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Continued: Are they fleeing Minnesota taxes or bad weather?

  • Article by: DAVID PETERSON , Star Tribune
  • Last update: February 11, 2010 - 10:12 AM

Minnesota is losing hundreds of millions of dollars in tax revenue from people who are "voting with their feet" by leaving for places with lower taxes, a conservative think tank said in a report released Tuesday.

"This is not a PR problem, it's a taxing and spending problem," Annette Meeks, a Republican appointee to the Metropolitan Council, said at a Capitol news conference. "People are heading for low-tax and no-tax states. Let's stop chasing them out."

Liberals, however, countered that the shift -- from a net gain through interstate migration to a net loss -- coincides exactly with the "no new taxes" reign of Republican Gov. Tim Pawlenty. It started the year he was elected, 2002, and has continued ever since.

Demographers noted that, far from being a sudden new shift, departure is the norm for Minnesota going back for decades -- only briefly interrupted in a major way by the blazing-hot economy of the '90s.

"My sense is that if people are leaving the state, it's not because of the taxes," said Will Craig, associate director of the University of Minnesota's Center for Urban and Regional Affairs. "It's because of the weather, and jobs. I know a guy who was in construction here, and now he's in Arizona," after the dramatic fall in homebuilding that started at mid-decade.

The top recipient states for Minnesotans are places like Florida, Texas and Arizona, and all sides agree that the underlying issue is real: Minnesota will increasingly see an outflow of wealthy retirees as the state ages and more and more people reach the stage in life when they want to trade snowblowers for desert golf.

Meeks' Freedom Foundation of Minnesota commissioned from a pair of economists a study of federal data tracking the movement into and out of Minnesota from other states. It shows that since 2002, Minnesota has lost 54,113 residents to other states, after a net gain of 104,295 between 1991 and 2001.

Using Internal Revenue Service data, the economists calculated that, had Minnesota continued to be home to the incomes of those who left between 1995 and 2007, state and local governments would be ahead by a cumulative total of $2.5 billion.

Asked what she suggests the state do, Meeks responded: "First, do no harm" -- that is, ignore the gubernatorial candidates and others who would raise taxes to solve the state's budget crisis.

Taxes have fallen

Dane Smith, president of the progressive advocacy group Growth & Justice, said that if taxes are responsible for flows of migration -- something he doesn't believe is true -- then the facts disclosed in the report don't seem to support its argument.

"We have cut taxes and the cost of government by historic proportions," he said. "The 'price of government,' meaning all revenues, state and local, is well below what it was in the '90s, when people were coming here. We cut income taxes by the largest amount in our history in 1999 and 2000, followed by a rigid no-new-tax approach, and behold, people are fleeing."

In reality, he added, he doesn't believe taxes are the main reason people come or go. "People will always snowbird out of here. We can't make our state less livable for the vast majority of people just to save a few snowbirds from leaving."

Census Bureau data show that Minnesota continues to gain population overall, if you count international migration. That inflow outweighs the net outflow of people heading off to other states.

And that net inflow is unusual. Historically, the Minnesota State Demographer's office reports, in more decades than not, Minnesota has seen more people move out than in. The huge exception was the '90s.

In the past 10 years, Minnesota's growth rate has tapered off, raising concerns about a possible loss of a Congressional seat after this year's Census.

Setting foreign immigrants aside, Craig said, the basic pattern in the state's history can be summed up as "in-migration from neighboring states," in search of high-paying jobs, "and out-migration to Sun Belt states," in search of warmth.

David Peterson • 952-882-9023

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    Counting all people moving in and moving out, foreign and domestic, Minnesota has more often lost than gained (negative numbers in parentheses):

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