Minnesota’s lost decade


A recent post on the Wall Street Journal blog entitled “Lost Decade for Income: Change for Households, by State” tracks the decline in real (i.e., inflation-adjusted) household income using U.S. Census Bureau data.  From 1999 to 2008, real median household income has declined by approximately 4%, based on the WSJ post.

As bad as the national income loss is, Minnesota’s situation is even worse.  Real median income in the Gopher State has declined by nearly 9% — double the national decline.  Only two other states had a greater decline over the last decade.

The decline in real median household income as noted in the WSJ is consistent with trends noted in a recent Minnesota 2020 report, “On Our Way to Average: Ranking Minnesota’s Economic Performance.”  In areas ranging from income and job growth to road conditions and pupil-teacher ratios, Minnesota’s performance relative to other states has deteriorated.

The prosperity promised by “no new tax” proponents has not materialized.  Since 2002, Minnesota has cut taxes, charges, special assessments, and other own-source revenue more than any other state in the nation.  Rather than spurring growth, cuts in public investment in Minnesota have coincided with economic deterioration relative to other states.  Furthermore, the extent to which “no new tax” adherents can point to extenuating circumstances to explain away Minnesota’s sub-par performance is limited.

In light of this disappointing track record, there is no good reason to adhere to a policy that rejects all tax increases out of hand.  In dealing with Minnesota’s ongoing budget mess, all options — including both spending reform and reductions and revenue increases — should be on the table.