There’s an excellent reason why Minnesota lawmakers aren’t coming up with good ideas for balancing the state’s budget deficit, except for crossing their fingers and hoping the federal government bails them out (again).
It’s because there aren’t any.
OK. There are two good reasons. The other one is that this is an election year and all 201 legislators are up for election, except for those who are retiring or running for higher office. And nobody running for office wants to campaign on finding the least horrible solution to a no-win scenario that will bring pain to every doorstep.
But you can’t get to the second reason without understanding the first, so let’s start there.
Nowhere is it easier to see just how deeply screwed Minnesota is than by looking at this short overview of Minnesota’s budget issues from the nonpartisan Minnesota House of Representatives’ Fiscal Analysis Department. It’s must-reading for every informed voter this fall.
Besides the current $994 million state budget deficit lawmakers are hoping will magically resolve itself in the next month (page 8) minus the $312 million in cuts already approved (page 11), there’s the little matter of a projected $5.8 billion deficit for the next two-year budget cycle (page 9.
That lawmakers have largely decided this is a matter best not discussed until after the November elections is another story for another time.
But every politician out there who says we can solve the problem by taxing the rich a little more should take a look at page 10 of the report. Because even if you:
* Created a fourth income tax bracket for married households earning more than $250,000 a year;
* Increased the sales tax rate by 1 percent;
* Removed the sales tax exemption on clothing;
* Established video lottery terminals;
* Raised the liquor tax by 5 cents a drink;
It would raise an estimated $1.5 billion in new tax revenue. That still leaves you with $4.3 billion in black ink to erase.
And every politician out there who says that state government is just too bloated and all we need to do is painlessly cut the pork should take a look at page 5, which shows where the money actually goes.
Of all the money the state spends, 41 percent goes out in direct payments to school districts, 28 percent goes out in direct payments to (or on behalf of) individuals for health care or property tax relief, 9 percent goes to run higher education institutions and 8 percent goes directly to local governments for aid.
That’s 86 cents out of every tax dollar spent right there, for education, health care and property tax relief. Only 10 cents out of every tax dollar goes to actually employing all the bureaucrats and running all the agencies that do everything else in state government.
Even if the Minnesota Supreme Court upholds and the Legislature ratifies all Gov. Tim Pawlenty’s draconian unallotment cuts from last year, the state would still be looking at a $2.8 billion deficit in the next two years ( page 9).
And for those who think we’re paying more in taxes now than ever, take a look at page 7, which shows that the price of government (when you combine state and local government taxes) has hovered around 16 percent of our personal income for at least the last two decades.
No, what we have, as State Economist Tom Stinson described in his February state economic forecast, is a state that has lost a decade’s worth of job creation in the last two years, a recovery that likely won’t replace those jobs for several years to come, and stagnant wages and declining tax revenues as a result.
Worst of all, those deficit projections don’t account for inflation in the cost of goods and services the state will have to purchase in the coming years, which means, as Minnesota’s Council of Economic Advisors has said over and over again, that even these grim numbers are understating the depths of Minnesota’s problems.
So, when delegates to the state party conventions are whooping it up over the next two weeks and the chosen saviors of each party are handing out the platitudes about getting Minnesota back on track, maybe someone could ask them:
What’s your plan for beating Minnesota’s no-win scenario?