Does Minnesota have a revenue problem, or a spending problem?
Posted at 5:00 AM on August 23, 2010
by Eric Ringham
(55 Comments)
Filed under: 2010 Governor's Race, Politics/Government
Each Monday from now until the election, we'll pose a question on an issue that's pertinent to the race for Minnesota governor. Today's Question: Does Minnesota have a revenue problem, or a spending problem?
For today's TQ, we also asked the three gubernatorial candidates how they would answer.
Republican candidate Tom Emmer:
"Minnesota state government has a serious spending problem. Revenues are projected to increase by nearly $2 billion for the next budget. Spending is projected to increase by almost 17 percent in only 2 years. What family wouldn't be happy with a 7 percent raise in these economic times, yet government says that's not enough.That's unsustainable. And that's why the next Governor will have to reform and restructure state government."
DFL candidate Mark Dayton:
"Minnesota faces another budget crisis that will require both revenue increases and spending reductions. However, state spending during this biennium is 8.2 percent less than in the previous biennium. So, further cuts will inevitably mean higher property taxes, more overcrowded classrooms and higher tuitions for thousands of Minnesotans."
Independence Party candidate Tom Horner:
"Minnesota has a political problem that has blocked good public policy. We need reforms on both the spending and tax sides to allow smart investments in the future for Minnesota."
Comments (55)
We have a REVENUE problem.
When you don't have enough MONEY IN THE BANK to even PAY schools on time for the services they provide you have a revenue problem. (And it's not like they've received any new revenue that all of a sudden you can't afford - this means not even enough in the bank to pay for status quo...)
When you CUT local government aid because you don't HAVE ENOUGH MONEY IN THE BANK, you have a revenue problem.
Schools are being required to do more reporting, both state and federal and have received no new money to do this reporting. In addition, due to the delayed payment many schools have to BORROW MONEY, causing increased expenditures for their district. WHY? Because the state has run out of money.
Local governments budgeted based on getting all of their LGA and now are searching for ways to make up that loss of revenue through cuts in services. At a time when MANY Minnesotan's are struggling to find employment or struggling because the employment they found pays less than before.
You can only cut so far. You can't cut your way to success. My biggest fear is that Pawlenty will become president and do to the nation what he has done to Minnesota. That is frightening.
During four years of a libertarian governor and eight years of an extreme right-wing Republican governor, the fiscal health of our state has steadily declined. The idea that four more years of the same will help the state recover is ludicrous. This state has a revenue problem. We need to return to a progressive income tax to provide the revenue we need. And if we ever again have a surplus, we need to retain it in the state's coffers and save it for a rainy day.
On the broader issue, I'm still mystified by something: if MN is a high-tax state, and high taxes kill jobs, why has MN consistently had lower unemployment rates than the rest of the country decade after decade? Obviously one of those premises is wrong. Either MN is not really a high-tax state, or high taxes don't kill jobs. Which is it?
They go hand in glove. Both need repair...yesterday.
Revenue problem.
In response to Scott Kaercher, for 12k a year I could not hire police, fire, street maintenance and plowing services for myself and property, let alone afford the tolls on the freeways it would take to keep bridges from falling down. It would not cover public defender costs, should I be falsely accused of something. It would not even begin to cover the cost of educating a child at a public university, which is now up to 20,000 dollars AFTER the state kicks in its percentage. To say nothing about how our society would be if we suddenly cut loose all of our mentally ill along with half of our prison community. This is the scenario we are faced with under a Tom Emmer administration.
12,000 per person on is a flat out BARGAIN.
The reality is the services we expect out of our government costs money.
We have been playing this no new taxes trickle down economics game awhile now. All in the name of creating a better climate for Minnesota business and jobs for our people.
Where is the beef? All that I seem come out of this is, higher property taxes, bigger deficits, increased numbers of working poor and unemployed. Who cannot get help because the programs that are supposed to be there are no longer existent or been cut so bad that they have been rendered impotent
All the while companies who benefit from tax breaks either relocate or outsource our living wage jobs elsewhere.
I would propose a two pronged approach: One, we look to scale back tax breaks for business that outsource jobs elsewhere. Two we explore expanding the sales tax to articles of clothing that are over a certain dollar amount.. similar to the way you pay additional sales tax on a can of soda.
But no more cuts, we been cutting government services since Arne Carlson. It is not working.
The question appears to be written by TomEmmer's campaign. It is a false dichotomy that makes dangerous assumptions, which it does not express. Simplistic, draconian answers are the way to make Minnesota into a cold Louisiana.
Minnesota has a revenue problem. Government underlies the fabric of our society. Taxes support the government. Beneath programs and projects is the the government structure and the workers that keep the system running. The people of Minnesota need to take responsibility for supporting our government. We need a balanced tax system with a better distribution of the income tax and revenue streams that draw from sources other than income.
Governor Pawlenty has consistently undercut this system. For example, in 2003, Governor Pawlenty proposed paying for court services by increasing fees. He suggested charging people who had no money for a lawyer a $50 fee for a public defender. That didn't go through, but it now costs $500 to file for divorce, $1,000 to file for bankruptcy. Fees won't suffice. Not only are there fewer public defenders with greater case loads, but there are fewer clerks to process mortgages and other legal documents. This spring the Chief Justice of the Supreme Court pleaded for no more cuts to an already starved system. The mantra "No new taxes" is mindless, unconstitutional and dangerous.
It should be painfully obvious to all but the morons of Minnesota, that after 8 years of "no taxes", that this stand, procedure, or gimmick does not work. It's boils down to do you want Minnesota to be know for high quality schools and colleges, great recreation spots, great roads and highways, clean cities or do you want to be known as the Mississippi of the North. I personally don't mind paying a few more bucks in taxes to considered a great place to live and visit.
Unless we want to live in a state with the "quality" of education an infrastructure that Mississippi has then we have a revenue problem. Most specifically the budget deficit is caused by the structural shift away from state income taxes to sales taxes and fees and property taxes. This shift benefits the wealthy and penalizes those in the middle and the poor. Just so we are clear who we are talking about. Those households that are in the top 25% of income earners in the state, households making more than around 75,000 a year should pay more taxes and they shoudl actually have to pay them and not get out of them with loopholes.
Both are issues. Like any business (and the government is a business we own), efficiencies can be found and implemented to save money. And just like any business, we have to invest in our business - in this case, that means tax dollars. It is important to stop making our governmental issues so black and white. Sensibly looking at agencies, determining sustainable efficiencies beyond just cutting jobs and giving reasonable budgets that need to be met followed by investment with our tax dollars that can be justified can go a long way in restoring the people's confidence that their dollars aren't just going down a black hole.
both.
According to www.usgovernmentspending.com, total MN government spending, state and local, is about 60 billion dollars, divide that by 5,000,000 people in the state of MN, that's $12,000/year in government spending for every man, woman, and child in the state. It is a spending problem. These numbers do not include federal taxes.
It doesn't matter. As long as production increases (along with corporate profits) and wages stay flat, working families will continue to borrow money that they should be earning in the first place, keeping them in perpetual debt. It doesn't matter if the state's budget is balanced as long as we continue to rely on credit to grow our economy.
Currently we are suffering the "after effects" of a Pawlenty problem. In spite of how he chooses to spin his time at the helm...he did a large part of this to Minnesota...even going so far as to siphon off money dedicated to helping Military service members families, to pad his own staff...
Neither spending nor revenue is the only answer. As more and more people are unemployed/underemployed, we naturally have lower revenue coming in to the Government. Also, we simply cannot continue to spend and grow at the same rate as has been the pattern for decades. I agree that a co-ordinated approach to NOT renewing/continuing these republican-backed tax breaks for the wealthy, any more than we can continue to bail out every failing bank, business and homeowner who bought more house than they could afford to maintain.
Balance, and moderation is the only way we will EVER get out of this mess.
It doesn't matter. As long as production (and with that corporate profits) increases while wages stay flat, working families are going to stay in debt regardless of the condition of the state's budget.
It doesn't matter. As long as wages stay flat and production continues increase (along with corporate profits), families are going to stay in massive debt regardless of whether or not the state's budget is balanced.
Revenue problem
"Minnesota went from "the state that works" to the "state of nothing special."
Revenue problem.
Granted what we spend on needs to be watched and looked at, but whats getting the priority seems to only help those who already have.
Since Jesse Ventura's tax changes, giving the rich a break, we have given away a lot of that needed revenue to simply function.
That entire tobaco income which helped us as a state was NOT applied to where it was designated to go case in point.
It will be nice to return to a stable state.
But too many sponges exist at the top.
I believe both are a problem.The size of our budget there is always room to find programs to be cut. So spending can be controlled. Revenue needs to be raised but not with regressive taxes like sales tax and real estate taxes. We have been, are, and want to be a progressive state. We need to cut taxes in the lowest 2 or 3 decile income tax groups and raise taxes in the upper 3 to 4 decile income tax groups.Right now the lower 3 groups average about a 14% income tax rate while the upper 3 groups average 11% income tax rate(MN dept of Revenue data). This needs to be reversed NOW!! If that does not balance the budget we need a temporary surtax like before until our budget balances as the workers get jobs again.
Both: The wealthy do not pay their fair share in taxes and we spend way too much on "defense" spending, i.e. the Pentagon. Balance these out and we'll be much better off!
Keith, the not-too-distant history of Minnesota belies your thesis. At the end of Arne Carlson's administration (the high water mark of bipartisanship), state government was running a surplus, and there was a significant amount that was kept in reserve, to be used to cushion the blow when an economic downturn came. The system of budget reserves was working well and had been in place for quite a while. It was in the late 90s with the "Jesse checks" and early 00s with the Bush tax cuts (which affected Minnesota, because MN income tax is linked to federal) that the system began to fall apart. When the dot-com bubble burst and sales tax revenues fell, it sure would have been nice to have that reserve to fall back on, but (alas!) it had already been raided. What wrecked that system was not profligate spending but the ideology that demands taxes be as low as possible.
Being creative and always finding new ways to use the resources available will take care of the spending or revenue problems that are occurring.
It's mostly a revenue problem and runaway health care costs.
I liked Matt Entenza's ad during the primary.
"If cutting was always the solution, then Mississippi would be a leader in this country". How true!
The question offers a false choice. Politicians have framed the debate as either a lack of revenue or a lack of spending because it fits the way they want to present their respective party differences. Citizens should take a step back and look at the broader context, but to do that, we need the media to take its collective eye off the horserace.
Our democracy has problems no one likes to talk about. One problem (drum roll please) is that governments can’t save money. The reason it can’t save money is because elected officials love spending it (this is true of both republicans and democrats, they just like to spend on different things). The reason they love spending money is because when they do, their constituents re-elect them. If the congress or a state legislature is foolish enough to leave a few dollars unspent, the next one will find a way to spend it (see the Social Security surplus). Knowing this, politicians do the only logical thing in the world they inhabit, they spend it all.
In years of surplus, elected officials typically divide the money more or less evenly, among all the funding committees. They do this because the leadership is dependent on the members to vote them into their powerful positions, and every member has projects they want to fund.
After receiving their cut, the committees increase funding to all the programs they oversee, usually by incremental amounts. The result is like blowing into a balloon. The entire balloon expands, but the “outcome” is negligible. Schools might get a small increase in per pupil funding, there might be more slightly money to nursing homes, a few more people might get housing assistance, but the problems that underlie the spending never get solved.
This habit of spreading the wealth around to each committee has a ripple effect. As spending increases in each committee, the recipients of those funds now believe that this higher level of funding is the new floor, and anything less than that will be a “cut”. When the surplus years go away, everyone feels cheated, and because we spent all the money as it came in, we now have nothing to cushion the blow of lower revenues. This leads politicians to want voters to see the problem in terms of revenue or spending shortages. It’s easier than solving the underlying problems.
Our country would be better off if we ignored the question and asked instead; Why does government spend so much on treating the symptoms of problems (crime, poor education, poor health, etc.), instead of spending money on solving the problems? The answer is likely that we spend money treating symptoms because the people that have those symptoms vote, and if politicians don’t show that they care, they’ll soon be out of a job. The parties also favor different solutions to the problems, and it’s in their political interest to block the other’s efforts rather than finding ways to test each parties solutions. Our system has evolved into one that treats the symptoms at the expense of the underlying problems.
It’s understandable why political parties vying for power through the favor of voters would support this. They pander to us in the hope of being elected to a position to decide for us. It’s our job as citizens, to hold them to a higher standard. Because in the end, we get the government we deserve.
SPENDING!
A budget that grows at double-digits is unsustainable.
We need a budget spending limit based on inflation plus population growth, a zero based budgeting system instead of an incremental one and a more rigorous review of of existing programs.
Although many people think Minnesota has a spending problem, we really have a revenue problem because our population has grown significantly in the past 30 years and so has the cost of living. A lot of this growth occurred because Minnesota created good jobs and a fabulous quality of life, ironically during the days when we were one of the highest taxed states in the nation (mid-late 70s to the mid-00s). In fact, several communities, chiefly suburbs bloomed overnight thanks to this unprecedented job and income growth (remember when Eagan and Burnsville were still corn fields as early as 1980?) We haven't kept up with this growth which is why we need more revenue in order to sustain it.
The real problem is that the issue is looked at in the terms of this divisive question in the first place. There isn't just a spending problem, and there isn't just a revenue problem, and the more time we waste pointing our fingers at each other and playing the blame game, the more time passes without getting anything done to fix it.
I can understand using this phrasing to get people to think of several sides of the issues, but in the end it's precisely this kind of one-side-or-the-other mentality espoused by the politicians [and the media, too] that keeps everyone distracted from the real issues and realistic, compromising solutions that are so sorely needed.
Since 2000, the state budget has gone from 35 billion to over 50 billion, which is about a 50% increase in about 10 years. No other aspect of state demography (population, revenue, employment, student enrollment, miles of paved roads, acres of parks, etc.) comes close to matching that increase.
Minnesota has a very obvious SPENDING problem and it's unsustainable. Politicians are unwilling to undo what they've done and never ratchet backward the level of well-meaning goodies they create.
Neither. We have a disconnect between the politicians of the new age trying to let rich people keep their money and politicians of the last era trying to create and maintain a healthy, vibrant, and compassionate community where the goal was to help everyone in the community prosper. Now the rich, and even the middle class, can't be bothered with making sure that everyone has enough.
We HAD to buy land up north to make a new state park! Which will need to be developed with roads, parking lots, visitor stations, utilities, etc. and will need to be staffed when it is up and running. All costing us more in the future.
But....... we had no money for GMAC or schools.
Go figure!
The question isn't just about too much spending or not enough revenue. It's easy for conservatives to suggest that government is getting too large, but they don't often tell us what programs to cut. Then, when they do make suggestions, liberals say that people who need government services would get pinched.
What we need is an honest discussion of our state's budget priorities. If we cut health and human services, for example, then poor people who need care won't get it. They'll go to the emergency room every time they need care, and that costs money. If we cut K-12 education, then we'll have larger class sizes and we'll have to worry about "No Child Left Behind". If we cut transportation, then we'll have more potholes and more bridges crumbling. If we cut aid to local governments, then they'll cut back on their services or raise property taxes. On the other hand, if we raise spending in any of those areas, how do we quantify the results?
The solutions are never quite as simple as the campaigners make them out to be.
Spending - When compared to other states similar in size to MN we spend much more. Example: Colorada has $40B budget MN has $60B budget.
It is clearly a spending problem. Minnesota is typically in the top-10 of the 50 states in terms of state and local tax burden. We don't need to move any furthur up this list.
yes there is a spending problem at the state and personal level things cost we are all struggling just to get by-but if we stay positive and keep focusing present and long term we will turn this thing around!
Neither.
Government size has increased during Pawlenty's time (just like it did with Bush jr.). He never really cut taxes or increased revenue. So what if we have a 6 billion dollar deficit. That doesn't matter! What matters is he TALKS about reducing government and taxes. I am so glad he is running for president!
I just love leaders who talk about stuff and not fix anything. I cannot wait to vote for Emmer, he too talks about problems and has no plan to fix them.. I just love that stuff!
So, revenue vs cuts who really cares. As long as the governor leaves the state in worse shape than it was when he/she got into office I will be very happy.
At times we believe that we have enough revenue when the budget is in balance. But, we never believe we are spending enough. There is a never ending clamor for more funds and a never ending supply of politicians seeking the spotlight by catering to those pleas.
It is a spending problem.
Until and unless there is a discipline to balance the budget each year through cutting spending, we will blame the revenue side every year. But if we start a habit of cutting our expenditures to match our revenues, we will begin to see spending for what it is.
There is necessary spending and there is unnecessary spending.
We need REVENUE! Our infrastructure has been gutted in the last eight years, taking our past growth and squandering it to pretend that there have been no increased taxes---shame on Pawlenty. Now we are behind in our high standards, not to mention getting ahead. I expect to pay higher taxes to get higher levels of service. As a teacher, my colleagues and i have seen less time and more students per class. My friend Bob has 38 kids in his geometry classes--- dispicable!
The problem isn't so much expenses or revenue as the refusal to have a rational discussion of what it takes to maintain the quality of life we expect. Worse is the apparent unwillingness to fully consider the implications of different decisions, and the failure to adequately explore alternatives.
The problem begins with the insistence that this is an "or" situation. It is not "either/or" but "both/and." We need to both cut expenses and boost revenue. I am a retired person. I wish I could say I was on a fixed income; I am not. My pension was cut for 2010, and I have already been informed that it will be cut in 2011 and 2012. My income is going down. In my whole working life, my income never reached six figures, and it certainly does not now.
But I would happily pay higher taxes for a "better" state; a state that more adequately supported education and human services.
At the same time, there certainly are expenses that could and should be cut.
Unfortunately, each of our major political parties seems willing to look at only one answer. We need to look at both.
I am 50 years old and I have heard the same cry every year for 30 years: "We have a budget 'crisis.'"
Really? A 30-year crisis of inadequate funding. Hmmm...
Minnesota State Government cannot impose double-digit spending increases year over year, over 25 consecutive years. The candy jar is empty.
It is both. We have a deep revenue problem that is partially structural, partially due to the current unusual economic circumstances. Our spending problem is not so much a problem with quantity, but with priority - we spend money on short term demands and needs, while ignoring foundational pillars of our economy like modernizing transportation and communication infrastructure and educating our children.
Both. As a high income earner, I would not mind if my taxes increased slightly but if Dayton increases them too much, I have the means and ability to relocate which means my wealth and all my economic activity will also relocate.
Again, take a look at California vs Texas. California keeps spending money they don't have and they have created no jobs in the past 5 years, Texas has restricted the growth of government spending and they are a job creation machine, in the recession.
Go ahead, raise my taxes too high and good luck with what remains!
Its both. Revenue is the biggest of the problems. For 8 years we had a governor that failed to acknowledge the changing demographics of the state (increased population of seniors and increases in poverty) and now billions of dollars in the hole later, the most vulnerable Minnesotans are in serious danger if revenue is not increased by drastic amounts. I am a social worker. I work daily with the state plan MA programs. I see how much they help people make a turn around in their lives and I see how much they benefit seniors by allowing them to stay out of nursing homes.
The only reason I suggest there is a spending problem is because I see so much time and resources wasted in the social services delivery system. I could spend half of my work day writing about the good and bad of the social services system, so I will sum it up with the services delivered are vital to the most vulnerable people in the state, but the way they are delivered could be made to be much, much more efficient.
Yes.
California has no money. They always think they have "revenue problem".
Would somebody please explain to me which Minnesota government programs are "broken"? Other than GAMC, which Pawlenty deliberately broke, and MNDOT, which has been underfunded for too long, all the evidence I see is that things work pretty well. Our HS graduates consistently lead the nation in test results, for instance, and that's despite Republican attempts to break public education and blame its failure on the teachers' union.
Spending problem. We can't just keep throwing more money at the same broken programs and expecting different results. It's time to overhaul all of the social programs and make them work for the people they serve and for the larger population while not bankrupting the people who pay taxes in Minnesota. I would hate to see Minnesota become the highest taxed State. I fear that would result in both businesses and tax paying individuals leaving the state which would only hurt the situation more.
It's a revenue problem.
For a decade (or maybe since the Reagan tax cuts) we've allowed the "trickle down" theory of tax cuts to erode the financial basis on which our society operates. We are not capturing even half of the true cost of government through current taxes. So, unless we want to go back to driving on unpaved roads, or allow industries to pollute at will, or stop funding basic research, we need to all shoulder the burden of higher taxes. Minnesotans who don't like a high-tax, high-service model, which has served us well, can always move to Florida or Mississippi. You get what you pay for.
With the "Bush tax cuts" expiring. With the new "Obamacare taxes" going into affect in 2011. And Dayton "making the rich pay their fair share", just how much revenue will the state actually get from the increased state taxes? Just how many people leave or work less? How many private sector jobs will be created.
I agree with a previous respondent: "we have to pay back schools for the money we pushed down the hill and for GAMC." After two terms of the penny-pincher-in-chief, anyone who believes there's any significant fat in the budget, much less $6B worth, is delusional. We definitely have a revenue problem.
We have both a revenue problem and a spending problem. Through the current administration we have been failing to make any investment in the future. It's all about "wasteful" government spending of the sort that pays for police officers and firefighters. I find it funny that the Governor approved all of the spending bills, but didn't want to pay for it. Hey Tim, you can't have your cake and eat it too.
Now, I think we have enough programs that need to be revamped. You can only cut taxes so much before you start the proverbial cutting off your nose to spite your face.
It's never enough revenue and never enough programs. Whether good times or bad, it's never enough. When we have a surplus, it has to be spent.
Look at what's happening right now, we have a massive deficit and Mark Dayton in talking about new programs and spending. Hey Mark! Even if you "make the rich pay their fair share" still won't have enough money to balance the budget and definitely not enough for new programs!
I get a kick out of Democrats that think this Dayton plan will be some new faucet that won't run dry! We can just spend and spend.
I get a kick out of Mayor Chris Coleman betting on getting 10 million more in LGA. What a joke! Even with the golden money faucet promised by Dayton, we have to pay back schools for the money we pushed down the hill and for GMAC.
HEY COLEMAN, LGA is dead!
Our government has become unsustainable. At all levels.
Were cutting essential programs like lumberjacks. We definately have a revenue problem. Please raise taxes.
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