Flawed financing plan ought to compel reform.
Thursday is back-to-work day for tens of thousands of Minnesotans whose livelihoods and service to this state were disrupted by the longest state government shutdown in U.S. history. Their sacrifice was unfair and unwarranted, and cannot end soon enough.
We wish the shutdown's end could evoke good feeling among all Minnesotans. But there's little reason to celebrate the deal struck by DFL Gov. Mark Dayton and Republican legislative majorities to set a budget for 2012-13 and end the shutdown. It's a short-term fix that leaves the state on shaky fiscal ground -- and ought to compel concerted efforts in the next 18 months to find more cost-effective ways to do public work.
The bills Dayton signed Wednesday better meet this state's needs than did the smaller Republican-backed budget he vetoed in May. But the new budget is propped up by $1.4 billion in one-time measures that heap debt on schools and all but guarantee deficits in future years.
Small-government conservatives defend these bills as a way to force more spending restraint in 2013 and beyond. We'd describe them as unprecedented and irresponsible.
Never before has Minnesota borrowed against a future state revenue stream to pay for government operations, at high interest costs to boot. The tax bill Dayton signed Wednesday pulls $640 million in future tobacco lawsuit proceeds into the next two years' accounts. The upshot in the future will be lower general-fund revenues, larger debt-service obligations and higher interest costs, in part because Wall Street bond houses are bound to scorn what is, in essence, deficit spending.
Almost as ill-advised is a $700 million delay in school payments, forcing many districts to borrow operating funds. Minnesota has "shifted" the timing of school payments before, and has restored the regular payment schedule years later. A shift can be justified near the end of a biennium, when tax increases or spending cuts cannot act quickly enough to balance the books. But employing an emergency tactic at the start of a biennium is a marker of poor management, and using the delay's one-time savings to pay for ongoing expenses compounds the error.
This much fiscal gimmickry in 2012-13 -- on the heels of a similarly squishy budget in 2010-11 -- reveals an inability to find a sturdier bridge between the Capitol's DFLers and Republicans on the rightful size and role of state government, and the advisability of higher taxes.
Republicans wanted a state budget no larger than the one authorized by the 2007 and 2009 Legislatures, even though existing state obligations were forecast to cost $5 billion more. But the GOP product was vetoed because it was loaded with harsh consequences -- a fact Republicans seemed to tacitly acknowledge when they offered the school shift and tobacco borrowing on June 30 to underwrite $1.4 billion more in spending. Dayton initially refused their offer, holding out for higher taxes, then accepted it in the face of a lengthening shutdown one week ago today.
The final budget spreads the additional $1.4 billion widely for worthy purposes, including these:
•A fair shake for property taxpayers in Minneapolis, St. Paul and Duluth. They weren't singled out for loss of local government aid in the final bill, as they were in the vetoed GOP budget.
•Preservation of renters' credit, the property tax relief for 300,000 low-income renters that Republicans targeted for major cuts.
•Continued Medicaid and MinnesotaCare enrollment for nearly all of the low-income adults the programs now cover. The final bill dropped a GOP reversal of Dayton's shift of the lowest-income childless adults into Medicaid from its meager state predecessor, General Assistance Medical Care.
•Continued mental health services, which will face cuts much smaller than the GOP bills delivered.
•Intact transit systems. Crippling cuts to Metro Transit and Greater Minnesota systems in the Republican budget were moderated.
•A functional state Human Rights Department, which would have all but disappeared under the GOP budget.
Despite those improvements, the budget signed into law still inflicts too much pain. The hurt will be felt most keenly on college campuses and among those who serve low-income disabled and elderly people. Child-care cuts for low-income families are especially shortsighted.
That pain and the prospect of more to come should be more than sobering. It also should compel action. Now's the time for Dayton and legislative leaders to come together to seek ways for state government to produce better results at lower cost, and for state taxes to generate more stable growth in revenue.
If they do, they will find that scores of state policy veterans, from nonprofit organizations, foundations, business groups and labor unions, are ready to bring a plethora of ideas to the fore. Those knowledgeable policy hands have long seen what the new budget should make apparent to every Minnesotan: This shaky structure won't last and must be rebuilt.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.