Want to debate? Bring facts next time

by Jeff Van Wychen | September 28, 2009 • Mitch Berg’s critique of the Minnesota 2020 analysis of cuts to County Program Aid (the state’s revenue sharing program for counties to administer key services while keeping property taxes down) was most notable for the audacity of its claims and the scarcity of facts to support them. While there were many assertions in his blog, many of them were patently false.  In general, his post was a mindless and irresponsible regurgitation of far right fallacies that would make Sarah Palin blush.

Much of Mitch’s post is a rant against the Local Government Aid (LGA) program.  If Mitch had bothered to do any research, he would have realized that counties have not received any LGA since 1992.  Thus, the diatribe against LGA was irrelevant to a discussion of state revenue going to counties.  Incidentally, the current LGA formula which Mitch hates so much was designed primarily by the Pawlenty administration back in 2003 — the same Pawlenty that Mitch lionizes elsewhere in his blog.

Mitch’s primary gripe is against the Minnesota Miracle, a major restructuring of the state-local fiscal relationship enacted in 1971.   In his screed against the Minnesota Miracle, Mitch blames it on “gigantistic DFLers and a Republican minority.”  In fact, Republicans held a majority in both the Minnesota House and Senate when LGA and the Minnesota Miracle were enacted.  Since 1971, many GOP state lawmakers have fought to preserve these reforms.  In short, the fingerprints on the Minnesota Miracle and LGA are bi-partisan.

Mitch fails to mention an important fact about the Minnesota Miracle.  While it is certainly true that the Minnesota Miracle included a large increase in state revenue to local communities, the state also took local governments’ ability to levy sales taxes and placed limits on their ability to levy property taxes.  In short, the redistribution of resources that Mitch whines about was a mixed blessing for local governments.

The program that the original Minnesota 2020 analysis was about and the one which Mitch probably meant to attack in the first place is County Program Aid (CPA).  CPA was passed in 2003 by a Republican House and a DFL Senate and signed into law by a Republican governor.  Once again, the fingerprints on CPA are bi-partisan.

CPA provides revenue to counties based on demographic characteristics of counties that drive the demand for public expenditures and property tax relief.  The formula does not encourage unnecessary spending, because the amount of aid that each county receives is based on its demographic characteristics, not on the amount that they decide to spend.  While the CPA formula is not perfect, it is a rational system for distributing public dollars to where they are needed.  Again, Mitch could have avoided some inane comments (e.g., “immense money-laundering, accountability-obscuring engine”) had he done his homework.

Mitch disputes the fact that CPA cuts have been disproportionate.  During the entire span of the Pawlenty administration, real per capita state general fund spending is projected to decline by 16.9 percent.  (This decline is somewhat overstated due to the fact that some of the cut in state spending is being shifted or replaced by federal dollars.)  After the July unallotments, the cut in real per capita CPA over the same period is 51.4 percent—three times greater than the cut to the state general fund.  Only the ill-informed or the innumerate would dispute the fact that the cut to CPA has been disproportionate.

But why should the state provide aid to Minnesota counties in the first place?  For one thing, counties are doing a lot of the state’s work. As noted in the Handbook for Minnesota Counties, “Countes are the administrative arms of the state and were created primarily to carry out certain mandates, such as providing welfare and a corrections system.”

Mitch appears to assume that county spending is driven entirely by local decisions.  Not so.  In addition to human service and corrections costs, counties must also implement state mandates in the areas of solid waste management and recycling, wetland mitigation, and burial of indigents, to name a few.  Given that state government imposes substantial costs on counties, it is incumbent on the state to provide the dollars to help pay for these costs.

Mitch’s defense of Pawlenty’s aid cuts would have some intellectual credibility if he was also calling for the elimination of state mandates on counties.  However, Mitch’s blog is silent on this subject.  To defend the massive cuts in state aid without also noting the role of state decisions in driving county costs is irresponsible.

Rather than reducing state mandates, more costs have been shifted on to counties during the tenure of the Pawlenty administration.  For example, additional medical assistance and felony offender incarceration costs have been dumped on counties.  This was done because it was easier for state leaders to shift their budget problems to counties rather than deal with them responsibly by increasing state taxes or by making deeper cuts to state spending.  Mitch might want to note these costs shifts the next time he chooses to preach about “accountability.”

As noted in my original analysis, county revenue in particular and local government revenue in general have declined more than state revenues during the Pawlenty era, so neither Pawlenty nor his right wing apologists should be preaching to local governments about the need for frugality.  Local property taxes have increased not because of real growth in local budgets, but because state leaders have chosen to solve their budget problems disproportionately on the backs of counties and other local governments.

In a bit of a digression, Mitch asserts that the prosperity that Minnesota enjoyed in recent decades would have likely occurred “without government intervention.”  In the same paragraph, Mitch notes the role that “a highly-educated” workforce played in promoting Minnesota’s economic growth.  That highly educated workforce was largely the product of the public investment that Mitch appears to spurn.  According to Art Rolnick, Senior Vice-President at the Federal Reserve Board Bank of Minneapolis:

Back in the late 1950s and early 1960s, when Minnesota was an economic laggard, the state made a long-term commitment to upgrade its education system.  That kind of foresight helped forge a strong economy that has lasted for decades.

Mitch would have us believe that public investment has been irrelevant to Minnesota’s prosperity.  The above remarks from Rolnick, a respected non-partisan expert, indicate otherwise.  True fiscal conservatives need to decide whether they will follow Rolnick’s fact-based analysis or Mitch Berg’s fact-free dogma.

Contrary to Mitch’s assertions, the economic prosperity that Minnesota enjoyed since 1970 was far from inevitable.  Our natural resources, while notable, are certainly not extraordinary relative to other states.  Our climate is a drag.  We are not particularly well situated in terms of our geographic location to major markets.  To prosper, smart public investments are essential.

Without going into a detailed analysis, it should be noted that CPA is distributed based on a rational formula that takes into account objective local needs and the local ability-to-pay.  While reasonable people can disagree on whether CPA is a smart public investment, the debate on this subject should be based on fact, not ludicrous appeals to ideological co-religionists.

Mitch’s post is littered with other inaccuracies, too numerous be catalogued here.  Such that it is, his post typifies the worst of modern political discourse, in which extremists (on both ends of the political spectrum) are too lazy to research their issues and instead rely on tired mantras of questionable veracity.