Gov. Dayton's budget doesn't rely on gimmicks

  • Article by: RICHARD J. COHEN
  • Updated: February 14, 2013 - 8:31 PM

The governor puts Minnesota on the road to prosperity and budget stability once more.

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Gov. Mark Dayton

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Gov. Mark Dayton's budget plan has drawn the expected criticism that, when facing a deficit, the first thing Democrats do is to raise taxes. But this rhetoric simply misunderstands Minnesota's budget history going back to 2002.

Since the state began running deficits in 2002, the solutions presented by former Republican Gov. Tim Pawlenty and by both GOP- and DFL-led Legislatures have relied heavily on spending reductions and temporary fixes -- but very little on tax increases. In fact, spending cuts have been used at nearly five times the rate of tax increases.

What's most concerning, though, is that one-time solutions -- including school shifts, the use of budget reserves and transfers -- have constituted nearly half of the budget solutions over the past decade.

Since 2002, Minnesota has confronted significant budget deficits in eight out of 11 legislative sessions, totaling $21.1 billion. The books were balanced with $10.2 billion (48.4 percent of the total) in accounting shifts and gimmicks; $9 billion (43 percent) in spending reductions, and $1.8 billion (8.7 percent) in tax increases. Only Pawlenty's 2005 cigarette tax of 75 cents a pack presented new revenue for the budget.

It is clear that over the past 11 years taxes have not led the way in Minnesota's budget debate at any time.

Gov. Dayton has finally presented a structurally balanced budget for the state. The problem with using accounting shifts and one-time funds is that the spending that accompanies them is ongoing. The consequence of this type of budgeting is that Minnesota has continued to run deficits year after year, even as other states have brought their budgets into structural balance.

Nothing made this dynamic more obvious than the budget solutions of the last two years by a Republican-led Legislature. It called for a $2.3 billion shift of funding from Minnesota's schools, $640 million in tobacco settlement revenue bonds and $1.8 billion in budget cuts.

Minnesota is running a surplus for the current biennium, but there is a projected deficit of $1.1 billion in the next biennium. The arithmetic is quite simple: The use of one-time money and accounting shifts under the Republicans totaled $2.9 billion vs. only $1.8 billion in cuts. The difference is our present deficit.

Dayton's budget includes no gimmicks or accounting shifts. Instead, he presents a straightforward budget that balances the $1.1 billion deficit in fiscal 2013-14 with $2.1 billion in new revenue and makes an investment of $1 billion in K-12 education, higher education, property tax reductions and jobs.

If enacted, this budget would rebalance the historical trend. However, tax increases would remain a small portion of the total budget solution over the past 12 years. Revenue increases of whatever source would amount to only 20 percent of the total budget solution going back to 2002, with 80 percent being accounting shifts, gimmicks, cuts and the use of one-time money.

By finally presenting a budget that is structurally balanced, the governor puts Minnesota on the road to prosperity and budget stability once more.

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Richard J. Cohen, DFL-St. Paul, is a member of the Minnesota Senate.

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