Gov. Pawlenty announced his short-term budget cuts yesterday (MPR). Local impact? Nlfd News says: Northfield to lose $356,000
Figures released today by Gov. Tim Pawlenty show Northfield’s anticipated Dec. 26 aid payment will be $356,000 short of what city leaders expected… The governor’s decision reduces the amount Northfield will receive next week by a little more than 4 percent — from $1.56 million to $1.21 million. It’s unclear how the city will deal with the unallotment. The city is required by law to balance its annual budget.
Today’s editorial in the Nfld News: Gov. Pawlenty, give back our money
Taxpayers are not legally allowed to tell the state that they didn’t make enough money this year to pay their taxes, so why should the governor be allowed to use essentially the same argument? … And while they’re at it, perhaps legislators should consider ending the governor’s authority to unilaterally take money away from our communities through unallotment.
Sen. Kevin Dahle blogged about the impending LGA cuts earlier this week:
If the Governor is set on using LGA to fill that gap, I hope he makes proportional cuts that will allow cities and counties to still receive badly needed checks this December instead of a blindsided approach that leaves our local governments reeling.
Seems to me that Pawlenty handled it reasonably well, especially in his sparing small towns and small counties from the short-term LGA axe… as well as military, veterans, K-12 education, and public safety (press release). I saw Northfield resident and Minnesota Association of School Administrators (MASA) Executive Director (and blogger) Charlie Kyte at GBM this morning and he agreed.
Besides, we’re not in such bad shape here in Northfield. City Finance Director Kathleen McBride commented here on Locally Grown back in early Dec when I asked her about City’s vulnerability to further cuts:
We have already received notice of our 2009 state aid amounts. The dilemma is what the potential cuts could be and when they would be made. It is possible that the governor – and the legislature could “un-allot” 2009 aid in 2009. This would cause local governments to have to make mid-year budget reductions.
The City does have a $722,000 “revenue stabilization” reserve for this very purpose. This at least allows us some wiggle room should the cuts occur suddenly.
Rep. David Bly blogged about the State’s BIG budget problem earlier this month. He alerted me to it via email:
In my most recent post I talked a bit about the budget crunch we are facing at the State level, I encourage constituents to weigh in on suggestions for the resolving the budget problem. It occurred to me that Locally Grown might be a place to generate some discussion. I do genuinely want to hear ideas from those who are interested in offering them. The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution and the more ideas we have to work with the better.
Sen. Dahle makes a similar plea in his Thursday blog post.
We’re planning to have both Rep. Bly and Sen. Dahle on our radio show/podcast in the next two weeks, so now’s a good time to start the discussion.
How would you balance the State’s short- and long term budget problem?
Griff,
I saw a notice of this in the Northfield News weekend edition.
It almost looks like an attempt to keep this low profile. The notice was tucked away among other things and it didn’t have a date or day on it.
I read it yesterday and it said that the meeting was tomorrow. However there was no date only the time and location, so now I am not sure if tomorrow meant Sunday or Monday night.
In any case I will drive by the library tonight after work.
http://davidbly.com/archive/town-hall-meetings-2/
Griff,
Just found the link…it is tonight.
Thank you David Bly and Kevin Dahle for organizing the town hall meeting yesterday.
30 -- 40 people were present and the meeting took one hour due to another meeting scheduled after it.
The problem of the Minnesota budget problem is enormous and will require political will ad leadership to solve. It became quiet apparent that the congress and senate do not have an alternative plan to our Tim Pawlenty’s.
Instead of stepping out ahead of the issue the DFL has decided to dissect the only existing plan.
I got a small glimpse of how difficult it will be, especially for the DFL, to propose true alternatives. A lot of special interest groups will push hard to keep “their” programs funded and alive.
Last night the ” ending poverty by 2020″ was present with several members to push their agenda.
There is also an absence of of political will to address some of the fundamental structural tax issues as reported to our leaders as early as 1995, by the Budget Trends commission.This commission was charged to give policymakers a clear picture of the future budget challenges. So, why is it being ignored?
My sense is that following those guidelines would force lawmakers to make unpopular decisions. These would jeopardize their changes of re-election. Instead of leading and making fundamental changes it is much easier to put of those decision and revert to a patchwork of fixes.
Expect more of the same. Higher spending, more debt and more taxes and fees.
Doesn’t look like “change” to me.
Paul Zorn
If you feel you want to pay more taxes..”write a check” and send it to St. Paul. I am sure they can use it….LOL;
Peter: Thanks for reporting on the meeting. Although please don’t ask Paul to send extra tax dollars to St. Paul. I am qualified as a stimulus recipient. He can send his surplus cash to me and I will spend it in Northfield.
Peter and Jerry:
Rumors of my surplus cash are highly exaggerated. And having heard just this morning that I’m in line for a (dental) crown, I may be taking up a collection among LoGroNo addicts.
Peter? Jerry?
The serious point I was trying to make at last night’s meeting was that, in times like these, “revenue enhancements” simply can’t be off the table — gubernatorial pledges or no, and despite the predictable howls of “class warfare” from the chorus stage right. New revenue might be raised in various ways (taxing clothing, raising some top rates, etc.) but I see no way around new revenue, especially when more and more of our fellow citizens can be expected to be out of work entirely. Sure, we should economize wherever possible, and perhaps some people would appreciate the symbolism of legislators themselves taking pay cuts.
But getting serious about addressing deficits, some one-time and some systemic, while paying due attention to maintenance (in all senses of that word) will take more than symbolic posturing. It will take flexible and creative thinking about what we want and need, and how to pay for it. And it will probably require more money from some sources to compensate for getting less from others.
Holding such opinions, I can hardly excuse myself from paying some share of the freight. When I said so in last night’s meeting the expected response came right on cue: Just send it in.
Sure, I can do that, but I want others equally or better able to pony up, too. We’re in this quagmire together.
Paul Zorn,
I suspect that we will be hard pressed not to raise new revenue through taxes. Despite my resistance to support bad fiscal policy and budget mismanagement.
My hope is that we will apply “the rule of necessity” to the spending part as well.
Problem is that while everybody sees the necessity for spending cuts, everybody wants to protect their own pet projects.
The shift to determine the actual role of government as a whole would certainly aid in the process.
But in the current hysteria and anxiety surrounding the economy there is no political will for that.
As a result we will see “token cuts” and higher taxes.
[...] How would you balance the State’s short- and long-term budget problem? (406) [...]
Breaking news: Apparently, there are still three branches of government in Minnesota.
http://www.startribune.com/politics/state/80369612.html
(fixed HTML/blockquoting.)
Patrick: Do you have the reference to the actual case?
I wonder how the judge thought that she had the constitutional authority to be involved in the case. It appears that an intended beneficiary of an unfunded program sued the governor.
If this case is allowed to stand as precedent, the legislature could, in theory, mandate all kinds of unfunded programs. And, worse yet, any politically aggrieved party could take their issue to the courts, creating a hopeless mess.
I don’t see that the governor had much choice. If there wasn’t enough money to pay for all of the programs, what was he supposed to do?
David L.- Enter the word “deficit.” Whether the budget is one thousand, one million or one billion over revenue projections, the fact of the matter is that there is not enough money. The question I see in this is whether someone is willing to do something about it or just keep their head in the sand and pass the problem on to future generations.
Pawlenty has done what the legislator was unwilling to do.
I believe that the democrats knew very well that their budget wouldn’t be accepted by Pawlenty, but they refused to make compromises.
It was a calculated move by the DFL to push the responsibilities on cuts to the Governor. That way they could avoid making the necessary cuts themselves and it gave them enough political cover for the next election.
The theme of the next election will be Pawlenty is the bad guy and we are the good guys…LOL.
Unfortunately both approaches don’t help the situation very much.
At the end of the day none of the structural issues have been addressed, and the political game surrounding our money will continue.
The game of finger pointing continues and in the end we the people are left holding the bag.
We need leadership that is willing to make necessary cuts and uses prudence and honesty in budgeting.
A good step would be making a budget based on actual revenue and not on projected revenue. Another good step would be to slow the growth of the budget to the rate of inflation.
Only spend what you have…..geez there is a concept.
Peter- That is the problem with your furi’ners (no racism intended)- you always come up with something that is un-American. Only spend what you have? LOL! Just think where we might be without all the toxic mortgages in the banking system and unfunded mandates in the legislative branch.
Peter, John:
Whether taxes and budgets are too high or too low in Minnesota is an interesting question.
But Judge Gearin’s ruling was about something else: whether the role Gov Pawlenty played in the budget process was or wasn’t constitutional.
Paul Z.- Yes, that is the question. When I heard about Gov. Pawlenty threatening to do that, I wondered if this is a way to balance power between the legislative branches. Pawlenty does have the authority to completely veto the budget. Then, the legislature can see if they have enough votes to overturn that veto. The concept of line-item veto is an interesting one. No matter what political stripe the governor might be, it allows for funding of those services that everyone agrees are necessary until the ones in question can be delineated further. I’m no constitutional law expert by any means, so it will be interesting to see how the courts rule on this.
Peter, I think all the government spending benefits many businesses and gov’t employees and these businesses and employees don’t want to lose their piece of the pie even knowing the system overall is failing. This is the long term evil of governmental growth. Unless something huge can be done (like when the phone system was deregulated but on a massive scale) then the system will have to completely fail like the USSR … which will be sad and painful.
This has been a worthwhile discussion and I look forward to more give-and-take about the state’s financial health. But very few of the 400+ comments respond directly to the original question: How would you balance the state’s budget? (That’s a paraphrase, not a quote). There has been some discussion of revenue (extending sales taxes to clothing and lawyers’ fees and such), but almost nothing specfic regarding cuts. Real, substantial, non-technical cuts in state spending. Though I do not identify with those who decry government; who assume that government is inefficient or corrupt or wasteful or evil; or who think lowering taxes will spur development, I DO think there is a lot that state government does which isn’t necessary or could be done better and cheaper by local governments or the private sector. It might be fun to identify one thing each week that the state spends money on and see whether that thing is worth doing at all or worth doing with less. Kind of like Ludescher’s zero-based budgeting idea (I was around during the 70′s ecomonic downturn and remember zero-based budgeting fondly).
My nomination for the chopping block: driver licenses.
Most people who get a DL have completed a driver education course. Presumably, that course is a worthy investment because it makes for safer drivers. But I would theorize that the possession of a driver license in no way contributes to public safety. It is proof of nothing, save a rudiemntary vision exam and a heafty fee. Whay do we spend millions of dollars issuing and re-issuing driver licenses? What justification is there for this expenditure? What would happen if the state simply got out of the DL business?
The FY 2009 operating budget for the Driver and Vehicle Services Division of the Department of Public Safety was just over $71 million.
Jim do you have any evidence that the fees charged for drivers licenses don’t already cover the cost of that program? Since this same agency also collects vehicle registration taxes (which are far more than $70 million/year) I’m guessing this is an agency which raises more money in fees than it spends. So if you’re suggesting that eliminating some/all of it then you’ll have to explain how that’s going to help to balance the budget if in fact it reduces revenue more than it reduces spending.
Then of course there’s the issue that drivers license are widely used as legal id so there would be a strong argument that we’d need a system of issuing id’s even without the driving part. And of course some people might suggests that having anyone allowed to drive (12 year olds? repeat drunk driving offenders? ) might not be a great idea. And if you’re going say some people can drive and some people can’t then you’ll need a system for tracking those people (which sounds a lot like a driver license system). Also, all other states require drivers licenses and while they’ll happily honor minnesota-issued licenses I’m guessing they’d be less than happy about a “anyone who claims to be from minnesota can drive on our roads” arrangement. So it would likely mean Minnesota drivers would need to obtain a license in some other way (Federal driver’s license anyone?) in order to drive out of the state.
Jim, your idea would also strengthen the right to “free assembly” by removing one legal road block.
Jim: I don’t know how to balance the budget. But, I do know that the courts telling the governor that he has to spend money on programs that are unfunded doesn’t help, and may be the worst possible way to get a balanced budget.
David,
Yes,
would be a bad way to set or balance budgets. But this hasn’t happened in the present case. To repeat, Judge Gearin’s ruling was about the governor’s role in the budget process, not about whether too much or too little is being spent.
Sean @ 410.2:
Excellent point about fee revenue supporting state services. I have tried to find out what portion of the Driver and vehicle Services budget is supported by fees. I haven’t been able to figure that out yet. I assume — because a lot of what they do (vehicle registrations and driver licenses) comes with fees — that the fee revenue takes care of a large percentage of the budget. BUT…does that justify the services they provide?
Also a valid question about the value of a DL for purposes other than driving. A driver license is indeed the most common form of ID, although many people carry several other forms of ID (passport, school ID, work ID, credit card with photo). What I’m trying to get at is Ludescher’s question about government expenditures — that we shouldn’t just assume the value or assume that because a service exists that it should always exist and therefore always without challenge consume fees and taxes.
Is there some other way to derive some of the benefits [although I'm still not sure that there are very many] of a driver license without spending $71 million each year?
Next week, I’ll propose another target.
Paul: I haven’t seen the case. but, I understand that the Judge issued an order advising the Governor that, in her opinion, he had to operate a particular program even though there are unfunded programs. Essentially, the court opined that the Governor doesn’t have the authority to balance an unbalanced budget.
This is dangerous precedent if upheld. It effectively means that the Governor is powerless to make the Legislature live within budget. Now the threat of a tax (revenue) veto can’t stop the Legislature. There is no incentive for the Legislature to create a balanced budget.
David, I believe you are correct in your analysis of what the Judge ruled regarding the food issue before the court. I don’t think she said unallotment is not allowed, but somehow she seems to have stated that the Governor went too far in using unallotment. I’m not clear what that means—if $2.7B is too far, is $1.7B OK? or if not, is $700M OK?
I’m glad that the Governor is taking this to a higher court for a look as it seems unallotment needs some clarity if a trial court judge can deny the Governor the right to balance a state budget, a requirement in our constitution.
A Supreme Curt ruling on ‘unallotment’ seems like a very good idea.
Patrick: I think that it would have better for Judge Gearin to have told the Plaintiff that the issue is a political problem between the Legislature and the Governor. Like Ray said, all she did was muddy the waters by saying that he can do it but in this case he went too far. We now know less about unallotment than we did before she issued her opinion.
David,
She has simply issued an injunction pending resolution of the issue. Now we’ll go go a higher court and find out whether or not the plaintiffs were right. The injunction will end once that is determined.
David & Patrick- If I were a betting person, I would put money on odds that either side will not be satisfied with whatever decision is handed down, and we will see a few years of attempts at legislation to “correct” the procedure.
John, I’d guess you are right -- though from my point of view, any reestablishment of constitutional limitation upon the Governor’s declared right to set his own budgets would be an improvement over the present situation.
Minnesota realized a problem decades ago and instituted unallotment. Patrick, without unallotment as an option there could be a constitutional crisis in that if the legislature doesn’t create a balanced budget that the Governor agrees is in order and signs into law, the legislature is in direct violation of our constitutional requirement for a balanced budget. Unallotment also must be available to act quickly when unplanned budget shortfalls are discovered and the legislature either decides not to deal with it, or there simply is not enough time to deal with it in a legislative manner.
I seem to recall at the start of the 2004 legislative session we discovered tax collections were down and the budget was about $400M off. The Governor used unallotment to correct that deficiency. There was no great huffing and puffing, it was done quickly and reasonably. And it allowed more months for state agencies and local governments to deal with a reduction than if the legislature acted at the end of May.
Ray et al.,
I don’t know about the constitutional law issues surrounding unallotment (David L’s the legal wallah … maybe he could render an official opinion). My sense (wholly uninformed by the ruling itself, I grant) of Judge Gearin’s point is that (i) she did not diss unallotment itself; (ii) she ruled that Gov P had misused the unallotment process.
I hope Judge Gearin agrees with my summary, because it makes sense to me. It seems reasonable enough to me that a governor should have authority to withhold spending, even after the budgeting process, in cases where state income goes unexpectedly south, natural disasters occur, etc.
To unallot at the *start* of the process seems, to put it mildly, imperious. I seriously doubt that lawmakers of either party really wanted the Governor to sit back through the budget process and then swoop in at the end, Caesar-style. Could this guy be running for something?
Paul: Your summary is probably what Judge Gearin thought, which means that she had no business ruling on unallotment.
It seems to me that whether the budget imbalance is unexpected or expected is irrelevant to the constitutional or even the political question. There is not enough money and someone has to do something about it. The governor can’t raise revenue or cut programs on his own. So, what are his options when the Legislature doesn’t do its job?
Paul,
I’ve now read the opinion. Your analysis of Judge Gearin’s opinion is almost dead-on. The trouble with her opinion -- there is no support for the Judge’s decision. She indicates that the Governor only had two choices -- call a special session or he could have vetoed the appropriations bills which passes earlier.
Interestingly, the Judge points out that the Governor’s office was involved in a lawsuit in 2005 when the Governor called a special session, but money hadn’t been appropriated. The Governor asked for money for “core functions of government”. In that case, the Court intervened and allowed expenditures of money without any Legislative allocation.
Jim H….
I don’t think anyone writing here can say exactly how to balance the budget. All anyone can do is give some ideas that might move the process in the right direction.
As for cuts in spending…I would start by asking the DFL and the Republicans to reduce or eliminate narrowly focused programs that serve a relatively small number of people who need the government assistance the least. Obviously the impact of such cuts would be small, but they would signal that both political parties are willing to begin to reduce funding to favored constituencies that do not necessarily need the economic assistance that the program provides.
For example…I think most programs that specifically target the basic economic needs of minority communities are necessary. But do they need funding for every program that promotes their ‘culture’? It seems to me, that in most cases their cultures are alive and well. On the other hand, do cattle farmers need state assistance to increase the size of their herds? Does a specific industry need continuing state ‘incentives’?
Additional revenue? Eliminate the tribal monopoly on casinos (talk about a program that benefits a few people!), and license state taxed casinos. Expand the sales tax to luxury food and clothing.
William- Good ideas, there. When are you going to get on the ballot? Of course, meddling with the tribal casinos begins to cross over into some treaties based on sovereignity. That’s a real hot potato! I could say something here, but I dare not!
The rise in gambling has paralleled the rise in irresponsible lending ~ maybe a cause and effect. Our economy is in peril in a way that did not exist when gambling was limited to Vegas. Maybe “Get Rich Quick” signs on billboards and in every gas station is not the way to build a successful society.
David, you are correct in the 2005 matter. It would have been much better for all of us if the courts had ruled on the lawsuit several legislators brought regarding the Special Master dispensing funds. It was a very, very strange time in St. Paul then. People/groups came marching in and testified before the Special Master to make a case that their funding was part of ‘essential state services’.
I think we could balance the budget by eliminating redundant legislators--we have too many and we should go to a single house instead of having both the “Reps” and the “Senators”. We should also pare down the numbers--say between 80 and 100 instead having twice that.
Secondly, I wholeheartedly agree with Judge Gerrin’s ruling--unallotment is not for a petulent governor to use when the legislature refused to institute his vision for a balanced budget--we elected the legislators to legislate, and they presented 2 balanced budgets to the governor--he is the one who vetoed them and decided he had a dictatorship that allowes him to cut whatever he felt like.
Unallotment was intended to be used in a budget crisis that might occur after a budget is passed and adopted--and when revenues were not as projected or where some other crisis changed the budget picture, the Governor would then be able to save the state some headaches. Instead, Pawlenty is using unallotment as a budgeting method, and that is incorrect, wrong, and heartless in this current economic times. Pawlenty is a sniveling, self-serving, presidential candidate wannabe who is grandstanding for political gain. He is not governing to do what is best for the citizens of Minnesota.
Jane: The question for Judge Gearin was the constitionality, not incorrect, wrong, or heartless. Unallotment is constitutional. There isn’t anything in the Constitution that says that the Governor has to approve bills that he doesn’t like, or that he has to call a special session.
I think Judge Gearin will rule otherwise if the matter goes to trial. I think her real intent was political -- give the Legislature enough time to do the job that they should have done before the end of the session -- pass a balanced budget. The Legislature’s intent was to give the Governor’s a Hobson’s Choice -- either approve the spending bill, or force a special session to approve a spending bill. The Governor outwitted them by doing neither.
Let’s hope that they do their job this time. And, let’s hope that they don’t wait until the last minute to do what they should have done last May. If they have enough votes to override a veto, then fine. But, don’t send another spending bill that is just wasting time to posture for the people.
Jane- Is your comment-
“…–we elected the legislators to legislate, and they presented 2 balanced budgets to the governor–…”
correct? I thought the whole brouhaha was over the size of the defcit, which means the budget was not balanced. Perhaps I am missing something here, but when we decide to spend more than we make, then we are not working with a balanced budget.
John,
I’m pretty sure the budgets were balanced. The Governor just didn’t like how they were balanced.
Patrick: I think that the budget would have been balanced if the Guv had signed the bill to raise taxes. One of the points made by Judge Gearin is that the Guv should have vetoed the spending bill if he knew that he was going to veto the tax bill. That is a good point.
So, no. I don’t think they were even close to balanced at the end of the Legislative session.
Patrick- I was just going by what Rep. Bly said in his post above-
“…The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution and the more ideas we have to work with the better…”
Is this some new kind of accounting system, where budgets with short falls are considered balanced?
This whole mess is completely avoidable if the legislature behaved in a prudent manner…..pass the revenue bill first. That’s a really basic thing to do. You have the fiscal department give advice on what revenue the current tax code will generate. Then you have three simple options before you….decrease the tax code, increase the tax code or leave it the same. If the revenue bill is passed first, then it would be much easier for the legislature to carve up the ‘known’ pie of revenue.
No business or family could possibly remain solvent if they behaved the way the legislature behaves. Passing all sorts of spending bills when you know you do not have the money to fund this is simply irresponsible. As some politicans have said in the past, if a family operated the way the legislature does they would write checks for all the things the family ‘needed’ during the month and at the end of the month walk into the employers office and say “I need more salary to fund my checkbook”. Obviously that scenario is not realistic. It shouldn’t be an option for the legislature either.
Ray- Sorry, but you have presented an oxymoron- “realistic government spending”, at least the way they go about it now.
Our elected legislators presented two balanced budgets to the governor--he vetoed because he refuses to raise taxes. Ray makes a good point that they should pass the revenue bill first.
The majority of the voters clearly voted to raise taxes--we still want schools for our kids, snow plowing for the roads, nursing-care for the elderly, and welfare for the poor. Voters overwhelming rejected the Republican platform. Pawlenty did not get a majority of the votes, due to the three-way race.
Pawlenty refuses to share power or compromise. He acts like a dictator, and he is impoverishing the state with his policies. It won’t be too long before we see the results of these policies, including the disastorous deterioration of education. The only thing Minnesota has going for it now is that other states are struggling and may not be able to improve. The result is mediocrity across the states--so maybe we won’t lose businesses because they won’t have anywhere better to go--except for a continued out-sourcing of jobs to better educated countries.
Jane- I guess it is a matter of how we look at it. By proposing a budget that falls short of incoming revenue, then this does force some reaction. If it is possible to raise taxes by $5.2 billion to cover this shortfall, then that is definitely a realistic solution, and you can call it a balanced budget proposal. If I figured the math correctly, this averages about $13.00 for every man, woman, and child in the state. That doesn’t sound like much in a society that regularly pay $5.00 for a cup of coffee. The only problem I see is that there are a lot of families that cannot afford even $13.00 per member (part of the spending is wefare, after all). What I do not have is how this would average out over the number of households that can pay taxes.
Just because of my up-bringing, I tend to agree with Ray above. I approach my spending on what I actually receive for income, not what I think I can shake out of my employer. There are some wage earners who do not have the ability to increase their taxes by $13 per family member. With the progressive tax structure we have, the burden then falls on a smaller percentage of wage earners. Whether a person can justify that or not is where there are political divisions, and some would say moral obligations. Both approaches probably have merit in and of themselves, so we as the electorate do have some choice in the matter depending upon whom we elect.
John,
I’m not sure I follow your $13/person calculation. Dividing a (biennial) deficit of $5.2 billion by Minnesota’s population (about 5.2 million) gives about $1000/person over the 2-year period, or about $1.30 per person per day. To put this in context, note that (if I’m reading the docs at http://www.doer.state.mn.us/budget-summary right) the total biennial general budget runs around $35 billion, or about $7000 per person — or about $10 per person per day.
These are huge amounts, any way you slice them, and irrespective of your tax philosophy. One clear message, though, is that it can’t work just to bill each Minnesotan for the same amount. Some inequality in tax burden will come with the territory if we want to have anything recognizable as a modern state.
And then:
Well … I have no doubt about the quality of your upbringing, or of Ray’s, but one wonders about the relevance of all that to a political discussion. Surely you don’t suggest that those who disagree (with Ray or me or you) suffer from some defect of upbringing.
Paul Z.- Thanks for the correction on the ammounts. My calculator dropped a couple zeros. I just divided the $5.2 billion by the approximate 4 million population of the state. Your numbers slant the budget proposal as being even more realistically unattainable.
I don’t see how you interpret my upbringing as being some higher plane than others. I only used the comment to illustrate how long I have held my convictions. I still look at the solutions to this problem as being rooted in politics as much as economics.
Jane, we are far, far away from being an impoverished state. We spend more per capita than most other states. And at our current tax rates I’m sure we are in the top 10 states. The big question to deal with is ‘how much is enough?’. We deal with that in education spending, transportation spending, health care, and on and on. That is why passing a revenue bill first makes a lot of sense…and, as John points out, is why our legisalture will not do that.
Our state population is staying very stable. Evidence of this will come forth shortly and may end up costing Minnesota a Congressional seat. But, if our population is staying flat, or in a slight decline, then it is more and more difficult to keep expanding government, as you have to keep increasing taxes and fees on citizens to do so. At some point I would think Minnesota would look at reigning in government growth, consolidating local governments, etc. to keep costs in line. The question is when.
Ray,
It might indeed be a good idea to see first to revenue and then to spending. No system is perfect, of course, and I’d expect some political game-playing either way.
And of course you’re right that we’ve long been a high tax, high services (HTHS) state, and that this strategy raises special problems when we have stagnant growth in population or in the economy.
But let’s also acknowledge two other key things.
First, Minnesota’s HTHS strategy has actually worked quite well over the last 35 years or so. (I’ve argued this often on LoGroNo, and in many ways it’s self-evident, so I won’t repeat that schtick now.)
Second, the idea that Minnesota government is unduly and across the board “expanding”, with ever-increasing taxes and fees, is at best debatable, and it’s arguably false. By the State’s computation (go to http://www.doer.state.mn.us/budget-summary and click on Price of Government) our price of government has hovered around 16% of state personal income for quite a few years, and has sometimes been higher than it is now.
Paul Z.- Why do we have a $5.2 billion shortfall? Is someone not paying their taxes? Has the economic climate affected revenues?
Paul, you and I agree on the fact that a high tax, high services state has served Minnesota rather well. We started talking about this model in the late 1950′s and implemented it by the mid-1960′s. So, for the majority of my life I have enjoyed the largess of Minnesota. We also need to look at that model and understand that it worked because we essentially said ‘if we invest in these kids (the baby boomers) maybe they will amount to something, stay around, and pay their taxes’….sort of when we all do better all of us do better philosophy.
My concern is that with a change in demographics we have to closely monitor our state efforts. Where do we need to concentrate our dollars to again get the biggest bang for our buck. Just because something seemed to work in 1960 does not mean the same model will work in 2020. In fact the legislature has a 2020 Caucus or R’s and D’s that is working on this very issue.
Thanks for correcting John’s math. Your figures do put things in an even
tougher light. And you are right that our progresssive tax structure will not collect any shortfall evenly. And our progressive tax structure is one of the reasons we are in the financial problem we are in today. As those well off baby boomers retire and drop their incomes, stop spending like they did, or even move their place of residence to another state, we really, really miss the good old days. And when the economy stalls and the private world reigns in salary and bonuses, we immediately feel it in the state coffers.
.-= A recent blog post from Ray Cox titled Deer =-.
The letter of the day in the today’s Strib raises a topic often bandied about in government budget discussions. The link for it is here:
http://www.startribune.com/opinion/letters/81999727.html?elr=KArksc8P:Pc:UUULPQL7PQLanchO7DiUr
I would really like to find some firm data on this idea. I tried looking at some labor statistics and got nothing I could understand. I’m not sure how the number of state employees translates into their earning power. Also, state employees pay taxes like civilian employees, so some of their wages are offset by their witholdings. It would seem to me that the tipping point this writer refers to would have to be reflected in dollar amounts rather than sheer numbers of employees. Also, how does a person break out those civilian employees who get income from both the private sector and state funded programs, such as medical and elderly care workers? Much as I would like a simple solution, and much as I dislike to agree with David Bly, I have to admit that his statement, “The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution…” is accurate.
John,
The letter of the day you linked to is arrant nonsense, at least on the statistical front.
The total number of jobs in the US is something like 150 million. A moment’s research on the web suggests that the total number of federal, state, and local employees is around 17.5 million, or something under 12%. How precise these numbers are is debatable, perhaps, but the writer’s assertion that government employees actually outnumber “productive” ones is absurd — even if one accepts the writer’s equally ridiculous notion that government employees are, as a class, unproductive.
One wonders why the Strib so often prints such balderdash.
Paul Z.- I’m not sure about your word “arrant”, but I agree with your last statement-
“One wonders why the Strib so often prints such balderdash.”
I’ve wondered that for a long time.
Arrant- is that an amalgam of “arrogant” and “errant?” I’m not making fun of it. I just like that word.
John,
“Arrant” means something like “utter” or “complete” — and usually has a pejorative connotation. Here’s more:
http://www.thefreedictionary.com/arrant
I believe the word has etymology in common with “errant”, but probably not with “arrogant”. But I haven’t researched it …
“In an epic upset in liberal Massachusetts, Republican Scott Brown rode a wave of voter anger to win the U.S. Senate seat held by the late Edward M. Kennedy for nearly half a century, leaving President Barack Obama’s health care overhaul in doubt”
The Dems should have gone with a decentralized medical debit card for everyone. Big giveaways to banks and insurance companies just never goes over well with the voters.
David H:
If you quote something, please attribute the quote.
As for medical care, the payment vehicle — debit cards, cash, bags of gold dust — matters much less than the program, and (as your mysterious quote-ee says) that’s now in jeopardy. Bay State voters may indeed be mad about lots of things, but they seem to be getting even by shooting themselves, and us, in the foot.
Paul, that was just a news story quote from yahoo or somewhere. I think the voters are right that the current plan is no good and will get worse and worse over time. We need a simple decentralized plan that does not wildly pander to insurance companies.
John, I think what the Strib letter writer was trying to get at is the fact that even in this depression we are in, the total number of government workers on government payrolls expanded significantly….even here in Minnesota. One would think that perhaps the government might be thinking about slightly downsizing their operations in a time when tax revenue is steadily shrinking. But, other than a couple of states, they have not done that. I personally think this is simply because government is too far removed from ‘the people’. If managers in government offices had to follow me and my remaining workers around for a month they might get an idea of what is happening in our economy. But if they have not connection to our private, local economy then they won’t get it.
Ray- The bright side of the increase in government workers during a recession is that it does help aleviate the unemployment problem. Also, since the government is not affected by market pressures or lack of working capital, they can “create” as many jobs as they want. Of course, these jobs do not contrubute any goods to the GDP, but that is something our children and grandchildren can worry about.
Today’s Strib has a worthwhile article on state finances, tax and spending cuts, and their connection to the gubernatorial race:
http://www.startribune.com/politics/state/82524522.html?elr=KArksLckD8EQDUUUUs
The piece includes (hurray!) some useful numbers; largest is the projected $5.4bn revenue shortfall through the 2012-13 biennium. Also included are some projections on what various “revenue enhancements” might bring in if they were enacted. A 10% surcharge on income taxes (an extra $100 if you owe $1000) would raise about $680mn annually, for instance, while extending the sales tax to clothing would raise about $280 million.
On the spending side, it’s pointed out that Minnesota spends about 70 percent of its general fund on (i) schools, and (ii) health and human services.
There are some gaps and unclarities among the numbers reported, and (unless I misunderstand) some inconsistencies. But some messages seem clear to me.
One is that none of the gubernatorial candidates mentioned in the piece, with the possible exception of Tom Bakk, seem willing to discuss the problem forthrightly.
On the DFL side some of the candidates mention some revenue-raising possibilities, but nothing mentioned in this article would come close to addressing the problem (Bakk may be the partial exception).
The Republicans are, IMO, even worse. Seifert and Emmer, as quoted here, offer slogans and pieties and unspecified cuts, but no numbers. And both seem opposed to doing anything at all on the revenue side.
My comment (not necessarily the Strib’s): Neither party comes out looking good—or even grown up—here. But the R’s are worse than the D’s. Thanks mainly to the R’s, serious discussion of the T-word at the state level has become toxic, or even fatal. We won’t solve, or even seriously address, our budget problems until some antidote to this toxin is found.
Paul Z.- I think that antidote may be an increase in our GDP, because even if we do increase our taxes and fees, it still falls short, as your numbers indicate. Somehow, there needs to be an increase of wealth in the state. But then, I’m certainly no economist.
John G:
Sure, having more money around would help with our money problems … point well taken.
But the antidote I yearned for was specific to our aversion to any revenue-based discussion.
Paul Z.- I know my suggestion doesn’t really address what we have going on right now in the state budget. In my simple understanding of it, it appears a last bienium budget was put together with expectations that the economy would continue to grow at its rate at that time. There were additional spending programs introduced based on this assumption. When the economy turned sour, there was not a cut-back in these extra expenditures. A case in point is David Bly’s introduction of a program to add 40,000 uninsured children to a stae funded medical plan. This is all fine and has admirable motivations. How this was done, though, was to redistribute the funds alloted to Human Services. What actually happened is that about 50,000 nursinghome aides did not get a raise for three years. Nursinghome care is pretty much government funded, because an estate will last about 3-6 months covering nursing care, on the average. When questioned about these care givers not getting a raise, his reply was that he couldn’t do that on the backs of 40,000 children. The elephant in the room is that he provided health care for 40,000 people on the backs of 50,000 employed health care workers. That was the same budget that the legislators voted themselves a huge salary increase. That is hypocracy, IMO, even though the raise was a drop in the bucket dollar wise relative to the total budget. My opinion is that our budget woes have more to do with distribution of available funds. These are tough choices to make in the face of actual dollar shortfalls, but someone has to do it or we will continue on the road to soaring deficits.
John, distribution of available funds is a huge part of our budget problem. And right along side is deciding what things the state should be doing. Over the past 30-40 years we have expanded areas of state govenment in many, many areas. We may now learn that our ‘day of reckoning’ has arrived. We need to examine whether Minnesota is going to go down a path that will include many new levels of taxation never seen in the state before, or if Minnesota is going to reprioritize spending decisions and deliverly methods….or some combination of both.
Paul points out the Strib article which was very good in presenting numbers for various taxes, plans, etc. I thought it was interesting that the article noted Mark Dayton’s plan to ‘fix’ Minnesota is to increase taxes on the wealthy by something like $3.2 billion. Then it noted that in reality there would be all sorts of fallout to such a plan and that it wouldn’t end up raising near that level of revenue.
I do know that taxes are a very tricky issue to deal with at the state level. People react in unpredicted ways many times so what appears to be a good revenue source often doesn’t generate what was planned.
.-= (Ray Cox is a blogger. See a recent post titled Geothermal System) =-.
Ray,
Indeed, the state needs to decide what to do and what not to do, and how to pay for what it does. None of this will be easy.
But let’s keep in mind, meantime, that (as I think you and I agree) Minnesota has actually done quite well economically, compared to other states in our region, over the 30-40 year period you reference in #427, during which Minnesota invested in building general prosperity. And (sorry to keep repeating this) state spending on these investments has not been going through the roof: it’s hovered around 16% of state income for a long time.
It isn’t clear, of course, that the future will be exactly like the past; perhaps it will be very different. But the basic dynamic of prudent state investment in state prosperity has worked well in the past, and the burden of proof is properly on those, like our present governor, who want to change, or even reverse, that dynamic.
Paul, I don’t think Governor Pawlenty wants to change or reverse the prosperity of our state. Quite the contrary, I believe he wants to do all in his power to make it as successful as he can. But I think one thing you said is the clue to all this discussion: “it isn’t clear, of coures, that the future will be exactly like hte past; perhaps it will be very different.” I am one that believes that the future will indeed be very different from our past. When a State Representative that’s why I participated in the Legislative 2020 Caucus of R’s and D’s who are concerned about Minnesota’s future.
We have had over a decade of challenging budgets in Minnesota. Is a decade long enough for legislators to look hard and say “things are different here and we need to adjust”. I say a decade is enough to set a pattern, especially when it involves retiring baby boomers. Many DFL’ers are saying that we simply need to ‘tax the rich’ (Mark Dayton, et al) But as the Strib article you referenced pointed out, even going to the extreme of tax raising will not come close to meeting our spending appetite. So, like it or not, Minnesota is probably going to have to adjust its spending. But it is also a good thing in that if the adjustments are done properly, we can get real value, priortize spending, and eliminate wasteful spending. Will this legislature make sensible reductions or just try to support the status quo?
.-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.
Ray,
I didn’t say, and don’t believe, that Gov Pawlenty wants to reverse or end the state’s prosperity. What the Gov seems to want to end is the dynamic of state investment in Minnesota’s future prosperity.
Perhaps he truly believes that we can have the benefits of public investment (education, health, infrastructure, a healthy environment) without proportional costs, but I doubt it. More likely, IMO, the Gov is driven by some combination of opportunism (gotta maintain those right wing bona fides) and the belief that unwanted state obligations can usually be offloaded to other levels of government and modes of taxation.
This belief, by the way, seems not unfounded in practice. In the case of Hennepin County Medical Center, for instance, Minnesotans don’t really want the poor dying on the streets, and so Hennepin County probably will do what it can, gubernatorial unallotments notwithstanding.
Ray, I believe Gov Pawlenty has reversed the prosperity of Minnesota with his myopic policies. And claiming that Mark Dayton only wants to “tax the rich” is a cheap-Republican-shot.
Minnesota was historically the most prosperous when taxes were the highest. Now, under Pawlenty, we have underfunded every department, including MNDOT, and we have proof of what that led to--with a falling bridge that somehow left T-Paw unscathed. When MNDOT didn’t plow roads, Minnesota was up in arms--and Pawlenty and Mornau had to reverse that decision. Pawlenty has a Q-comp program that does not improve schools but is where he wants to put dollars. Many prominent, wealthy Minnesotans have petitioned the government to tax fairly, and suggested and return higher rates for the rich--because it makes sense, and because they value what taxes pay for--schools, roads, and social services.
Contrary to popular belief, taxes do not inhibit economic growth. In Minnesota and across the nation, empirical data proves that we prosper under higher taxes. These false claims that raising taxes will mean losing jobs ridiculous in light of our no-tax governor under who we have lost jobs like crazy.
Most importantly, our taxes are not wasted (except on the governor’s political appointees.) Claiming that government is a big waste of money is a nice claim for those that expect a free ride--there are always stories of inefficiencies, but in the whole government has served the citizens of Minnesota very well. We can always work for improvement--but menawhile, we need to fund schools, our department of transportation, our court system, the DNR, and other social services, including caring for the old, sick and infirm. Most of Minnesota’s welfare dollars go for care for the elderly.
Right now, our counties and cities are in crisis due to underfunding by the state--and you can lump in our court system, where we are failing to pay for speedy trials or public defenders.
Our poor are poorer and our middle class is lower class, while failed Republican policies have condemned us to an uneducated work force. I think the future for Minnesota is predictable--a cold Mississippi--unless we can bring about a new “Minnesota Miracle” that should include fair-taxation for the services we expect in a first-class state. Unfortunately, Pawlenty is more interested in his political future than our state’s future.
Jane- Can you name one government program that has increased the MnGDP?
I’m not Jane but I wager if MN had gotten rid of k-12 education in the 70′s we’d have a GDP of about zero by now.
John:
I’m not Jane, either. But we’ve had this discussion before, at length.
True, government doesn’t run for-profit businesses, like Malt-o-Meal. But Malt-o-Meal doesn’t—and shouldn’t—dig sewers or maintain the highways or fight fires, even though Malt-o-Meal relies on these services. Different entities, different tasks, but they work together to build economic value. It’s not complicated.
Here is an interesting quote:
I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
Winston Churchill
And, another one:
Government is the great fiction, through which everybody endeavours to live at the expense of everybody else.
Frederic Bastiat, French Economist (1801-1850)
John: You continue the Republican mantra that by claiming that government is the problem you have made some point, and the next step, which tells the masses that they don’t have to pay for a civil society.
Under the constitution of the State of Minnesota, we must pay for public schools and provide a “free and appropriate” public education for all of our children (even ones we don’t like or are not related to us.) Lately, we have not wanted to live up to that committment as it keeps going up in price.
The people love to hear the mostly Republican claim that government is a big waste and does not have to be funded, schools are dens of wastefulness and don’t need anymore money, and really, poor people just need to pull themselves up by their boot straps and don’t need any help--we don’t need taxes to fund the state--we can do it with a casino!
This is a failure by the people to assume their responsibility to themselves and their fellow citizens. Taxes are necessary and good for paying for services--and in fact do lead to prosperity. Having sewer and water services, garbage collection, public roads that allow for rapid transportation of goods and people, police and court systems, and our public schools all fall into this category. Claiming that government is a waste and the cost should never increase is like claiming that my telephone bill should be the same as it was in 1967. Both our needs and our desire and use of services change over time, as well as the affect time has on the value of a dollar.
Government is not meant to compete with private business. (In fact, I would say my criticism of government is its reliance on private businesses--like paying private contractors for services, like unneccesary market studies on hotels.) Consequently, if government is contributing to GDP, it is taking the place of a private business.
That is not the point. We are failing our state and each other by not paying for the services that are needed--yes, we can argue over whether some services are “needs” or “wants”, which is what our legislators should do. But to claim that we can’t raise taxes beacuse we don’t WANT to pay more--well it won’t work at the grocery store--they are not going to give you your groceries for the old price just because you don’t want to pay the new higher prices.
We NEED to fund our schools. We NEED to pay for elderly in nursing homes. We NEED to pay for our police and fire protection, and we NEED to fully fund our court system. We NEED to pay for the maintenance, including snow removal for freeways, highways, local roads and city streets. We NEED to pay for health care for people who cannot afford it.
We have serious problems in our economy that affect government--and we need serious people to respond. We need to quit running to the safe but silly argument that government is bad and somehow we can get everything we need without stepping up to the plate and forking over some cash.
We can argue the different ways that taxes should be charged--I am for progressive, not regressive, so I think we should have an income based tax that taxes higher incomes at higher rates--it is the system in place right now in Minnesota. I have a quirky attitude about corporate taxes--I am against corporate income taxation--I think corporation should pay a fee that reflects services, rather than an income tax. Unlike the supreme court, I do not think corporations are people, and I don’t think they should be taxed (after all, they don’t get to vote.)
The idea that we should reform government spending by rejecting any tax reform and only paying attention to the spending side is like trying to have a boxing match where we have one arm tied behind our backs and one leg tied up. It’s not a fair fight and we all look a little silly hopping around trying to head-butt government into submission.
The state of Minnesota is in this economic vortex because of the failed Republican policies spear-headed by Tim Pawlenty and seconded by the obstructionist party members--of course the people want to hear that tax increases are not going to happen--of course they agree with the bald-faced lie that they are taking a reasonable position. It is a lie.
These are the facts: Minnesota was at its peak financially when our taxes were the highest. We had companies clammoring to come here and set up shop, we had one of the higheste average incomes in the nation, we were prosperous, we had the best schools and the best medical care and all of our kids were above average AND good-looking (except for those with special needs--who then had access to best array of supportive services and education in the nation.)
I am not suggesting in any way that increasing taxes will mean instant return to those prosperous times. I am just saying that we should not try to dumb-down Minnesota to the dumbed-down expectations of a nation convinced by George W. Bush, Sarah Palin, Rush Limbaugh, and Glenn Beck that there really is free lunch. We need to step up to our responsibilities as citizens and seriously consider the problems of our state budget--and taxes must be part of that budget solution.
Jane, Paul Z., Sean F., et. al.- There is a symbiotic relationship between business and government. Neither can exist without the other. What we need to figure out is that dollar point at which the relationship is not sustainable. That would seem to be a simple economic equation, but perhaps it is not. The solution for this is where political differences enter in, and rightfully so. I contend that neither capitalism nor socialism is the cure all for the ills of mankind, nor the shortfalls in funding. What Ray and I and others have said is that it appears we cannot continue to increase government programs when there is insufficient funds to cover the cost of them. When the economic studies report that there will be a $5.2 billion shortfall over the next couple years, then I think we are at a point of needing to get all the cards on the table. This includes increased taxes and decreased spending.
John--I guess that is why the funding part should not be cut out of the equation. When you sit down at your “kitchen table” to do your budget, do you keep any increases in your salary for yourself and NOT consider them as contributing to your budget? If you lost your job and did not have an income--would you stop paying for food or your mortgage? Or would you try to economize and still eat? We need to look at the state budget through realistic, not rose-colored-no-tax-glasses.
Jane- I agree. I also agree with Ray’s statement that it is better to know what revenues are available BEFORE we start spending it. There are definitely necessities in the budget, but there is also pork. I suppose what pork gets cut depends a little bit on whose hog it is.
Jane, I hardly think speaking of Mark Dayton’s plan to increase taxes a minimum of $3.2 billion is “a cheap-Republican-shot.” If you watched Tom Hauser’s Sunday morning political show when Mr. Dayton appeared as a Governor candidate, it was essentially his only platform.
I will say that you are falling in line for the cheap-DFL rhetoric when you identify the collapsed bridge as a failure on Governor Pawlenty’s part. The failure of that bridge started decades ago. It most likely reached a critcal failure point due to a number of factors which may include summer heat, roller bearing failure, construction repairs being undertaken, etc. etc. The US Dept of Transportation has weighed in on the failure and I’m sure some courts will also weigh in. But I doubt that a defendant in any court action will be Gov. Pawlenty.
Your opinions on Q-Comp are free to express. Many schools across Minnesota have signed up for the program. Just a few days ago their was an excellent article by a veteran teacher about how he felt Q-Comp really helped his district and the teachers there improve their teaching delivery systems.
And yes, we do need to pay for our schools. In the 2005 biennium we gave schools slightly more than an 8% increase in funding. In the 2007 we gave them another 8% funding increase. That increase is far in excess of what the vast majority of businesses and families have seen. And it came after a very tiny increase in 2003 and what may again be a very tiny increase in 2011. Higher education during this time received increases as well. So all in all I don’t think Minnesota has been competely neglectful of education funding. But, as many have pointed out, we are dealing with an area of the budget where many try to make the case that there is never enough funding.
Minnesota has many choices and plans to evaluate in the next couple of years. Our population is not growing. Our working population is shrinking. Our average income is not increasing much. We are projecting somewhere around a $5-6 billion shortfall in the 2011 biennium….depending upon how the legislature deals with our current $1.2 billion shortfall this year.
Minnesota was at its peak a few years ago because the baby boomers were roaring into their peak earning years. We were buying goods and services for our growing families at a record pace. We were in a period of low cost money and prosperity. That is all changing now. As I’ve said before, the BIG QUESTION
.-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.
sorry….hit a bad key
The BIG QUESTION for me is how will the legislature deal with all this? Will they study and analyze Minnesota and then come up with plans to get us back on track? Or will they work to preserve a status quo?
.-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.
Ray: There is no evidence that Q-comp works-and you may have a few stories where some teacher had a great experiences, but it is counterintuitive to rely on a system that rewards some teachers over others based on student performance, where student performance is not adjusted for ability.
And yeah, I will blame the collapse of the bridge on an administration that favors cutting budgets over safety. MN Dot had studies from consultants that warned of weaknesses in the bridge, but because of budget constraints chose to seek other consultant’s advice and ignore what was prophetically correct.
And quit claiming that all Democrats want to do is tax. Democrats are realists, and know that budgeting should not be one sided--your claim that we can just look at our revenues and then set our spending is simplistic--what if our revenues are not enough to cover our NEEDS--like schools and police and courts and sewer and water? Should we just tell old people to go off in the woods and die? We must consider raising revenues as part of the solution of a balanced budget.
And explain in real terms how school funding has worked over the last 20 years--your “8%” increases barely have schools back to 1994 funding levels. And this isn’t even real funding. Minnesota is failing to pay to the schools--holding back a quarter of our obligation until August and then telling Districts that have been frugal and saving for budget needs that the state is going to keep even more of the schools money.
We have proof that Tim Pawlenty’s approach to state funding is a disaster--we live with it every day. Unless Republicans can offer real solutions without resorting to “false facts”, they should get out of the way.
Jane- Here’s a couple thoughts out of an column by David Brooks that I linked in the State of the Union thread.
“The populists have an Us versus Them mentality. If they continue their random attacks on enterprise and capital, they will only increase the pervasive feeling of uncertainty, which is now the single biggest factor in holding back investment, job creation and growth. They will end up discrediting good policies (the Obama bank reforms are quite sensible) because they will persuade the country that the government is in the hands of reckless Huey Longs.
They will have traded dynamic optimism, which always wins, for combative divisiveness, which always loses.”
Declaring that things were great when taxes were high is of limited value. Were things great because taxes were high? Maybe…maybe not. If tax burden was the measure of state quality, then New Jersey and New York would be the best places in the country. On the other hand,it looks like increasing revenues has to be part of the budget balancing process.
It seems to me there are cuts that can be made and there are taxes/fees that can be increased.
We can cut some school funding. Everything that is spent in schools is not sacrosanct. We can cut some social service spending. We can ask state employees to take a 5% pay cut, or face a 10% RIF.
We can levy a temporary 10% income tax surcharge. We can extend sales tax to food and clothing. We can allow casino gambling at race tracks. We can try to find a way to collect taxes, or equivilant fees, from ‘residents’ of no tax and low tax states who spent 5 months collecting income in MN but pay no MN income tax.
Few if any of these proposals will be enacted. And not necessarily because they are bad policy, but because of a lack of political will.
William, great comments, especially about the tax ideas. Contrary to what Jane has stated, I am not advocating no addtional taxes or that Minnesota may not need some additional revenue. Your comments about expanding sales taxes to pick up the millions and millions of dollars that are spent by people visiting here warrant serious discussion. As you note, a sensible plan that includes spending reductions and revenue increases is most likely what is needed in Minnesota.
It is foolish to blindly believe that increasing spending on any program automatically makes it better. We have seen Minnesota do that in recent years and we need to make some revisions to that concept. But as I said earlier, we are also navigating in uncharted waters with the retiring of baby boomers and an entirely new economic world situation. Business as usual will definitely not work.
Jane, no one ever had proof that modular school days worked really well….but it fanned across the nation like a wildfire. No one ever had proof that open classrooms worked really well, but it too ran up and down the education system. Outcome based eduction….another fad that ran up the pole. Maybe Q Comp will help some teachers/districts; I’m sure it will not help everyone. But to condemn districts that are voluntarily enrolling in it I believe is wrong. I’m not faulting Northfield teachers for voting it down because I assume they talked it over and felt it was not for this district. But I do think the choice needs to be left out there for those that do think it will help them.
Finally, schools surplus funds are being tapped because that is what the law says must happen—-there is no choice in the matter. State law directs that school surplus funds must be used when the state doesn’t have the cash flow to meet its obligations. In other words, schools, which receive almost all their funding from the state, that have saved some of that state money do not get new state money on top of their surplus funds on a temporary basis. That frees up many millions of dollars of cash flow that the state can then use for oblgations to people/organizations that do not have massive cash reserves. Jane, you being a CPA know all about this. This is not really much different from the state law that impacted Northfield and many other schools when I was on the school board. At that time the legislature declared schools would get XX amount of dollars per pupil….unless a district had X percent per pupil fund balance, then they would get $XX-X. In that case the state permanently took some funding away from schools that were managing their budgets well.
I’m not sure which case of school funding is the best for schools or taxpayers. One thing that does concern me is that if the state withholds payments to schools that have substantial fund balances I know there will be a push to make the ‘delayed’ payment a permanent cut. Since some school districts, such as Northfield, approved substantial voter approved operating levies, one can argue that the state isn’t taking ‘their own state money’ back, they are taking the money that local taxpayers funded to the school district.
.-= (Ray Cox is a blogger. See a recent post titled NAF Grants Breakfast) =-.
Two new state money-related ideas:
1. From a self-described DFL’er: repeal the corporate income tax.
http://www.startribune.com/opinion/commentary/83673327.html?elr=KArksUUUoDEy3LGDiO7aiU
2. From our governor, in a feat of contortion worthy of the Beijing Acrobats: use lottery money to house the Vikes.
http://www.startribune.com/opinion/editorials/83682362.html?elr=KArksUUUoDEy3LGDiO7aiU
Very cute. Gotta love this:
How exactly is the Governor’s proposal different from the state simply buying a stadium for Zigi outright, using general funds?
Hmmm. Vikings stadium vs. “schools or roads or whatever.” Tough choice.
Patrick,
Good question. Seems to me, given the fungibility of money, that the difference is almost entirely political. One way or another, the state (i.e., its citizenry) pays.
I’m not opposed in principle, by the way, to public money contributing toward a stadium. States do, and fund, various things that are arguably recreational or related to quality of life, and a case might be made for a stadium in that category. (Someone else should make that case, as I’m not much of a stadium consumer.)
I am opposed in principle to politico-financial gimmickry—as we have here—with or over public expenditure.
Paul and Patrick- I found this study by an economist with the Federal Reserve Bank in Kansas City. It is a few years old, but the history of the economic effect of a major league team on a metro area seems consistwent.
http://www.kc.frb.org/publicat/econrev/PDF/1q01rapp.pdf
This should cause some people in higher up places to take a serious look at publicly funding a stadium, especially if they fear a downtrun in the local economy if a team leaves. I really do not want my tax money going to build a stadium for a billionaire, but my voice is just a whisper in a hurricane when it comes down to it.
The study’s conclusion:
So does it makes sense for metro areas to use public funds to attract
and retain major league sports franchises? The answer is definitely not if
benefits are limited to increases in economic activity and tax revenue
collection. A strong case can be made, however, that the quality-of-life
benefits from hosting a major league team can sometimes justify the
large public outlays associated with doing so.22
Quality-of-life benefits are rarely explicitly included in the debate
on using public funds to attract and retain a major league sports franchise.
Acknowledging that the main benefit from hosting a team comes
from improved metro-area quality of life should help to value this contribution.
Doing so does not require impact studies. Residents and
elected officials who understand that the benefits of a sports team are
the same sort that flow from parks, zoos, museums, and theater can
decide on their own how much hosting a major league team is worth.
…which seems to concur with what I read back when the Brewers were blackmailing Milwaukee into building a stadium.
There were supposed to be blockquotes in there.
Sooo, how do you make an objective decision on intangibles?
As far as I’m concerned -- you don’t.
I think Green Bay got it right when the Packers proposed partial public financing of their stadium remodel: they put a referendum on the ballot, and the voters of Brown County approved a 0.5% sales tax on themselves expressly for the purpose of funding the project.
Of course, that referendum was made more fair by the fact that the Packers couldn’t threaten to take their team out of town (which is not really possible under the publicly-owned team’s bylaws). But still, it would seem that any public funding of a stadium for Zygi should be put to the voters, and if a majority of the affected voters approve the tax on themselves, then so be it.
The decision may not be objective, but at least those most affected by the use of public funds (namely- the public) would have a choice in the matter. That sounds objective to me, or at least fair.
Patrick, you bring up an imporant point about stadium financing….voters. We can in fact finance things with voter approval if it is granted. I have no idea if funding for a Viking stadium would pass with the public, but the last several tax increases put before the voters have passed. (MVST dedication, sales tax increase, etc)
One thing that is always important to examine is ownership of the stadium. I don’t really have a huge problem with Hennepin County paying for the Twins stadium because they also own it. Hennepin County owns lots of facilities that the voters pay for and use. But if we are talking about outright gifts to someone to help build and own a project, then I have real problems with any tax money being used.
Ray, Patrick:
I think Ray and I may be together (but correct me if I’m wrong) in the embattled minority of people with mainly positive views about the okay-ness, with appropriate caveats and due attention to priorities, of public funding for stadia. I don’t expect to spend much time in stadia, lavish or austere, but I do plan to haunt parks, zoos, museums, libraries, and other publicly subsidized venues. Why should the public subsidize my pastimes and not others’? Quality of life may be hard to measure, let alone price, but it’s no less real for all that.
So much said, we should indeed be careful. You warn, rightly, against “outright gifts [of public money] to someone to help build and own a project”. Indeed, that’s right out (for a stadium, at least, though governments do it all the time to lure or keep businesses, factories, etc.).
But IMO such direct stadium giveaways are less likely, and thus less worrisome, than other forms of profiteering at public expense. An instructive example involves former president GW Bush, whose rise from (relative) rags to (relative) riches was fueled by public subsidy of a Texas baseball stadium. The story is briefly outlined by the NYT’s Nicholas Kristof here:
http://www.nytimes.com/2002/07/16/opinion/16KRIS.html
As Kristof acknowledges, nothing illegal seems to have been done. But the irony of such an episode in the rise of a small-government advocate is pretty striking. Brings to mind St Augustine, who eventually found chastity and continence — but not too soon.
Paul,
I’m with you on the okayness of the voters approving financing of stadia -- if the public is properly informed,* and deems that the intangible benefits of a stadium warrant the cost.
My guess is that the best way to approve/fund a new stadium would be through a metro-area referendum and tax hike of some sort. I’m guessing that a state-wide referendum/tax would not pass, but if the whole state wants to fund the Vikings, that’s their/our choice, too.
As a non-Vikings fan, I would probably be one of the people voting against such a tax. I’d also think that this is a particularly bad time to be building a new stadium, given our terrible state budget situation. A few years from now the price might be easier to justify.
*: and not just an unquestioned stream of propaganda about the HUGE!! economic benefits that inevitably stream from an NFL franchise with a new stadium.
Not exactly about Minnesota finances, but the federal situation is presumably analogous in many respects, including the medical-spending elephant in the room.
Paul Ryan, Republican rep. from the southeast corner of Wisconsin, has been getting a lot of press, including *two* editorials in today’s Strib, for his Roadmap plan to address the deficit. My sense (but what do I know of such things?) is that mainstream Republicans are partly supportive (young guy, ambitious, full of ideas) but also wary (change hurts … a lot).
Here’s a link to an informative (and not entirely unfavorable) summary and commentary in the Washington Post:
http://voices.washingtonpost.com/ezra-klein/2010/02/rep_paul_ryans_daring_budget_p.html
If you want Ryan’s own version, find the link in Klein’s editorial.
The most important feature of Ryan’s plan—appropriately, given the size of the problem—pertains to medical costs. Ryan would essentially privatize almost everything medical — including Medicare, our deeply (but in some sense paradoxically) popular program of socialized medicine for seniors. Federal involvement, if I understand correctly, would be limited mainly to insurance, and insurance benefits would be indexed to rise less rapidly than medical costs.
There’s a lot more to like or dislike about Ryan’s plan. IMO a serious, perhaps fatal, flaw is the assumption that medical care is a commodity like soap or cell phone subscriptions that is best controlled by free-market discipline. The CBO appears skeptical of this, too.
But IMO Ryan deserves some credit for coming (partly) clean about the pain that will be involved in getting serious about deficits and debt.
Paul, you are on the right track in the way you look at public expenditures. Right now the state is wrestling with funding a bear and a gorilla exhibit at our zoos. And there are millions and millions of dollars dedicated to everything from planetairiums to public fishing docks. I agree that we should’nt simply eliminate one venue without discsussion.
I also agree with you that public assistance, to make a stadium happen, will most likely enrich the owners of the Vikings just as it did the owners of the Twins. A franchise with a spiffy new home, even if it is owned by Hennepin County, is worth a lot more than without one. I’m not sure how one deals with that and that is what makes stadium plans a bit unique. I don’t think the bears or gorillas are worth any more when their homes are spiffed up.
On the Congressman Ryan plan(s) I do want to look at them and see how he is projecting that they work. Most of the time when I hear about privatizing Social Security it tends to leave out all the important things SS does for the disabled and others in our world. Private accounts, much like 401(k) plans can be OK but someone has to be taking care of those without the private accounts.
Like you I do appreciate a plan on health care and SS coming forward. There are those that attempt to say the Republicans are not bringing plans forward. That is simply untrue. There have been plans from the R’s for year after year. Not all of them the best. And not many of them being discussed right now. What this country truly needs is good bipartisan discussion of ideas. We don’t seem to be in a position to do that right now.
.-= (Ray Cox is a blogger. See a recent post titled Trims at The Crossing) =-.
More on Paul Ryan … see #444:
http://www.tnr.com/blog/jonathan-chait/paul-ryans-ideology
Jonathan Chait, by any measure a liberal, describes Ryan as honest but loony. I wonder what mainstream Republicans think — on either score.
This is really the place — note the ostensible discussion subject — where we should be wrangling over Minnesota finance follies.
To get things going again here … today’s Strib editorial
http://www.startribune.com/opinion/editorials/86044497.html?page=2&c=y
includes (on the page linked to above; see the middle column) some possible “scenarios” related to the 2012-13 biennium, for which the current forecast predicts a $5.6bn deficit.
None of the scenarios come anywhere near addressing the deficit. At least one is downright scary: the state reneges on the $1.2bn in delayed payments owed to school districts. And most of the scenarios don’t account honestly for inflation, which is assumed to raise the state’s income but not its expenditures.
Any comments?
In Jane M’s #417 statement she is right on to pare down the number of Lawmakers. Another step to take is close down all non-essential sevices like closing the Parks and Trails and set them up for a user only fee so others who do not use this service have to pay for it. And we need to prioritize Long-Term Care. Long-Care provides over 112,600 jobs state wide. That is alot of revenue and taxes coming into the state. There are jobs on the outside Long-Term Care supports,Some of these jobs pay more than a Nursing Assistant. Nursing Assistants perform essential services and we need to pay them properly for their dedication and hard work that has little benefits. So Long-Term Care is a Jobs maker and that is good for Minnesota’s Economy so call your law makers and urge them to properly fund Long-Term Care. Thank-You David Roberts
Hey Griff:
Here’s a idea to put LGN to an interesting use…
How about a “balance the City’s budget” thread? Gather the available information about the current city budget, as well as current proposals for future spending, future cuts, and future taxes. Then let everyone argue for or against their favorite targets.
Personally, I think it’d be very enlightening to review, in one place, how the city spends all its money, and where it gets it.
That’s a great idea, Patrick. I’d want city fathers and mothers to participate, however. Think they would?
Maybe some would. Are they all still speaking to you? Also, some councilpersons have had personal attacks directed at them when they have previouly dropped by here.
Perhaps it would be better to start a citizen discussion, and if it is productive, maybe some of them would drop by.
I think it’s a toss-up between an informal citizen discussion vs. a more highly produced forum/panel discussion. Hmmm.
Another long-dormant thread that should, perhaps, be re-awakened.
State Rep. Tom Emmer, now the Republican gubernatorial candidate, has some ideas (I’m paraphrasing Lori Sturdevant’s Sunday column in the Strib): Eliminate state aid to cities. Replace government health care subsidies for the poor with tax incentives for charity care. Prohibit government support for alternative energy. Cut the state’s all-funds spending by 1/3.
Big ideas, to be sure. Do they add up to a program, or is this just posturing?
Hint: Emmer also supports an amendment to require a 2/3 legislative vote and a gubernatorial signature before new federal laws would take effect in Minnesota. There’s a little problem with the US Constitution …