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Sunday, July 03, 2005 

"Tax and Spend Timmy"

The Minnesota Critic is all over the shutdown coverage. Go read.

I'm also going to respond here to SD42 Webmaster, who has been leaving comments on this blog and over at MDE. The question that he/she has posed is various forms of the following:
The Republicans propose to raise spending 8 PERCENT. How can this possibly not be enough?
No one seems to have answered adequately for him/her, so I'll do my best here.

To properly answer, one has to understand what that number means. And as best as I can tell, it means that Minnesota will spend 8% more money in the next biennium compared to the money it spends now. And at first, that might sound like a lot, but lets break that figure down. I'm told by folks who are supposed to be knowledgeable about this stuff that the 8% number is over the entire biennium, and that it actually means that state spending is going up by 4% a year. That doesn't sound like quite as much, does it? Next, consider inflation, which is (while I don't have exact figures) in the neighborhood of a couple percent a year. Then consider that the state's population is rising, and thus Minnesota is providing services for more people, and that tax revenue is also rising. Finally, the number that SD42 cites may also include accounting shifts that the Legislature made last year. If you spent $100 on something last year, but you paid the credit card bill this year, would you choose to say you spent the money last year or this year? Last year's Legislature chose to say they spent it this year. Thus, 8% may sound like a lot, but really is not enough for all the worthwhile things we need to fund and invest in. I understand that, at 8%, the state actually spends less money per Minnesotan. And I just don't think that's acceptable.

Well that's pretty funny. An eight percent increase is actually a decrease. Good luck trying to sell that one.

Let's talk about spending per person.

Minnesota spends less per person than only three other states. Three. According to the U.S. Census Bureau for 2004 (http://www.census.gov/govs/statetax/04staxrank.html) only Hawaii, Wyoming, and Connecticut spend more per person.

Minnesota ranks 4th. We spend more per person than Wisconsin (ranked 12), Iowa (ranked 39), North and South Dakota (28th and 49th). Minnesota businesses are in direct competition with businesses in each of the neighboring states. Yet, compared to every one of our neighboring states, Minnesota businesses and families are at a disadvantage.

You simply cannot make the case that we aren't spending enough per person.

There are things worth paying for, and keeping Minnesota as great a state as it is now is one of them.

This goes to a matter of basic philosophy; Republicans believe in cut-cut-cut, with no regard to what it affects. But when you cut spending across the board, you hurt both the K-12 and higher education systems, resulting in a less-educated workforce. Now, one of the reasons that businesses choose to operate in our great state is that highly educated workforce, something that goes away when you cut taxes, even though businesses might enjoy a short-term advantage.

Democrats, in short, believe that certain things are worth paying for. Many of the taxes we pay are an investment in Minnesota's future. We invest in the U of M and MNSCU so that someday we'll have a strong workforce; we invest in roads, bridges, public transit, and other infrastructure so that the people of Minnesota can carry out their business, both now and in the future.

This is a debate that Democrats can and will engage in. I, for one, am not willing to let Republicans in the Legislature dismantle all the things that make Minnesota great.

Webmaster--You're really going to argue that we should compare ourselves to Iowa, North Dakota and South Dakota? Good luck trying to sell that one.

Not "cut-cut-cut". Eight percent increase. Everything you mentioned -- schools, roads -- can and should be addressed. I would add crime prevention, health care. All worthy goals. But we have to do it within LIMITS. The DFL does not beleive in limits. And that's how we got to be the #4 highest taxed state.

As I said on the MDE blog, you're playing by rules the rest of us cannot use. When my expenses go up, I cannot say to my employer: "The lousy raise you gave me is not enough." Eight percent is greater than inflation and a greater increase than most people are seeing in their paychecks.

Minnesota taxpayers -- the businesses and families you rely on for those taxes -- are more generous than any other neighboring state. But, unlike our state government, their income is not unlimited. They have to make hard choices every day. It's called living within your means and it's what Republicans are trying to get our state government to finally do.

"When my expenses go up, I cannot say to my employer: "The lousy raise you gave me is not enough."

Instead, you charge everything on your credit card and pay the minimum hoping that eventually you'll find the money somewhere eventually before the whole bill comes due.

Budget shennanigans are not what we ask of our legislature. And the previous bonding and pay later fiasco is a bill coming due.

First, it's worth pointing out that there's nothing accidental about Minnesota's high per-capita spending. This is a high service and high quality of life state, and I, for one, am proud of that.

Second, I don't know that having high taxes, if it means also having lots of quality state services, means that businesses are going to stay away from a state. Businesses might actually be attracted to such a state. Also, Minnesota has always been a higher-tax, higher service state. Businesses (3M, Pillsbury, Honeywell, etc.) have seemed to like it here so far.

Third, you still aren't accounting for population growth. Minnesota is growing, tax revenues are rising accordingly, and the budget should also rise accordingly. I'm not too troubled by a budget that keeps per-capita spending even; I'm very troubled by a budget that reduces per-capita spending.

Fourth and finally, the family analogy just isn't really valid. The State of Minnesota is not, in the economic sense, a family, and we shouldn't be treating it as such.

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