Commentary
Federal stimulus spending helped get Minnesota into this mess
by Tom StewardHow did we get to the Great Minnesota Shutdown of 2011? Regardless of when the shutdown ends and what the eventual budget compromise looks like, it's critical that legislators and the general public alike take a hard look at how state government prioritizes and pays for public services.
Minnesota's state government is hardly alone in its struggle to find a new equilibrium in an era of modest revenue and increasing cost pressures. In fact, while we were busy debating a slew of tax hikes, the vast majority of states this year were debating whether to slash or merely trim government spending.
Not to let our elected officials off the hook, but there are systemic culprits that help set the stage for prolonged budget battles and increasingly disappointing results. Call them budget Band-Aids.
Instead of addressing head-on our state's longstanding structural deficit problem, we have kicked the can down the road by utilizing one-time money and accounting shifts. These temporary fixes have become so commonplace that Gov. Mark Dayton and Republican legislators were able to agree that we would once again delay K-12 aid payments -- it was merely a question of how much to delay.
But perhaps the biggest Band-Aid of all? The federal stimulus funds that propped up state and local governments last biennium. That's right: the same $862 billion stimulus spending program that cost taxpayers an average of $278,000 per job created or supposedly saved, according to the most recent reports.
The American Recovery and Reinvestment Act of 2009 (ARRA) was an unprecedented law passed during a time of extraordinary economic distress. Lawmakers of both parties agreed that the $2.3 billion of ARRA funding included in the 2010-11 state budget was not intended as an ongoing program or obligation. Still, some Minnesotans may recall that a number of observers nevertheless warned of the perils of dealing with the deficit the DC way.
"These one-time federal stimulus funds may have helped lawmakers avoid some very painful cuts, but essentially only delayed these difficult decisions," explained Sen. Gary Kubly, DFL-Granite Falls, at the time. "If we want to help turn this economic relief provided by the ARRA into long-term economic recovery and job growth, lawmakers need to focus on responsibly balancing the state's budget shortfall."
This year, many states scaled back their budgets to essentially remove stimulus funds from their budget baselines. In March, Pennsylvania Gov. Tom Corbett announced a $27.4 billion spending plan for FY 2012-2013 that would not raise taxes and would instead cut $866 million in current obligations to bring spending by the state back to 2008-09 (or pre-federal stimulus) spending levels.
While the final $27.2 billion budget passed by the Legislature and signed by Gov. Corbett did not include all of the funding cuts originally proposed by the governor, the budget did eliminate much of the spending that had been bolstered by federal stimulus money.
Not only is Minnesota failing to reign in spending like the vast majority of other states, but we're also laying groundwork for future budget cycles to be equally dysfunctional. The state fiscal aid from the stimulus turned out to be more than just backfilling deficits to keep the lights on. In some cases it was creating new positions that were supposed to be temporary. As the federal financial support goes away, the state is left to pick up the tab for employees who are not necessarily getting laid off.
In short, Minnesota taxpayers are being "jobbed" by the perpetuation of supposedly temporary state jobs created under ARRA included in the current 2012-13 budget.
For example, one of the smallest state agencies, the Minnesota Public Utilities Commission (PUC), received $883,000 in ARRA funding to hire three "temporary electricity specialists." They came on board to manage "increased regulatory activity" associated with the uptick in green energy projects and requirements. As expected, the federal dollars will run out on Dec. 31, 2011. But at least two of the PUC's "temporary," stimulus-funded employees would be among eight "new" positions on the agency payroll under Gov. Dayton's budget proposal for a $1.5 million increase in the PUC budget. (That's a 14 percent increase.)
Then there's the Minnesota Food Assistance Program (MFAP). After stimulus funding ended in 2010, the Legislature boosted the budget an additional $150,000 to continue providing the same level of service in 2011. Subsequently, Dayton recommended a permanent expansion of MFAP from $407,000 to $741,000.
Minnesotans will continue to pay a considerable price for the one-time federal stimulus subsidies. While it's impossible to assign an exact figure, it's probably safe to say that the funds necessary to fill the gaps created by the temporary stimulus spending would likely cover the current differential between the governor's and Legislature's budget proposals.
Unless something changes, however, the stimulus act will continue to be the gift that keeps on taking from Minnesota taxpayers for years to come.
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Tom Steward is investigative director for the Freedom Foundation of Minnesota, which describes itself as "an independent, nonprofit educational and research organization that develops and actively advocates the principles of individual freedom, personal responsibility, economic freedom, and limited government."
Comments (14)
Same thing in NJ. The then Governor Corrzine (D) took all the stimulus and spent it to help his re-election, which failed. Leaving the new governor to deal with the new propped up phony baseline. The unions screamed the governor was CUTTING spending when the shortfall was realized. 2 choices, cut the baseline or raise taxes.
Make your choice America. Higher taxes to pay for free healthcare and pensions for the state employees (D), or get the unions to back down and have their members participate in their own costs. (R) Look to Greece for an example of (D) policy.
Seriously? It's the federal gov'ts fault MN STATE legislators can't do their job? I think you are reaching. You might as well blame Obama's mother while you are at it, because he would never be president if she never gave birth to him....see how stupid that sounds? How about you try connecting dots that are at least close enough in proximity to each other rather than in different universes? What will you tell us next, that the NFL lock out was caused by the stimulus? your bias is obvious.
Let me see if I understand what you're saying. We refuse to take billions from the feds, and we end up saving money? Yeah, right. I hope the people of Minnesota are smart enough to see through these kind of "media misdirection". The writer is the investigative director of Freedom Foundation of Minnesota. The incorrectly describe themselves as an "independent, nonprofit educational and research organization". In reality, the Freedom Foundation was founded by Annette Meeks, who was Tom Emmer's running mate in the recent election for governor. MPR, please don't allow your article contributors to misrepresent themselves in the future.
this really takes the cake..MPR becoming a platform for every right wing "investigator", pundit and spin doctor. This freedom foundation..is little more then a rightwing propaganda machine with mitt romney as its favorite speaker...to suggest this article is commentary is a joke...
I have noticed recently that MPR has become a platform or sounding board for the right...where i think they ..MPR should do their own reporting rather then posting non affiliated commentary..
MPR will no longer get a donation from me.
Brent Williams..It's not TAKING the stimulus money that is questioned. It's what you choose to DO with it that is questionable, to say the least.
Contrary to common belief, there is no Obama Stash. If money is poured into MN, it is only because it is poured OUT of someplace else. Why borrow it, then spike taxes to pay it back? Does it really create any wealth? No, it destroys it. Some people understand this through abstraction. Looks like there are plenty who need to learn it from experience. That's okay. Socialist wealth destruction is going to knock on every door, like the Angel of Death except there is no Passover.
If dumbo Obama's mother didn't screw around with Obama's no-account father, neither Minnesota nor the rest of the country would be in this mess.
The author identifies 2 retained stimulus positions, at the PUC. From there he extrapolates up to the entire $1.4 billion budget difference between the governor and the legislature.
If each and every temporary position created by federal stimulus money were retained, it would take about 10,000 of them (about 25% of state employees) to make up $1.4 billion over the biennium.
It takes a wildly exaggerated estimate of the actual number of state hires (and retentions) under ARRA, in order to make this argument work.
Thank you for the research and analysis of how detrimental temporar federal transfers of wealth to the states can be. Its almost impossible for any temporarily created government program to ever be temporary, thereby forcing the state taxpayers to end up paying for it going forward, as you have shown in your examples reflected in the current MN budget, adding to the already difficult choices facing ours and other states that accepted these funds. As they say, "there is no such thing as a free lunch". I wish more media outlets would focus on research based analysis of the current government budget issues so we can all be enlightened.
Hey conservative Minnesotans. Do what I did, move to Texas. No state income tax, snow shovel or sub-zero temperatures. Texas welcomes business, so how about it 3M and General Mills? Come to Texas and see how great it can be when every statewide elected official is a Republican. Just take I-35 South. It's easy to find. Leave Minnesota to the liberals and let them enjoy their socialist paradise without your interference.
Both parties are responsible for the budget mess, which goes back well beyond the current biennium -- or the federal stimulus.
Steward writes as if federal money made available during a recession somehow enabled the bad habits and shifts that critics have pointed out for years -- and of which Gov. Pawlenty was enabler-in-chief.
And it's absurd to say the stimulus was only to create jobs and to assign the total tab to job creation. The infusion advanced projects that were already identified and eventually would have been funded when the economy recovered. We have roads and other infrastructure that will last for decades. It's simply wrong to say the spending cost taxpayers an average of $278,000 per job, as if that's all we got.
Yes do what Tom Kilbride says (who listens to MPR for some reason.. does Texas have a crappy public radio station?). Just as an example, do a little comparison of Texas vs. MN. http://www.statehealthfacts.org/profileglance.jsp?rgn=45&rgn=25
In case you want some highlights, we make roughly $10,000 per capita per year here, our unemployment rate is 1.4% lower, 23% vs. 32% of our children/adults are overweight as compared to Texans. AND 26% of Texans are uninsured as opposed to 9% of Minnesotans. Looks to me like Texans would rather have everyone else pay higher premiums than to have health insurance, and they still don't have better outcomes. Still want to move to Texas? Maybe you can keep more of your money? But we'll keep more of our society.
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