One of the largest cuts Tim Pawlenty made in his unilateral slashing of the Minnesota budget was completely eliminating General Assistance Medical Care. What is GAMC? According to the
Department of Human Services website, “
GAMC provides medical care for a monthly average of 33,000 (FY 2007) low-income Minnesotans who don’t qualify for MA or other state and federal programs — primarily low-income adults, ages 21 and 64, who do not have any dependent children.”
Here’s the problem, though — the need for this money doesn’t just go away. It’s not like we get to save $381 million dollars and that cost won’t be passed on elsewhere. So where is the cost going? Much of it will be passed on to area hospitals. HCMC, for example, estimates it will lose up to $109 million from GAMC cuts, and Regions hospital estimates it will lose $46 million, which is 10 percent of its gross revenue.
How are the hospitals supposed to replace that lost revenue? They can’t really make up for it with cuts in services — they are mandated to provide service to patients who come into their emergency rooms. That means the only real choice is to pass the cost onto their other patients. Just like Pawlenty replaced taxes with “fees,” he’s now avoiding tax increases by increasing your hospital bills. As famed economist Milton Friedman once said, there’s no such thing as a free lunch.
Minnesotans are still going to pay to provide health care, we’ll just pay for it differently. Now, instead of paying for it with taxes that can be distributed equitably, we’ll just dump the entire burden on Minnesotans who need to go to the hospital.
Does the word “apocalypse” sound a bit over the top to you? Well, just think about the drama and hand-wringing of this past legislative session. Now imagine what it will be like when the deficit is
4 times as large as this biennium’s.
Politics in Minnesota’s Steve Perry runs down what the numbers will look like without this year’s one-time stimulus money and education shift. After one-time money and accounting shifts this year, we only (only!) had to come up with $2.1 billion in this biennium. In 2012, we presumably will not have help from the Federal government. Plus, we will need to pay back the education shift that we so wisely used in this biennium. The result:
- In sheer inflation-adjusted dollars, the $7.3 billion ‘12-‘13 deficit is equal to 3.5 times the net $2.1 billion hole that the Legislature and the governor had to make up this year for ‘10-‘11.
- As a share of the prior biennium’s collections and expenditures, the projected 24 percent ‘12-‘13 shortfall is equal to 4 times the net 6 percent ‘10-‘11 deficit.
Once again, this is why we shouldn’t rely on one-time money or accounting shifts to “balance” the budget. Because it’s not balancing the budget, it’s just kicking the can down the road. Our policymakers — including, but not limited to, Governor Pawlenty — should be ashamed of themselves for allowing this to happen.
You didn’t think we could solve our problems by kicking the can down the road, did you? We didn’t actually solve our budget deficit this year; we just postponed the pain. Take a look at the
estimates for the next biennium:
This afternoon we hear from a Senate staffer that an initial nonpartisan legislative estimate is setting the number at $4.9 billion. (The source stresses that the estimate is preliminary and may change.)
The major components break down this way: a structural deficit carried forward that amounts to $3.1 billion by fiscal year 2012; a $1.7 billion school cost shift repayment; and about $100 million in deferred obligations from the current biennium.
That’s right, the next biennium’s budget deficit is going to be nearly as large as this one’s. That’s why accounting shifts aren’t a solution — because we still have to make those payments. Paying back the school payment shift will be more than one-third of the deficit Pawlenty is leaving us.
For yet another two years, we will have to deal with the recurring effects of a structural budget deficit. We need to address the structural deficit once and for all and balance our budget. The recipe, once again, is simple:
- Cut spending
- Raise revenues
- Stop all budget gimmicks
Our legislature, which is presumably elected to do such things, passed a balanced budget. The governor vetoed a portion of it, as is his right, but then decreed that the legislature would no longer be participating in balancing the budget — he would do it himself through unallotment. Is this constitutional?
David Schultz had a great article in MinnPost yesterday analyzing the arguments against unallotment. I’m not a lawyer or legal scholar, and I can’t speak to how accurate Schultz’s argument is. But it is certainly interesting, so I’ll just relate a few highlights. The whole piece is worth a read.
…there are two reasons to argue that the governor’s interpretation of §16A.152 is incorrect. First, it is unlikely that the original intent of the Legislature was to give the governor this broad of a power to unallot. Its original passage was to give the governor power to address small budgetary shortfalls, not make cuts that amount to major programmatic changes. Second, there is a basic rule in law regarding statutory interpretation. One should interpret laws to avoid absurd results and avoid conflicts with other laws. Here, if one accepts the governor’s reading of unallotment, it would mean he alone has the power to change fiscal priorities for the state or that he could use this power to negate laws establishing statutory authorized policies. One result is absurd; the other produces a conflict in the laws.
Unlike the U.S. Constitution, the Minnesota Constitution has an explicit clause that addresses separation of powers. Article III states: “The powers of government shall be divided into three distinct departments: legislative, executive and judicial. No person or persons belonging to or constituting one of these departments shall exercise any of the powers properly belonging to either of the others.” One could argue that this clause protects legislative authority even more so than the federal Constitution, questioning whether unallotment as construed by the governor is permissible.
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With the Governor’s decision to eliminate General Assistance Medical Care (GAMC), our healthcare industry will bleed thousands of jobs. I don’t have statistics, yet — just an anecdote about how far Minnesota has fallen.
My sister-in-law graduated with her Bachelor’s in Nursing in December. She’s always been in the top of her class — an excellent candidate in what’s supposed to be a “recession-proof” field.
But not in Minnesota.
After months of searching for work in Minnesota, she’s finally found a way to get work. She’s moving to Kentucky.
The impetus behind the DFL’s plan to balance the budget was shared sacrifice. Everyone would have to give — some in the form of service cuts, and others in the form of tax increases. Back in May,
I wrote about what I thought were some very basic values that should inform our solution to our budget problems:
We want budget solutions to distribute sacrifices evenly and fairly. We can’t balance the entire budget on the backs of the poor. At the same time, we shouldn’t force the wealthy to pay for everything either, even if they have a greater capacity to do so. Fairness demands shared sacrifice, in which cuts to the social safety net are reduced by increased taxes. No single segment of our society should have to pay for returning our state to fiscal solvency.
So how about Pawlenty’s plan? Well, at least it’s relatively egalitarian in passing most of the harm to our children. Otherwise, it would be targeted at the poor and middle class. Health and Human Services cuts take up 4 pages of Pawlenty’s 7 page plan. Cuts to local government aid will continue to drive up property taxes, and it seems Pawlenty was actually trying to focus the burden on the poor by slashing the renter’s property-tax refund by $51 million. Why not reduce the property tax refund for the wealthiest, as well as the poorest?
Pawlenty’s cuts are full of gems like this one that showcase his compassion:
Effective Nov 1, 2009 and through June 30, 2011, eliminate grants to counties for low-income and disabled individuals or families to provide basic need items for emergency situations, most often related to housing or utilities. [Ed: Pawlenty says the cut is “mitigated” by federal stimulus money. Does that mean it’s replaced by federal money? That’s not what “mitigated” means to me.]
I understand the need to make cuts to health and human services. I can even understand that, in a state with a strong social safety net, the poor are going to have to participate in the sacrifices. What I can’t understand is why Pawlenty goes to such a great length to make sure sacrifices are not shared by all segments of our society. Are the wealthy so fragile that they will all flee the state if we ask them to contribute to restoring our fiscal solvency? I just don’t believe that.
It’s
right there in black and white: Out of $2.675 billion in unallotments, $1.7 billion will come from K-12 education. Ouch. Once I have kids, I’m going to have to move to Mississippi.
More in the morning.
Politics in Minnesota had a great inteview posted yesterday with state economist Tom Stinson. Unfortunately, the interview has some grim news about our state budget. We’re going to be running a deficit for a long time:
PIM: If you assume no substantive changes to the Minnesota tax system, how long under current forecast conditions before we get back to the inflation-adjusted equivalent of pre-recession state revenues?
Stinson: Well, just calculating it crudely, FY2008 had $16.7 billion in revenue. If we use the CPI (consumer price index) [to factor in inflation], it doesn’t happen in ‘10 or ‘11 or ‘12. We don’t quite make it back by the end of 2013. It’s close. We’re about $200 million short [at that point] in real dollars compared to where we were in 2008.
Of course, during that time, we can expect expenditures to rise due to inflation, which means we’ll be running a deficit for the next four years.
Continue reading ‘State economist Tom Stinson on our structural deficit’
Dave Mindeman at
mnpACT! really makes conservatives mad. Mitch Berg over at Shot in the Dark is the latest in a slew of conservatives to attempt fisking Mindeman. Unfortunately, I didn’t get all the way through Berg’s latest.
He lost me almost immediately:
One of the ugliest sides of “progressivism”, especially in tough economic times, is the cynical faux-populism that wafts out from the bathrooms and basements of the “progressive” movement.
Are you frickin’ kidding me? Perhaps Berg missed the 2008 election, and the right’s strategy of attacking anything and everything as “elitist.” I was stunned watching Rudy Giuliani and Mitt Romney at the Republican convention angrily decrying the “eastern elites.” But even that couldn’t prepare me for the everyman posturing of conservative icons Sarah Palin and “Joe the Plumber.” If uttering the words “hockey mom” or “average Joe” doesn’t make you a “cynical faux-populist,” I don’t know what does.
Both sides certainly have their faux-populists. But is Berg really claiming that this is a uniquely progressive political strategy? I may be one of the hated liberal elite, but I think I can safely say that he’s off his rocker.
Governor Pawlenty’s policies over the past six years have done a lot of damage to Minnesota, and his decision to unilaterally defund the Minnesota budget this year will make things even worse. Fortunately, he’s got a plan:
Escape from Minnesota and run for president, while leaving Minnesotans to clean up the pieces. Of course, this has always been his plan,
as I suggested a couple of months ago when we were discussing whether he supported term limits:
Pawlenty’s goal seems to be to disappear before the full extent of the damage he’s caused becomes evident. His support for term limits, then, should come as no surprise.
Once again, Pawlenty has shown himself to be a shrewd politician. Not running for a third term is certainly the most logical choice for him. After all, which would you choose: running for the highest office in the country, or being forced to face the consequences of this biennium’s budget when the schools demand their $1.7 billion in “delayed payments?”
Actually, one big question on my mind is why would anyone want to be governor in 2010? The next governor will face an enormous mess left by Pawlenty: A budget that has serious structural problems; soaring property taxes; collapsing infrastructure and social safety net programs; and, in general, a Minnesota that is becoming thoroughly average. In fact, the next governor is almost certain to be very unpopular, as he or she tries to repair some of the damage Pawlenty has done and address some of the problems Pawlenty declined to fix.
After once again
ignoring the elected DFL legislature and deciding he has to have things his own way, Tim Pawlenty now claims he
wants the DFL’s input. At least, that’s how he puts it.
More accurately, he wants DFL legislators to take partial ownership of his plan to slash Minnesota’s budget, so he won’t have to bear the full brunt of the voters’ anger.
…before using his unallotment authority, Pawlenty told legislators he wanted their views considered.
“Each legislator or committee chair has experience and insight into these issues. We want to make sure we take into account their perspective and their input,” said Pawlenty.
DFLers in the legislature may not have much sense, but at least they have the sense not to fall for this one:
So far, no legislators have written back. The majority leader in the Minnesota Senate, DFLer Larry Pogemiller of Minneapolis, says he won’t be offering any suggestions, at least not formally.
Pogemiller says the House and Senate just spent five months doing that, and he’s not sure the governor was listening. [MPR, emphasis added]
During the legislative session, Pawlenty was more interested in political gamesmanship than sound policy. Now he suddenly wants to talk? Sorry, Timmy, the DFL passed a plan, and you vetoed it. Now you can take responsibility.
It’s been a long time now since we’ve had a truly responsible budget that provides fiscal stability for the long term. That’s not just Tim Pawlenty’s fault — the entire legislature needs to be held responsible for that as well.
The long-term situation is relatively simple: as you may have noticed, we are perpetually spending more than we are making in revenue, leading to deficits every single biennium. Even in the last biennium, when there was a $2 billion “surplus,” it was mostly just a fluke due to one-time money. Every year, we’re spending too much, while bringing in too little revenue.
The situation will only get worse. As our population ages, the cost of social services will rise, while the number of Minnesotans contributing to the tax rolls will decline. Since our structural budget problems will only get worse, we need a permanent solution — not more budget gimmicks.
The solution is just as easy to understand as the problem. There are just three easy steps:
Continue reading ‘Will we ever have a responsible budget?’
Tim Pawlenty will doubtless be putting in overtime for the next week or so trying to lay blame on the DFL legislature for the catastrophic cuts he will be forcing on Minnesotans. But the reality is that the legislature did its job, and did it both on time and on budget. Let’s recap:
- The DFL passes a revenue bill that would raise $1 billion in taxes to balance the budget.
- The DFL passes spending bills that cut billions of dollars to balance the budget.
- Pawlenty vetoes the revenue bill.
- Pawlenty signs the spending bills.
- Pawlenty furiously accuses the DFL of sending him spending bills without a way to pay for them.
Pawlenty’s complaints are completely disingenuous. The DFL sent him a balanced budget until he vetoed the new revenues we needed to balance the budget fairly. That’s his constitutional prerogative, but with his veto, he loses the right to blame the legislature. He is the sole reason we will be seeing an additional $1 billion in cuts this year. He made his decision, and he needs to be held responsible for the consequences.
The Legislature passed
an election reform bill yesterday:
An elections bill would move the state’s primary elections from September to early August, which proponents say should give more time for voters to compare their general election choices and return absentee ballots if they live overseas.
An attempt to allow no-excuse early voting was removed from the bill, but there were other absentee ballot law changes crafted in response to the state’s lengthy 2008 Senate race. Local election officials would have to make extra efforts to contact voters whose ballots are rejected and give them the option of casting a new one.
The Senate passed it 44-20; the House vote was 85-49.
Pawlenty hasn’t said what he’ll do with the bill; his fellow Republicans wanted a requirement that voters show photo identification at the polls.
Looks like most of the really meaningful reform was removed from the bill in an attempt to avoid Pawlenty’s veto, but the bill does move our primary election up by a month. Long time readers of this blog know that we are big fans of an earlier primary. Having a September primary increases the cost of contested primary elections and magnifies the importance of the DFL/MN GOP endorsement. August isn’t as early as I would like, but its way better than September. Here’s hoping the Governor signs this legislation.
Tim Pawlenty said there would be no special session and no government shutdown. But what he meant was that there would be no
official shutdown.
Under his slice-and-dice plan, our government will slowly stop functioning. Hospitals will shut down or begin refusing service. Schools will go without billions of dollars are funds are “shifted” away from them. Cities and counties will raise property taxes and curtail most services.
Pawlenty could have avoided this by accepting the Legislature’s plan to pay for the funding he will now slash. But instead, he opted for his standard “compromise” — taking everything he wants, and giving up nothing in return.
But if Pawlenty and the Republicans want to have everything their way, they will need to deal with the consequences. The DFL presented a balanced budget and attempted to negotiate in good faith. Because Pawlenty refused to compromise in any way, the consequences over the next two years should be laid at his feet. Minnesotans need to know that Pawlenty and the GOP are responsible for the coming government shutdown.
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