious financial dilemma.

SPEAKER: Governor, we've got a lot of callers on the line already with questions, so I always get a chance to ask my questions. Media always does. So let's hear what the listeners got to say.

ARNE CARLSON: Fire away.

SPEAKER: Hi. First caller is on the line.

AUDIENCE: Hi there. My name is Juanita [INAUDIBLE]. And I understand that you are very concerned about the budget, and I would like to express a concern that I have. I am very concerned about the child care subsidies, which were contained in the welfare reform bill. I understand that that bill has been tabled and it probably will be permanently tabled. I'd like to know how Governor Carlson will ensure that the $5.7 to $10 million that both the House and Senate allocated for childcare subsidies will go to these subsidies this year. It's very, very important to many families in Minnesota.

ARNE CARLSON: Yeah, it is. But that's also precisely the heart of the dilemma. Everybody sincerely feels that their spending has great virtue, and we have to have it regardless of the consequences. Let me just finish. The way the bill is going to unfold, and I can't control with what, in this case, the Senate does, but I'm going to assume that the legislature is going to pass some form of welfare reform out.

What I have made very clear to them is that if you want to increase spending in one area, and in this case it's daycare, and I happen to like it, then please work with us and make reductions in other parts of the $16 billion budget. But we can't just go on as the federal government does and spend money today that we're not going to have tomorrow, thereby either causing a tax increase, which would cause us a loss of jobs, or spending cuts elsewhere. And what I'm fearful of is that the more we spend today, the more likely it is we're going to hurt K through 12 education tomorrow. So I think systems have to realize that they're competing with each other for very limited resources.

AUDIENCE: Sure. Does that mean that you would support up to $10 million added to child care subsidies if they--

ARNE CARLSON: I will support any kind of increased spending provided the trade off is reduced spending in some other area. In other words, please don't let your legislators off the hook by saying, yes, I support spending regardless of the consequences. If you want to spend more in section A, then you better be prepared to cut some money out of section B. And I think that's fair.

SPEAKER: Let's take another caller with a question or comment. Hi.

AUDIENCE: Hi. My name is Kathy and I'm from Richfield. I wanted to ask Governor Carlson a question about the women's right to know bill. I've been following it, and I read the original language that talked about women being given all the information about the fetal development of the baby and all of the risks of the medical procedure they're going to undergo, all of the facts about it.

And then I read the compromise language, and that says that that information is only going to be given to a woman if the guy who's doing the abortion thinks that it should be given to her, which that's where we're at right now. And I wanted to know Governor Carlson's feelings on this being probably the only medical procedure that generally puts somebody to sleep.

And I've undergone medical procedures, three of them that do that. And both the anesthesiologist came and talked to me first, the doctor told me all about what was going to happen to me, and all about all of the risks of what was going to happen to me. And I don't understand how Governor Carlson can be against something that is normally done in every other medical procedure that I know of on the face of the Earth, and not being given to a woman just because she's undergoing an abortion.

SPEAKER: OK, Governor?

ARNE CARLSON: Yeah, I don't know where this misinformation comes from. First of all, there's nothing in any language that basically compels a doctor to do that which is against normal procedures. No, we would encourage normal medical procedures to continue.

There are really two things here that should be touched on. The first is that whatever the state decides to do relative to this right to know has to conform to the Pennsylvania decision. The attorney general has told the state that the first bill would not pass a constitutional test. So that bill would be taken to court and according to his advice would likely be ruled against.

What we have worked out, and we've been working with four senators on both sides of the issue, is basically a compromise that permits the right to know to continue but takes away the liability from the physician and any violation would be reported to the AMA and that would go against their licensing, and that's where it belongs. But no, we do want to make sure that the information does proceed. It's frankly a sensible compromise, and it's a compromise that should clear the constitutional hurdles.

The problem with this subject is no matter what you do in the middle, it's not going to please the zealots of both sides. And I think part of the reason is that a lot of zealots would like to continue the fight rather than try to resolve differences. But this bill or this compromise seems to have the support of the AMA, seems to be acceptable to those women in the State Senate who are pro-life, and those women in the Senate who are pro-choice. So I hope it will go through.

SPEAKER: Do you think there's any need for a 24 hour waiting period?

ARNE CARLSON: Well, basically it can be done--

SPEAKER: I mean, forgetting about these other provisions.

ARNE CARLSON: Yeah, it's not a question of what I want. I have to work within the framework of what we can work out with the legislature. Basically, the way that the current compromise is drafted is that would be done over telephone, which you'd have to do anyway in any normal medical procedure. So it's not really an interference, if you will, in that sense.

Those people that are very strong on pro-choice would prefer no bill. Those people that are very strong on pro-life would prefer a very rigid bill that would not pass the constitutional hurdle. I think the position that the Senators have developed I think makes sense.

SPEAKER: Governor, obviously there are people on both sides of this issue who are talking about this as an issue, as a policy matter. What role do you think politics has played in this? I mean, this has put you in a pretty uncomfortable position.

ARNE CARLSON: Well, it's put everybody in an uncomfortable position, and it's driven an enormous amount of America's political energy. And that's not to say that it's not an important issue. But I think the problem is that we've allowed that issue to permeate political discussion on any level. The reality is that the ultimate decision rests with the United States Supreme Court. I mean, that's where it is.

And I think Vin Weber was right when he said that it's now a moot point in state government, but it still tends to drive a lot of state politics. The right to know bill is one of those that comes along that allows states the right to intervene within a very, very limited area. And I think the compromise that was affected is the right way to go.

SPEAKER: Let's take another caller with a question or comment. Hi.

AUDIENCE: Yes, I'm calling from Alexandria. I have something that I found in Discover Magazine regarding the storage of nuclear waste, and I wanted to get the governor's feelings on how this might fit into what's going on in Minnesota right now. The Argonne Laboratories in the desert in Idaho, they're developing and testing, have been testing for the last two years, what they call an integral fast reactor, which not only burns its own waste, but also burns waste from-- the potential to burn waste from other reactors.

SPEAKER: This is one of those breeder reactors?

ARNE CARLSON: No, it's a fission.

AUDIENCE: It's the next generation of the fusion reactor, call it, and uses fast neutrons instead of the slow neutrons that they use in reactors nowadays. It also burns plutonium. So it doesn't even create plutonium that might possibly get carried away to make weapons. I'm just wondering, is this something that has been-- this type of technology has been discussed by the legislature as part of the equation?

ARNE CARLSON: There is no such technology online right now. The work I'm most familiar with is at Princeton University. There have been several scattered tests that have had some success. I may be wrong, but are you talking about fission or fusion rather?

AUDIENCE: Let's see.

ARNE CARLSON: But basically, you can burn-- you burn all the sources of original energy, so you have no waste. Is that essentially correct?

AUDIENCE: That's what they're talking about.

ARNE CARLSON: Yes, that's right. I'm glad to hear that Argonne Labs is working on it, because they are a very, very fine facility. I understand that Princeton University is on the cutting edge. France has done an awful lot of work in this area. There's a lot of thought in the scientific community that that is going to be the next generation of energy. It'll be very inexpensive and obviously environmentally very sound. But no, that will not be a factor in the debate relative to NSP, because NSP's problem are immediate, and this is a lot more long term.

SPEAKER: How do you see that working out now? It looks like the house is going to pass a bill, or may very well pass a bill which would prohibit any outside storage outside the plant. Meanwhile, the Senate's passed a bill that allows the casks to be stored outside the plant. Looks like a head on collision here.

ARNE CARLSON: I think there is a head on collision, and I think it will go to conference committee, and they're going to have to resolve their differences. But I think NSP and the Nuclear Regulatory Agency is making it abundantly clear as to what your options are. I think there's a lot of wishful thinking right now going on in the House. It's kind of an avoidance, if you will, of a tough vote. So that's going to play out for a few more days. I understand they're going to take it up on Monday.

SPEAKER: Another caller is on the line with a question for Governor Arne Carlson. Hi.

AUDIENCE: Hi, Mr. Carlson.

ARNE CARLSON: Good morning.

AUDIENCE: Governor Carlson, I should say.

ARNE CARLSON: Oh, that's fine. [LAUGHS]

AUDIENCE: I just wanted to call in and say that I think you're a pretty good governor. I've lived here for about 12, 13 years now. And I really, I think you're the kind of guy we should have as governor. I think you're doing a great job, and I hope you're reelected. And I'm kind of amazed at the way the IR party seems to self-destruct. I mean, when they have a winner, they don't seem to recognize this. For some reason, they have to self-destruct. And I basically hope you are reelected and you continue to do a good job. And that's really all I have to say.

ARNE CARLSON: Well, that's very kind. Thank you. I truly hope the Republican Party does not self-destruct. I think what's happening, I think we discussed this before, is that both political parties through the caucus system are moving to their extremes, and it's causing a lot of problems in the middle. And the result is I think on the Democrat side, you're going to see a very exciting and it's going to have an absolute multitude of candidates running. And on the Republican side, we're going to have primaries as well. So I think the nominations in both political parties for the US Senate and for the governor are going to be made in the primary.

SPEAKER: Is there any chance that you would end up running as an independent?

ARNE CARLSON: No, no.

SPEAKER: No?

ARNE CARLSON: No. I think we would be engaged in a battle for what I would call the soul of the Republican Party. And I think a lot of people feel very strongly about that. I think most Minnesotans want very strong, competitive political parties. And I think there are a lot of Democrats that would like to move the Democratic Party much closer to the center and a lot of Republicans that would like to move the Republican Party much closer to the center.

Traditionally, Republicans have worked a little bit to the right of center, mostly on economic issues. Democrats have worked a little left to center, again, mostly on economic issues. And it's worked out well for Minnesota. So when one party puts up a very fine slate of candidates, they tend to prevail. When another party puts up a fine slate of candidates, they tend to prevail. And if look back over the history of Minnesota in the last 20 years, both parties have really left some very good fingerprints on Minnesota.

But the more you get out to the extremes, the less able we are as a political system to compromise. Very zealous people feel that compromise is a dirty word, and therefore you don't engage in compromise. And I think what the legislature is going through now is an enormous amount of pain. And I'm very sympathetic to their plight. And that is basically getting calls and letters that say that if you don't agree with me on this issue, I will not vote for you, period. And that's very harmful to the essential thrust of democracy, which rests on the capacity of a political system to build consensus.

SPEAKER: What's the proper response of a politician faced with that kind of pressure? Should they, if they get enough of these calls, vote according to the calls, or should they vote, essentially, their conscience, not represent those people, and presumably not get reelected?

ARNE CARLSON: I think that's the toughest question you can ask somebody. There is no right answer. I guess I would reshape it this way. I would say that your first obligation as a representative of the people is to vote for what you perceive to be their long term best interests. And that is putting on, in this case, your statewide hat.

The second perspective is to be representative of your people. But in order to be a leader, you have to lead them. But you can't be a leader if nobody is following. So you just, well, but you've got to play all those roles very, very well. That's one of the reasons you're seeing more political leadership, for instance, going into talk shows.

President Clinton, regardless of whether you agree with him or disagree with him, has taken a novel approach to marketing his agenda. He's going on talk shows. He's trying to sell, in this case, health care and then responds to questions and answers. 20 years ago, that would have been heresy. You simply wouldn't do it. More politicians are trying to get out of their beltways, because the beltways is where the capital press corps defines you.

For instance, as governor, if I want to get my message across, TV will essentially give me 30 seconds and they'll decide what 30 seconds it will be. Or the newspapers increasingly will analyze what I say rather than report what I say. So one of the reasons I'll do shows like this is it allows me the opportunity to answer questions directly, and nobody can stand in between the listener and me.

And I think you're going to see more and more political leadership doing precisely the same thing. I think if anything is going to help radio, I think it's going to be a new relationship between political leadership and listeners. It also allows listeners the opportunity to get their viewpoints across. Whereas at the state capital, most people there are people representing spending systems. It is not representative of the average person. The average person today, frankly, is working.

SPEAKER: Let's go back to the phones now. And another caller is on the line with a question for Governor Arne Carlson. Hi.

AUDIENCE: Hi. I'm Sue Sue from Minneapolis. I want to pick up from what the governor talked about, the long term best interest. At Prairie Island Nuclear Power Plant, there are 500 jobs. And then at the Prairie Island Casino, there are 1,500 jobs. So if this is a jobs question about nuclear power, my next comment is that there are an estimated 25,000 jobs with alternative energy, wind, and biomass. So why aren't we headed in the pro-jobs, pro alternative energy direction in this state?

SPEAKER: Governor?

ARNE CARLSON: Sure. I think that's a very fair question. I would suggest we divide it into two parts. Part one is to deal with the NSP problem today. That was really decided 20 years ago when the plant was built. The plant has a normal life cycle and it should close according to that life cycle.

But the second thing to focus on is the a significant amount of money that is being spent on these alternative forms of energy. We spend about $77 million a year. And I think there's a public perception that nothing is being done. A lot is being done. We have windmills down in Marshall, Minnesota, run by NSP at substantial cost to them. 16% of the electricity generated by NSP comes from those renewable resources. So a lot more is being done than I think is generally understood.

The dilemma is this. That is, we have some wishful thinking in our society. We wish the problem of nuclear waste would go away. The problem is it's here. If we shut down NSP tomorrow morning, we would still have the problem of nuclear waste.

The second problem is that the federal government broke its promise. It said, look, we'll take care of your nuclear waste. We'll build a facility. Well, they haven't done it. They took our money, but they didn't deliver on the promise. That's usually called breach of contract. And some states, by the way, are contemplating some lawsuits.

But I think it is fair to say that we don't have the acceptable alternative fuel source that will allow us to close the plant. Therein does lie the problem. The gentleman from Alexandria really hit on it very, very well. The one that most scientists seem to agree will be the next stage of our energy development will be, and I get the terminology terribly confused, it's either fission or fusion, whichever it is. But that deposits no waste. It absorbs its own energy and it absorbs all that goes into it. That will probably be the next generation. But in the meantime, I think we should understand that a large part of what we do today does come from these other options.

SPEAKER: Do you think, assuming that Prairie Island runs its natural lifespan here, by that time, by the time that plant closes, will we have all these windmills all over the state and all this other stuff?

ARNE CARLSON: Oh, I think you're going to have quite a bit and quite a bit more, because the current NSP bill that's before the House does provide more funding for alternative sources to be developed. But I think we have to be very careful. And that is not to impose our wishful thinking and assume that that's a reality. The reality is, if the plant closes, we have a 20% loss in our energy supply. And nobody can answer with a straight face where that's going to be made up from.

SPEAKER: Another caller is on the line with a question for Governor Arne Carlson. Hi.

AUDIENCE: Hi. I'm from Columbia Heights, and I have a question specific to improving the economy of rural Minnesota. I wondered if since we last talked, Arne, that if you've studied the available biomass technology. That's an energy technology. It's already ready to go, just like wind technology is ready to go and in place, like you said before. And I have one question, one comment.

And I wanted to know what have you done or plan to do to implement the biomass technology to improve Minnesota's rural economy? And that would relieve our energy problems to a great extent. And I'd also like to make a comment, just a brief comment from the last caller. You said that NSP, we have this nuclear problem now of what to do with the waste, and that's true. But in asking for dry cask storage, NSP is asking for permission to create more, and we don't need to create more. We have the room right there now to store what they've got. And I just wondered, why can't we just--

SPEAKER: Oops, we lost our lost our caller. Well.

ARNE CARLSON: It would be the same question that was raised by the prior caller, and that is that the state as a whole, and bear in mind, this is driven by the private sector, is already doing some 16% of total energy supply does come from these other alternative fuels. I don't know what more I can answer.

SPEAKER: Is it time for the state to put some of its money into the thing to jump start the development of these?

ARNE CARLSON: Well, but I think what you have to realize, it's all cost driven. You're a company here. You have a balance sheet. Columbia Heights has a balance sheet. Are you willing to quadruple your cost of energy? I mean, you have to start asking some very tough questions, particularly of those people who honestly believe that there is some other option out there, but they also think it's quote, "free." It isn't free. The reality is that the electricity that we have in Minnesota is one of the most competitive advantages that we have relative to other states. It is at a very, very low cost.

I think that all those people who have examined energy and the future of energy, et cetera, realize that you can take a portion of your total energy generation can come from these alternatives, as this caller is talking about. I think that's true. And right now that is about 16%. Could that grow a little more? Yes, it could grow. The state and the NSP bill is putting in more money to allow that to grow. So progress is being made.

The dilemma is that you can't just shut down 20% of your supply tomorrow and hope that somewhere out of the blue, something is going to come along that's going to replace it. Therein lies the hook. Our society some 20 years ago made that decision. And now we're basically saying, well, maybe we should change our mind and close the plant. If the plant closes, it will close in 1995. We don't have a lot of time.

SPEAKER: Back to the phones. Another caller is on the line with a question for Governor Arne Carlson.

AUDIENCE: Yes, Governor. I'm calling from Winona.

ARNE CARLSON: Yes.

AUDIENCE: There was a very interesting program on Talk of the Nation yesterday about the perception of crime, primarily as it relates to how media coverage is increasing on it. And that seems to be driving a real and imaginary public concern about their own safety, et cetera. And I guess I am seeing much more of a trend towards people wanting to spend much more money on prisons when we're seeing other services that are, as you talk about sharing the total amount of pie, shrinking and shrinking.

When yet if you look at the crime statistics, they're relatively flat. But because the perceptions are up where people are trying to outdo each other in terms of who is the most tough and who's going to be tougher. And I guess I would like to see some leadership, or at least someone say that it's all right to say that the problem isn't as great as it is, and that we have other very important things to do with our money, and that we don't necessarily have to rush into a headlong process to build prisons.

SPEAKER: OK, Governor?

ARNE CARLSON: Yeah, no, I think the gentleman is raising an awful valid concern. I'm just looking at my numbers here. For instance, he did talk about stacking up more and more money in this crime bill. Right now the House, for instance, is $145 million higher in spending in that area than we were. That's an incredible differential. The Senate is 82 million.

So what he's raising is a concern that is going to be a reality over the next several years if our trends continue. What we would like to do is, first of all, focus more of our resources on preventing the problem in the first place. So that's why we're very committed to programs like Head Start, very committed to those programs of intervention. We think that's terribly important. I'd rather spend $3,500 or whatever it is for Head Start any day of the week than having to spend $30,000 for a prison cell.

The second part, though, is to improve the capacity to catch the criminal. Part of the dilemma, and I think we're beginning to understand it more and more, part of the dilemma is that roughly 70% of the crimes are committed by 6% of the criminals. So in our crime bill, for instance, we won, for instance, some kind of a uniform data system. We want a uniform collection system so that we can transfer data from the various systems that comprise the criminal justice system. So the police departments, let's say, in Columbia Heights, can help police departments in Winona so that we can have compatible equipment, et cetera. I think that that's a piece of it.

But the other piece of it is if you can take your resources on those 6% that commit 70% of the felonies, that is going to require bed space. And I think as a society, we're willing to commit the resources for that bed space, because those are the ones who make us feel unsafe.

Whether or not the media is blowing it out of proportion or is not the issue. The fact is that half of the Minnesotans feel that they can't walk in their community at night. And that number, by the way, is enormously high, both in rural and metropolitan Minnesota. So we want Minnesotans to feel safe.

The third part, though, is that the amount of violence and the age of the violent offender has decreased. It's getting younger. And so that's causing a lot of shivers, if you will, not just in the legislature, but in society as a whole.

I think we're going to end up balancing both. I think it's going to take some very, very tough jawboning, because obviously the legislature and our administration are light years apart in what we want to do and how much we want to spend on it. But I think if we can get agreement along the lines of what I'm talking about, I think we can get back and meet this gentleman's objection.

SPEAKER: Another caller is on the line with a question for Minnesota Governor Arne Carlson. Hi. Your turn.

AUDIENCE: Thank you, thank you. Governor Carlson, thank you for taking my call.

ARNE CARLSON: Delighted.

AUDIENCE: I'm one of the few independent Republican public defenders. And this has to do with another spending question with regard to the current crime bill. There is a provision in the crime bill that is proposing to integrate the public defender system in Minnesota, meaning that all of the misdemeanor and juvenile public defenders will also become state public defenders with the state assuming the cost of the public defense system.

At first blush, it would appear to be another spending bill that may incur your attention in a negative way or from the standpoint of vetoing that portion of the crime bill. But if one was to examine it closely, I understand that there is a county formula for the funding of that part of the crime bill that may result in the long term and a net state saving. Have you been able, at this early time, to formulate a position on that segment of the crime bill?

ARNE CARLSON: No, and I'll tell you why. Because the House and Senate are so far apart, they've got to reconcile their differences first. So we're trying to work separately with both Houses. But obviously, our concern is the bottom line numbers. But now that you brought it to my attention, I'll make sure that we do focus attention on it.

But I always get a little skeptical of these bills that transfer costs and services to the state. The state, by the way, is all of us. Somehow we have this idea that if the state will pay for it, that relieves us of our obligation. No, if we were transferring our financial obligation to Wisconsin, I'd say hallelujah, but we're not. We're transferring it to ourselves. We're just taking out of one pocket and drawing it out of another. That's all it is. So we have to be very, very careful about all the proposals that will shift costs.

Now, let me add something, if I may, as long as we're on this broad topic. And this is more a response to the gentleman that preceded this latest call. I talked before about some tough decisions that we're going to have to be made. One of the tough decisions that we're going to have to make to avoid getting into building an endless array of prisons is what is it we're going to do with those people whom we fear versus, well, let me explain it in a different way.

The property crime. Should we treat that person differently than the violent offender? And I think our answer as a society is going to be yes. And if it is yes, then we're going to have to do everything we can to keep the bulk of the property offenders out of the prison system and into more community oriented programs. They will be far, far less expensive and far less disruptive to the family.

The problem is we want to come down with such harsh punishments that we want to lock everybody up. That's going to be an extraordinarily expensive proposition. And ultimately, we'll end up like Florida, where they're just releasing criminals wholesale and some of them are very violent offenders. So we're going to have to ultimately make that kind of a decision. What do we do with those people who are violent offenders versus those people who are nonviolent?

SPEAKER: Back to the phones. Another caller is on the line. Hi.

AUDIENCE: Thank you. Governor, it's an honor. I'd like to ask you for your current views on outcome based education, number one. And number two, given the way that you have flopped around on this issue over the last [INAUDIBLE].

ARNE CARLSON: [LAUGHS]

AUDIENCE: Would you describe the decision making process within your year administration that has led to these various positions? And finally, do you think it would be a reasonable outcome for a Minnesota graduate to have at least a definitional understanding of the difference between fission and fusion?

ARNE CARLSON: [LAUGHS]

AUDIENCE: Thank you.

ARNE CARLSON: Thank you. OK, let's go back to OBE. First of all, there has been no flopping. So that's the one thing I'm not accused of is being terribly subtle.

Here is what we have attempted to do. From day one, we said, we're interested in results on the state level. We have way too much focus on the state level of telling teachers how to do this and how to do that, and school districts how to do that. We're not in the business of micromanaging our local school districts.

Now, if a school district or a teacher wants to use a given strategy, do it. My classic example that I use in speech as speech after speech on education is the same. Look, suppose you were a track coach and you got a kid that could run the 100 yard dash in 9.8. Do you really care how he does it? And do you want somebody from Saint Paul saying, hey, he's not using the prescribed method? I don't care if he does it on all fours as long as he does it.

What is our vested outcome? As I told the Board of Education, I told the board, if it is not understandable in the local barbershop, it's not going to clear our test. It has to be measurable, it has to be definable, and it has to be understandable. I personally come out of a more classic system of education. I like grading. I like valuation. And I like core subjects.

When we laid out Minnesota 2000 in 1991, we laid out a specific course of action. And that was that our kids were going to excel in math, in science, in history, geography, et cetera. We didn't place social goals on the agenda. We didn't say the goal of education is to make sure all kids get along with each other. No, we want our kids to excel so they can compete in a world economy. So our goals are still the goals that we laid out in 1991.

SPEAKER: Where did those other things come from, though?

ARNE CARLSON: Talk shows.

SPEAKER: No, they weren't talk shows, Governor. I mean, there were people who were suggesting--

ARNE CARLSON: You had some members of the Board of Education talking about these social goals. You had talk shows talking about these social goals. None of it emanated from us. It emanated from us. That's the reason I brought the Board of Education to the governor's office and talked to him about measurable, definable goals. And I remember the language specifically was if it's not understandable in the barbershop, it's not going to clear our test.

SPEAKER: But prior to that, wasn't there a lot of--

ARNE CARLSON: Well, you have to go back.

SPEAKER: I mean, I don't know if there was official things from on high.

ARNE CARLSON: You're right. You have to go back to the 1980s. See, that's where it all started. It started back in the 1980s. And the argument has escalated to the point where people are just divided. Some say it's hopelessly bad and some say it's absolutely the most marvelous thing in the world. Our administration has made it abundantly clear that that's just one of many strategies that school districts can use. But we are in the business of measuring results.

I'll give you an example. We read a report that basically says in the metropolitan area, in the community colleges, 40% of our students are deficient in math and English. Well, that's an enormous remedial expenditure. Well, what is it we want? We want when a high school gives a diploma to a student, that should be a warranty. It should warrant that that student is capable in math, science, English, et cetera. Those are very specific, measurable targets and goals.

You don't see football coaches gather a team together and say, hey people, we're not interested in winning the game. I want you to go out there and get along with each other. Well, nonsense. I've got a 10-year-old daughter. When I send her to school, I want her to come back academically strengthened. And so that when she grows up, she'll have the capacity to compete in this world economy. I want her to compete with students from Taiwan, from Brazil, from Sweden, et cetera. I'm a very strong believer in those kinds of strategies that will allow her and all children in Minnesota to excel.

SPEAKER: Are the graduation standards being pushed back? Isn't there a bill that's working through the legislature which will kick it back to '97 before the official new standards take effect?

ARNE CARLSON: Yes.

SPEAKER: Is that all right with you?

ARNE CARLSON: Oh, I think that's all right, as long as it's not used just to continue the debate. I think the debate is healthy, but at some point we've got to a resolve. We in Minnesota have the highest graduation rate in America, but we also have some graduation standards that are among the weaker. And so it's not out of line to raise expectations of our young people. The problem is what is it you want? There are some people that do want some rather fuzzy social goals. I don't want that. I want them to be very specific and academically oriented. And I want us to measure them.

SPEAKER: Same bill would phase out current funding formulas, procedures for schools, and presumably replace the property tax with--

ARNE CARLSON: 1997. The property tax would no longer fund K through 12 education. I think that's wonderful, because I think that will start to debate on how it is that we're going to fund our schools, but it'll also force the issue of property tax reform. And it's about time that got back on the table. So I think that will be healthy.

I think all these debates, by the way, are very, very healthy. I'd much rather see a public discuss outcome based education or the quality of education than a lot of the frivolous topics that do come up. So I think it's on target.

SPEAKER: Back to the phones. Let's hear from another caller. Hi.

AUDIENCE: Hi Governor. This is Joe from Saint Cloud. By the way, I believe in large you're doing a very good job, although I have a couple of questions I'd like you to clarify. One of them talking about the teachers and the teachers unions and stuff. And their complaint is, as far as you have a big-- we have a surplus right now. And they're saying that you've gotten that surplus out of the funds that you promised them, that you took out on a loan on them.

And the second question is, I believe wholeheartedly that we shouldn't have any tax raises, and especially for the middle class, because we've gotten hit real hard both local and nationally and stuff. But I was wondering, is it such a big deal if you hit the upper class, say, people who make $250,000 and all that? And I'll take my questions off the air. Thanks.

ARNE CARLSON: OK. They're all very good questions. Let me go through them as quickly as possible. The reason we have a surplus today is because we came out of the recession in very strong shape. We're growing revenues at roughly 12.6%. It's abnormally high. The public employees who really bit the bullet were the state employees with the agreement that they signed that would provide for a 0 wage increase. Most local governments, I think, came in basically with settlements of 3.5. And I think teachers basically came in with the same settlement. But the ones who really paid the price were actually the state employees.

The second part of your question is we intend to hold the line on tax increases. I fully agree with you. Minnesota traditionally is one of the highest taxed states in America. We rank either sixth or eighth depending on what table you look at. And you don't grow jobs by growing taxes. There's no reason why government can't learn to live within its means and make some tough choices.

Look at the mess we're in the federal government. By the year 2000, 100% of our income taxes will go just to pay the interest on the debt. Now, that's a whale of a pickle. On the state level, fortunately, we're required to balance the budget. Well, that also requires us to make tough decisions. And we can't always run around and say that every single time a spending system wants more money, because everybody wants more money, that therefore, we have to make the people pay more. No dice.

The index that our administration is working off of is the rise in personal income. So let's just say for the sake of discussion, if personal income rises 5%, so too does our budget. That's fair. After all, we in government exist to serve the public. Now, the question then becomes why don't we put more taxes on, quote, "the wealthy?" Well, my definition of wealthy that I've seen in politics for the last 30 years is anybody who makes $10 a year more than I do. And that has to stop.

I mean, I see this tax now, it's called tax conformity on senior citizens. Well, you know where the income level is on these so-called wealthy senior citizens? At $36,000. Yet the legislature has a pay raise bill sitting in the Rules Committee. They deem themselves impoverished at $36,000.

SPEAKER: So you're going to veto that if the legislature--

ARNE CARLSON: Oh, I've made it abundantly clear that I will veto it. Yeah, I think it's wrong. I think we have to just simply learn to accept reality, and that is that government should have the same restraint on its spending growth that we expect of everybody else. There are a lot of families out there that would like to spend a lot more than they take in. But the truth is they can't do it, so they don't do it. Why in the world should government always focus its attention on spending and then come around and say, well, I guess we're going to have to have a tax increase. I don't know of anybody who wants to pay those tax increases.

And the truth is, the more you raise taxes in Minnesota, the more difficult it is to grow jobs. And we have to be sensitive to the fact that competition all over America today is a very, very sensitive issue. The governors of North Dakota regularly come into Minnesota to try to get businesses into North Dakota. Iowa's governor regularly comes in. Wisconsin's governor comes in. And we have to put in an enormous amount of energy just to hold what we have.

I remember about I think it must be two months by now, we as a state had put money into a company to grow. I think it was Jackson, Minnesota. And they did. And they did very well. And then they were going to have a major expansion. They could not afford to expand in Minnesota. They moved to Iowa. And it was workers compensation rates. Our workers compensation rates now are about 30% higher than the states that surround us. That's the reason I want workers comp reform. I want it very, very badly.

I think we as a state have got to make up our minds. What are our priorities? The truth is, if we don't grow quality jobs, government itself will become increasingly diminished in its capacity to perform.

SPEAKER: We have time for at least one more caller, if not a couple more. Hi.

AUDIENCE: Hi, Governor. Thank you for taking my call.

ARNE CARLSON: Thank you.

AUDIENCE: I'm a school board member. My name is Mike. I'm from New Brighton. We're stinging a little bit today. We just had a referendum that went down yesterday by 26 votes. And my call, my question has to do with open enrollment. Our district is a big winner. It's the Saint Anthony New Brighton district. We have about 20% of our kids that come in through open enrollment. As you probably know, under open enrollment, the general fund dollars go with students when they go from one district to another, but the capital dollars don't.

And whether it's perception or real, some people feel that if you are a big winner, the resident districts end up subsidizing through facilities and technology. Those kids coming in from other districts puts winning districts in a real dilemma. Do you draw the line somewhere and cut off open enrollment? Do you stifle competition? I guess I'm just curious where you are on this and how do we resolve that or do we? Thank you.

ARNE CARLSON: No, your point is very well taken, because the capital does not go with you. That is a terrible dilemma. I believe what some districts simply do is close the doors at a certain number of students that they can admit, and that does restrict choice.

What we're going to do is put every single thing on the table. And we've already started the state planning study. Every single item that is driving spending in Minnesota, plus taking a look at the whole school aid formula and how we can resolve so many of these ticklish questions. What I personally would like to do, and it's gotten me into trouble, is I want to see the state assume a greater portion of K through 12 education and substantially diminish the funding that we give to municipalities. I would argue that what municipalities do should rest with the local property tax payer.

The political dilemma is, how do you get those cities that are winning off of the formula? You've got some cities in Minnesota that maybe get 60%, 70% of their total budget paid for by the state of Minnesota. You get other cities that get absolutely 0. And it's a frightful problem. But in 1997, we're going to have to make those very, very tough choices, because we can't continue as is and still be a competitive state jobwise.

The question the gentleman is raising is an extraordinarily valid question, because as a society, we say, gee, we do want choice. We do want competition. We do want our children to have the capacity to go to any school district. And yet the capital money that's necessary to build the buildings doesn't flow with the student. So we are going to have to resolve it. I think he's raising the right question.

SPEAKER: Let's see if we can get one more question on here. We're running out of time, but one more. You're last.

AUDIENCE: Oh, thank you. I would like to know in dealing with competitiveness, et cetera, what is the-- I measure it in the total number of state civil service employees. Are we declining? Are we staying the same? Or are we, like your previous predecessors, having an ever steady increasing spiraling number of state civil servants on the payroll?

I've heard it said, I don't know if it's true or not, if you total up federal government, state government, county government, and local government that something like 25% of the people that work in this state are getting their paychecks from some form of government. And that means that three other people out there have got to work in order to pay to make the salary for that one person.

SPEAKER: What's happening at the state level, Governor?

ARNE CARLSON: On the state level, since we've taken office, there's been a slight decline in employment. We have actually reduced budgets. But what the gentleman refers to is the overall impact. And he's right. I don't know that his numbers are right, and I don't know that they're wrong. But I'm just trying to scratch back into my memory.

If you went back, I don't know, 15 years ago when you had to mention the four biggest employers, it would be something like Honeywell, Northwest Airlines, 3M, et cetera. Nowadays, I think three out of those top four would be government. I think the University of Minnesota would be right up there. I think the state of Minnesota would be right up there. We are not high relative to state and local government numbers vis a vis other states. But it still takes a tremendous bite out of the economy, and it does create an enormous dependency upon government.

SPEAKER: Governor, I have to get to ask one more question, back to politics, here before we run. Very briefly, are you planning to debate Quist, Allen Quist, before the Republican convention in June?

ARNE CARLSON: Oh, I'm not really sure. I'm not so sure that would be the most dramatic moment in either his life or my life. Our focus right now is on trying to do everything we can to close this session successfully.

SPEAKER: But you are thinking a little bit about that, are you not? Are you going to be able to win the endorsement, do you think?

ARNE CARLSON: I don't think we're going to be able to win endorsement.

SPEAKER: Block endorsement for Quist?

ARNE CARLSON: Well, we keep hearing rumblings now that there's been a substantial shift in Quist support, that his numbers are starting to decline. So we're in the process of calling now to find out. But the early calls seem to indicate that, yes, there is significant slippage. But regardless of what happens, our sights are focused on the primary.

SPEAKER: Thanks, Governor.

ARNE CARLSON: I'm delighted. Thank you. And I appreciate all the calls.