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Insight Now: April 6, 2011 Archive
Common Cents Conversation 4/8 - How will lawmakers begin debate on tax fairness and a balanced budget?
Posted at 3:55 PM on April 6, 2011
by Michael Caputo
Steve Sviggum, former Speaker of the House, said any talk of a budget and the proper level of taxation starts with what the state plans to have in its wallet.
"It's important to set that level of taxation that the state is willing to burden its citizens with and then prioritize the level of services to be provided - not the other way around," said Sviggum, the Kenyon Republican who served 28 years in the legislature.
That's what a family does. But in the back-and-forth over tax fairness in MPR's Common Cents online forum April 8, other lawmakers argued that the needs of the Minnesota "family" are what comes first. Here is Ann Wynia, former DFL majority leader in the House:
"It's not unlike a family in which the parents seek to provide each child with what he/she needs even when that means each child is not treated equally. Some need braces and others need glasses. And often times in the family one of the kids is asked to take a paper route to help the family or Dad asks for overtime. State government has to balance similar disparate needs. To arbitrarily assign a right number is senseless." This discussion starts at about the 12:17 mark of the conversationFormer Republican Minority Leader Marty Seifert said that state budget-makers have to look at what other states are doing with taxing and spending, especially those around them.
They have to be competitive. And that's defined, Seifert said, as what it means to employers.
"We often had job providers tell us what other states offered for incentives and tax rates, (workers compensation), etc. We can't live on an island," Seifert said (check the 12:24 mark)
An outside commentator in the discussion pointed to the Small Business Survival Index, which ranks states on their tax rates and amounts of spending. In other words, the index (done by the small business advocacy group - the Small Business & Entrepreneurship Council) starts with the premise that higher taxes and more government services are bad for business.
The 2010 rankings put Minnesota 42nd on the list of 51 (including the District of Columbia). It's neighbors? South Dakota has the best ranking. Ohio is 9th best, Indiana is 17th, North Dakota ranks 18th, Michigan is 26th, Illinois is 28th, Wisconsin is 31st, Nebraska is 37th, Iowa is 40th
But this metric for judging tax rates didn't sit well with Lee Greenfield, a former 21-year DFL state representative.
"This state has been at its best financially, when it invested in its people. Yes, we have to keep track of what other states are doing, but competing for the bottom does not serve us well," Greenfield said.
Halfway through the conversation, (about the 12:29 mark) Wynia said that it's the responsibility of lawmakers to look at long-term implications of the financial decisions they make.
"What did the past generations do for us; what do we owe the future?" she said. The roughly 600 people who attended the Common Cents forums hosted by the Citizens League called for long-term planning by legislators, even as they try to dig out from under the current fiscal mess.
Seifert talked about how lawmakers get longer-range forcasts, what he called "tail targets" that predict where spending would go in various programs.
What happens to the "tail targets" as the legislature gets knee-deep in deliberations to forge a budget?
"No doubt the 'tails' discussion and demanding long-term structural balance gets lost in the final days as we try to finish for the current biennium and either hold out hope or wishes for the out years," Sviggum said.
For the full flavor of the discussion with these legislators, click on the box below. (A video primer of the budget situation can be seen by clicking here.).