Here is a hint……mostly those who are well of already and won’t be affected by it.

The answer to this question will dictate the amount of taxes necessary to support our government.

Pawlenty had a great amendment which forced government to make plans on actual income versus projections.
This would be an important step, since government is incapable of making adjustments once projections don’t come true.
Case in point our current MN budget shortfall. Instead of adjusting spending to the realities of income (what a strange concept)the answer is raise taxes???
How many here can do that at home with their own budget? I was planning to take my family to Florida this winter with my yearly bonus….due to the poor economy I didn’t get a bonus..guess what?? I am not going.

The same rules should apply to our state budget.

On the issue of sutainable economy. Maybe if we stop supporting banks and car makers with artificial money we would get closer to an honest economy.
Maybe if we stop putting people in houses they can’t afford we would get closer to an honest economy. Maybe if we stopped supporting projects we don’t have any money for we would get a sustainable economy.

In my mind a sustainable economy does not come from government. It comes from free markets. Regulations of keeping people honest are a necessary evil, but supporting unsustainable business models are doing more damage than good.
In a free market if certain aspects of it become unsustainable the market will eliminate them..everything else is just a centralized, top down, insufficent market economy. There is enough historical evidence that those have never worked.

If we want more growth to achieve increase tax base and create jobs, surely this is a good vision. How we get there is the important thing. However, a vision for the future is just that, a vision. The problem is when we treat this future as a reality.

Realities do change, just compare the last year! Despite this predictable event, has our vision changed? Probably not, but the reality in achieving this goal should be adjusted. I think this is your point about using a sensitivity analyses. It allows us to understand future realities and prepare for them accordingly. Perhaps this strategic thinking can help us determine the “true costs of choices before the choices are made” and present these to our neighbors. These costs should include social and environmental costs, not economic.

It is also true that spending in most parts of state government have gone down in the last decade with one glaring exception, the rising cost of health care. In state government there are two parts to the story. One is the same for everyone else where see constant increases in the cost of private insurance; the other is increasing costs of caring for a growing elderly population and disabled. Without some reform this will consume our entire budget. This is not an easy problem to solve. I believe reform that Minnesota Health plan would offer would greatly reduce the administrative costs and bring order to our current health system. But to continue as we have will not be sustainable.

Unfortunately, Bridgewater Township Board meets the same night with important items on the agenda such as accepting Leif Knecht’s resignation and appointing an interim supervisor to serve until township election in March. We can’t be both places.

Thanks for explaining your rhetorically licentious use of “pyramid scheme”.

Does the same license also apply to Northfield’s “explosive growth” (in spending, I imagine)? If not, could you quantify the “explosion” a bit?

State income and state spending don’t always move in lockstep, and I certainly don’t advocate that they start doing so. But to see “absolutely no link” seems to me simplistic — or maybe I miss your point. State expenditure as a fraction of state income seems eminently sensible as one, if not the only, gauge of whether we’re over- or under-spending relative to historical norms.

Indeed, government “should grow at the rate that it minimally needs to grow to deal with the functions it is charged to deal with.” Who could disagree?

But all the hard questions remain open: What does “deal with” mean, for instance? Has Minnesota successfully “dealt with” the adequate support of education? With transportation and communication infrastructure? With early childhood and family education? With funding the court system? With pension and health care obligations to state employees? With environmental safeguards?

Thanks for your confidence in my math skills! Math might indeed help in assessing how much less our state might have spent under various scenarios. But assessing “how much more robust our state would be if in fact government grew at a [lower] rate” is not just a math story problem. “Robustness” (nice word!) requires not just saving money but also, sometimes, investment in our state’s human and physical resources. Not every investment is wise, of course, but neither is every refusal to invest.

All these schemes work fine until the underlying assumptions fail. The explosive growth in Northfield is fueled by a similar belief in an economic model that is probably unsustainable. Let’s see some sensitivity analyses addressing these possibilities BEFORE we buy into the promises. Or is the consulting firm only about glossy handouts promising “Futureland”? Hah! “Where is that flying car I was promised in the middle of the last century?”

I know many of the liberal persuasion are very fixated on the percentage of taxes paid by the ‘wealthy’ as compared to us working folks. But, as I’ve said many times in the past, a huge percentage of the taxing decions made by the wealthy are personal choices. A millionaire may live in the house simple next door and pay a very small percentage of his/her income in real estate taxes. Contrast this with a ‘keep up with the Joneses’ couple that lives far beyond their means, essentially paycheck to paycheck, that may live in an expensive home on a hill and pay a large real estat tax. Their percentage of taxes paid is much larger—-but it is their choice.

Moreover for expenditures that are being financed in the future, like the library, I haven’t heard any projections about where the money will come from. It appears that the expectation is that future tax growth will pay for the expenditure. At some point, as Bruce points out, the growth will be unsustainable. It is the same mathematical principle as not pumping too much carbon gas into the atmosphere.

The library will have a certain “carrying cost” once it is built. If the debt load will be $500,000 per year, and additional operating costs are $500,000 per year then we have to figure out where an additional $1.0 million will come from. At the very least, the City should be able to say that we will build the library if the tax revenues at a certain level, and we won’t build if they are at this level. The idea that we are going to build come hell or high water is foolish. It’s like saying that we will pump carbon gas into the environment until we decide to change.

For anyone concerned with the integration of our hispanic/latino neighbors more fully into the community, the value of the library is obvious.
Often one hears that that portion of our community doesn’t feel comfortable, or doesn’t feel welcome in the downtown. Well, it doesn’t seem to be the case at the library.. Thanks to the Gates Foundation there is a lot of free computer access at the library, and the Latino community is making heavy use of that amenity, and both adults and kids of all ages.
I have heard that the numbers are also strong for participation in the free pre-school programs; check with Lynne Young for accurate info on that subject.

If that were the single reason to keep the library growing it would be enough.

In hard economic times, the wealth of free library services is a ‘value added’ need, not just an amenity, for the community… and one of the most inclusive that exists in Northfield.

You say:

Where will the cost of an expanded library come from? Presently, it looks like it is coming from future taxes. It is money that we don’t have, and don’t know if we will ever have.

Northfield library expansion may or may not be wise (I’m inclined to favor it). Either way, you set a very high bar if you oppose public expenditure whenever paying for it depends on future tax income — money we don’t have now. Held rigorously to this standard we’d never build a road, a school, or a sewer, unless we’d saved up for it in advance.

Or maybe you oppose tax-financing only for foolish or needless expenditures. Fair enough, but does library expansion or a bike path clearly meet this test? That’s certainly not obvious to me. Having a good library is arguably a good investment, even in the financial sense, if it promotes education, keeps young families in town, gives kids an alternative to stealing hubcaps, etc.

Paul Z.: I think you are right. “Pyramid scheme” is probably not accurate. “Unsustainable” is probably better.

Bruce, Jim: Any model that calls for the City to spend money on the business park in hopes or expectations of future revenue have to be discounted for the risk involved. And, if the goal is to get more tax revenue so that we can spend it all is foolhardy. In my opinion, the goal should be to permit business to grow or come to Northfield in an economically organic method.

Still, I maintain the the most insidious kind of unsustainability is government spending. Social Security and Medicare are good examples on a national level. But, we are prone to the same unsustainable thinking on the local level. Where will the cost of an expanded library come from? Presently, it looks like it is coming from future taxes. It is money that we don’t have, and don’t know if we will ever have. Continued expansion of government services is a declining economy is a recipe for financial disaster.

It seems to me that, in a democracy, control over wants takes a sincere discipline. “No new taxes” is a bad public policy; but, it is better than “more taxes” without some idea of how we are going to restrain our appetite. And, the attitude that we have taken on the Streetscape, “spend it on whatever comes along” is the silliest policy of all. (One FOOT of bike path is 3,000 meals for Feed My Starving Children.)

I totally get the point you are making. What happens if Macro economic “Growth” is no longer possible due to the contractions in the foundations (natural resources, fossil fuels,debt leverage, etc) that support this growth? Your link to Eric Zencey’s article is very illuminating in this regard, especially the part about EROI, which I believe is the primary foundation to our modern industrial “growth” experience. As Eric said you would have to be stupid not to make money in this environment!

I believe currently, all the above foundations of growth are maxed out and are beginning to recede in unison, which will result in Zero, or worst negative growth.

Zero Growth = Static Income

Negative Growth = Static Income -- Debt Interest -- Increasing Energy Costs( due to lower EROI) -- Unfunded Pubic Liabilities

Severve Negative Growth = Falling Income(due to Neg Growth) -- Debt Interest -- Increasing Energy Costs(due to even lower EROI) -- Ever larger Unfunded Public Liabilities due to falling incomes

The above negative growth scenario would apply to all levels personal, local(NF) and National. For NF to be in at least a zero growth economic position it would, I think, be important to minimize the factors that subtract from income.

To decrease the increasing energy costs I feel it would vital that any NF city expansion would include some energy generation system on a very large scale (e.g. municipal wind/gas power plant). Being near major gas lines and the rail would be key, I feel, to location. City planning thinking circa 1909, I think, will be more important than Circa 2005(housing bubble).

A negative growth would collapse many, if not all of the institutional systems we take for granted today.

Sidenote:

The description Pyramid Scheme from a systems sustainability and economic growth perspective seems appropriate. The opening Wiki definition “A pyramid scheme is a NON-SUSTAINABLE business model” would apply to a negative growth scenario. Madoff ran his operation for decades in a positive growth bull stock market/ economy. it was not until the market turned Negative that his operation was exposed. Same can be said for Social Security fund. As long as the economic pie continues growing the system works. As with Madoff, when growth goes to zero or negative the structure can no longer function as promised. Any guesses which cost in the Neg growth formula above will be thrown under the bus first?

Reminds me of that old joke: A Texas rancher, accused of being a land-grabber, demurred, saying, “I jist only want that land what’s next to mine.”

Still, annexation just for the sake of increasing the tax base just doesn’t seem right to me. And it feels to me like it rarely works out because with annexation comes an expansion of city services — police, water, sewer, snow removal, steet maintenance, and much more — that pretty much eats up the new revenue. No net gain.

First of all , my good friend Bruce, the term “pyramid scheme” has a definite connotation of illicit activity, which does not come just from the physical structure, i.e. one person eventually involving many… but has the implication of illegal money management/distribution.

No matter what you might think of the management or effectiveness of Social Security, the above was obviously not the intent. To use then, a pejorative term to describe such a gov’t program is prejudicial, and smacks of a degree of ‘spin’ not necessary for a person as thoughtful as you in order to make their point.

So… let’s not make false intellectual arguments, i.e. ‘spin’, in order to prove a point… leave that to the NF City Council when they are discussing “The” , or “A”, new Safety Center!

Y’all seem to take it as obvious that government spending has been growing like kudzu in recent decades.

Is this really so? It depends on what you measure.

Ray says, correctly, that had Minnesota state spending per capita grown at only the rate of inflation in recent decades, the state would now be spending a lot less than it does.

But that’s not the whole story. Personal income in Minnesota has grown much faster than inflation over recent decades, too. Measured as a percentage of personal income in Minnesota, state spending has remained almost constant over the last 40 years, or perhaps even declined a bit. See

http://www.house.leg.state.mn.us/fiscal/files/summit909bdgcond.pdf

pages 5 and 6 are especially interesting.

Whether this 40-year history represents too-high or too-low government spending is another question. The fact that Minnesota has done better economically and on quality-of-life measures than most other states may suggest that whatever we’ve been doing hasn’t been entirely in vain. And perhaps the future will be different from the past.

But the idea that state spending is at historic highs is, by this reasonable measure, simply false.

Whether Social Security and universal health care are really pyramid schemes, as you assert, depends on definitions. If “pyramid scheme” means, for you, any program that depends on future funding that is (like everything in the future) to some degree uncertain, then so be it. But that definition seems to me both too broad and too cynical. Do you really see proponents of such programs as confidence tricksters, out to hoodwink the citizenry? Or are the pejorative “pyramid” and “scheme” just rhetorical funnin’ around?

I’d describe Social Security (and universal health care, assuming we get some) as a modified pay-as-you-go program — modified in the sense that SS has for many years and for good reasons taken in more than it pays out. Eventually this balance will change, if nothing is done, but that’s hardly evidence of fraud. On the contrary, a program that always and forever takes in more than it pays out would be actuarially unsound.

The point with any pay as you go program is to maintain a rough balance of income and outflow, keeping predictable demographic changes in mind. This may require adjustments over time, but that’s hardly pyramid scheming.

Whether SS will actually be able to cover planned payments in years ahead is a fair question, but a more complicated one than a slogan like “pyramid scheme” suggests. My (inexpert, to put it mildly) impression is that SS presents a smaller problem than Medicare — with or without the health care reforms now contemplated. Either way, we’re going to have to get serious about what we want and how to pay for it.

I agree with everything you said. However, I don’t understand why you think the annexation falls into one of the pyramid schemes. In my opinion, public pyramid schemes like Social Security and universal health care tend to last much longer than private schemes because they continue to get propped up by higher and higher taxes. So long as the government requires a reasonable payback on its investment on infrastrucure for the annexed lands, it would seem that such investments are much wiser for government than to borrowing money to build a non-returning economic investment (like a library).

As for pyramid schemes in general, at Politics and a Pint I sometimes suggest that the mathematics of all of the following represent pyramid schemes of ever greater size (a pyramid of pyramids): Cash gifting (how stupid are we), Petters ($3.6B), GM’s retirement system ($20B), Madoff ($64B), Social Security ($20T), economic systems based on growth ($TTT?). In my opinion, all of these systems count on the fact that new arrivals will start out by putting in more than they are taking out, and when that cohort is ready to take out more than it puts in, the system will have even more new arrivals to provide their money (or labor) to subsidize the payouts the system promised. When the increases ultimately fail to materialize (and they must fail), the systems collapse.