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Republican legislators have forsaken fiscal integrity

  • Article by: ARNE H. CARLSON
  • October 15, 2012 - 8:40 PM

Counterpoint

We have long been accustomed to a growth in political exaggeration the closer we get to an election. A recent counterpoint by state Rep. Keith Downey proclaiming a state budget "surplus" was a case in point ("Why so down about a budget surplus? Oct. 8). Rather than being candid with a public that hungers for truthfulness, Downey decided to continue the old partisan propaganda from the past.

It goes back to 2003 with the ascendency of Tim Pawlenty as governor and the dominating influence of Grover Norquist. For eight years, under the banner of "no new taxes," Minnesota balanced its budget with massive multibillion-dollar "borrowings," accounting shifts, fee and tuition increases, accelerated tax payments, delayed bill payments and shifting costs to local governments.

These policies continued after the 2010 elections under a more Tea Party-inclined Republican Legislature. The results have been truly harmful:

1) All three Wall Street rating agencies have downgraded our creditworthiness, citing continued poor decisionmaking.

2) The largest property tax increases in our history have taken place. From 2004 to 2012 (property taxes lag by a year), the average total increase was $370 million per year. For the nine prior years, the average had been some $107 million per year. So much for the truthfulness of the "no new taxes" slogan.

Downey claims that there is a $1.2 billion surplus in the current two-year budget cycle as a result of last year's budget settlement. This is a fiction, plain and simple. Budget documents from Minnesota Management and Budget show a temporary budgetary balance of zero, not a surplus.

Furthermore, this zero balance was made possible only because the 2011 budget settlement delayed paying aid to our school districts, thereby artificially reducing state costs in the current biennium. In total, this constitutes a loan to the state from our public schools to the tune of nearly $3,000 per student.

Further, the Legislature sold our future tobacco settlement revenue for the sake of a one-time upfront cash fix to pay for current operating expenses. This is costing the state $1.67 for every $1 received. Finally, this budget solution involved eliminating the Homestead Credit and cutting other property tax relief programs.

It is a bit like receiving your bank statement and celebrating a healthy balance. Then, in going through the check register, you discover that a couple of checks are still outstanding.

The end result is that when all this budget chicanery is eliminated, the next budget cycle of 2013-14 will commence with an approximate $4.4 billion deficit. This includes a structural deficit of $2 billion and the K-12 debt of $2.4 billion. An improving economy could lower that figure.

The sad reality is that this new Republican Tea Party team has been more about the politics of getting elected and the "social" issues than about restoring old-fashioned fiscal integrity. Endless hours have been spent on issues like abortion, including compelling the presence of a physician when a woman takes a morning-after pill; the marriage amendment, and the Brodkorb sex scandal, etc. However, virtually no time was spent on creating a strategy to regain the state's AAA bond rating or to improve its financial practices.

Hopefully, the next Legislature will conclude that we cannot continue to stumble from deficit to deficit and instead focus its attention on getting its own house in order.

Perhaps legislators will consider doing the following:

1) Creating a truly bipartisan commission that reflects the talent we have in business, higher education, the administration and the Legislature for the purpose of designing a growth-oriented budget along with a reformed tax code that encourages meaningful investment. Minnesota has been successful when it harnesses its best and works to be on the cutting edge of economic advances ranging from medical technology to food processing to the environment. The possibilities of top-level job growth are endless, and the relationships between business, education and government will facilitate technology transfer and encourage more research and growth opportunities. But it starts with leadership.

2) Agreeing to keep all of the divisive social issues off the table. The focus should be on significantly improving our financial management and upgrading our educational outcomes.

3) No more candidates pledging to Norquist or anyone else except for a pledge to the public to serve its best long-term interests.

Now this would be meaningful progress.

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Arne H. Carlson was governor of Minnesota from 1991 to 1999.

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