House Democrats would raise taxes by $1.5 billion over the next two years, cut spending by $843 million and employ a larger accounting shift than Gov. Tim Pawlenty proposes in an effort to balance the state’s budget without resorting to borrowing. [Emphasis added]
At least it’s more honest than the Governor’s budget, which relies on $1 billion in borrowed money despite our constitutional requirement to have a balanced budget. But the use of accounting shifts is a sign that lawmakers are shirking their responsibility to sustainably fix our budget problems, in favor of political expedience. Yes, it sounds better to say you’ll be cutting less and raising fewer taxes. But all that really accomplishes is pushing our problems into the next budget cycle.
I firmly believe that Minnesotans will support the DFL if they have the courage to put together an honest budget that makes the tough choices and structural changes we need to keep our state healthy for the coming decades. The formula is simple:
- Cut spending
- Raise revenues
- Eliminate the use of budget gimmicks
Minnesotans can understand that we’re in a tough situation right now, and they’ll side with the party that makes the hard choices to fix our budget problems for the long term.
What does it mean to fix our budget problems for the long term? Any long-term solution will have to start by heeding the lessons of the Minnesota Budget Trends Study Commission [PDF]. Here are some of the most important findings with regard to the structure of our budget:
• Public spending priorities will need to shift as Minnesota’s economically dependent population grows larger and relies more heavily on fewer workers.
• Demographic and economic factors will lead to lower growth of state tax revenues over the next 25 years.
• Minnesota has a long-term structural budget problem, with long-term spending growth likely to outpace revenue growth.
• Minnesota’s general fund tax base has grown more volatile in the past decade, and State revenue volatility makes long-term budget instability more difficult to manage.
• Shifting consumption patterns have reduced Minnesota’s sales tax base.
• Minnesota’s statutory budget reserve ceiling has not grown to an appropriate level to adequately manage the underlying risks in Minnesota’s tax system over time.
A long-term solution will recognize that, if we continue spending too much and raising too little revenue, we will continue to have the same problem year after year. That’s why accounting shifts don’t help us. They don’t deal with the fundamental structural problems of our budget — they just mask them.
We need a structural overhaul of our budget, and compromises will be required from all sides. DFLers should be the ones leading reform efforts. They should lay out a program that strikes a compromise between spending cuts and tax increases, reduces the rate of growth of government spending, and funds a substantial budget reserve to minimize the impact of future downturns. If they have the political courage to do so, Minnesotans will reward them.
Very valid point. Unfortunately, it looks like both Democrats and Republicans aren’t willing to make the tough choices. Isn’t this how we got in the mess in the first place?
No, it’s not how we got in this mess in the first place. A HUGE decrease in revenues due to the economy is mostly what got us into this mess.
“I firmly believe that Minnesotans will support the DFL if they have the courage to put together an honest budget that makes the tough choices and structural changes we need to keep our state healthy for the coming decades.”
That is exactly right Jeff. Pawlenty has boxed himself in with his foolishly partisan no new taxes pledge. The Democrats should not yield the ground of fiscal responsibility to the Republicans. Both parties should be reaching across the aisle and willing to work together to address these critical issues. Those who do will be rewarded. Those who don’t, won’t.
A 7.85% income tax are and the gas, proprerty, and other taxes I pay, I belive that I pay enough to the state. I do not support paying higher percentage taxes.
If you cut social support spending, cut corporate taxes, invested the social spending into infrastructure (roads, bridges, telecom), you would increase the attractiveness of this state for companies who are the only providers of real jobs. More jobs equal more income equals more taxes even at a lower rate.
Which social program should we cut first?
How much should we cut corporate taxes?
How much should we cut your taxes?
Do self employed people have real jobs?
Really
All of them 20% across the board, minimum. Keeps them all from trying to convince the government that one is more deserving than another.
In half. And allow very fast depreciation of all new assets. Want them to put the equipment here rather than in Wiconsin or China.
Read my post - I didn’t suggest a cut for myself, but since you are asking, 5% max.
Yes, they do. And the smart ones set up as a corp or other legal entity. I should have said companies or individuals as opposed to GOVERNMENT jobs.
I agree with Jeff but also agree with Really on this one. I think its possible they are saying the same thing.
Jeff says that the party who can make tough, and (very importantly) structural decisions will be the star of this show. I agree. No more budget gimmicks (by the Republicans), no more talking tough like reformers and then having to cater to the same out entrenched interests (like the DFL). If one party rises above and truly says “we don’t care who we’re traditionally supposed to cater to… we’re going to do the right thing”, that party will have huge support.
But I also agree with Really. The money should be in the system already, given the taxes we pay. We just need to allocate it smarter. There may be social programs that need to be turned upside down — I’m not saying don’t help those people, I’m saying don’t take disruptive changes off the table just because a certain program is “untouchable”.
Why is Minnesota so different that we have to raise our taxes even more to cover our costs? I don’t advocate being a no-tax state. I like good public schools and culture. But folks, can we really justify cranking up our taxes even more when several other states, who I’d maintain offer similar or better quality of life, can do it for less? Let’s factor in the additional cost of heating our public buildings in the winter, snow removal, and fixing our roads each spring. That is a cost inherent with Minnesota that states like North Carolina or Washington don’t have. But beyond that, I don’t know what about us would make us such the outlier. Remember, I’m talking the outlier relative to the states where I’d actually want to live, not hte outlier compared to Mississippi, Louisiana, and Texas.
Everyone’s talking tough now. But when it comes down to it, there will be so many entrenched interests and “untouchable” programs that we’ll only be talking about really fundamentally restructuring 4-6% of the state’s budget. And that would be a shame.
I could not agree more with author, we have not done a good job of leading on this issue. We won with the public when we scrutinized the transportation department. We highlighted consistently the problems and took action. Now, we had the opportunity to do that again with the Department of Health and Department of Human Services. We can take the time we need to build in accountability, streamline delivery and reform health care in a way that would lead to national recognition for our ability to analyze and reform. Instead, it is the same old thing and Pawlenty wins.
Pawlenty was out on these issue months before the DFL. Instead of listening in February, we needed to be discussing the problems in November. Pawlenty set the stage and once his gimmicks get in front of the press, they run with it. The media looks to Pawlenty because he has answers - they’re wrong, but he has them.
In my opinion, we need to take the lead. Tell the truth to the citizens, stop trying to beat the clock and get the job done. If we want real reform in government, we have to demand it as a party. We have to demand it for our citizens.
We win when we do this.