Minnesota's future: Minnesota Miracle or Minnesota Mayhem?

Opinion editor's note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. (To contribute, click here.) This article is a response to Star Tribune Opinion's June 4 call for submissions on the question: "Where does Minnesota go from here?" Read the full collection of responses here.

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Gov. Tim Walz set a high bar for 2023, promising to do nothing less than make Minnesota the best place in the country to raise a family. "We have the resources. We have the shared vision. And for the first time in half a century, we have the political will to get this done," he said in his State of the State address.

Democratic legislators responded. In five hectic months, the DFL passed their partisan priorities, made needed and overdue investments in infrastructure and environmental protection and created programs designed to give a leg up to those left behind by a changing economy.

The agenda comes with the promise that the investments will be the catalyst for population growth, more productivity and an economic boom. The agenda also comes with a hefty price tag. State spending will increase by 38% in the next biennium; even eliminating the one-time expenditures made possible by the $17.6 billion state surplus, the ongoing spending increase is at least 28%.

That's a heavy lift, especially if the economy falters. While Minnesota's job market remains strong, overall economic growth is sluggish, there are few new workers to generate additional tax revenue and the population is growing older and requiring even more public support.

Walz and the DFL can't rest on their laurels. What is being tagged the new "Minnesota Miracle" could become "Minnesota Mayhem" if policymakers don't make good governance a top priority.

Take housing as one example. Walz signed a $1 billion affordable housing bill. Helping Minnesotans achieve stable housing is critical and has many long-term benefits, including better education outcomes and improved health. The amount of money being spent on housing stability is warranted, but it is not the measure that matters. What matters are the tangible ways in which the economy and the lives of Minnesotans will be improved. How many families will gain stable housing? How many new affordable housing units will be built? How many people will become first-time home buyers?

Tangible metrics like these need to be defined before the first dollar is spent, not just in housing but in other areas of public investment. Measurement leads to discovery. If outcomes aren't being met, measurement creates the knowledge needed to refocus the dollars for more effective and efficient purposes.

The second challenge for the DFL is reform, starting with Minnesota's tax system.

This year saw a mishmash of ad hoc increases in taxes and fees. Combined, they made Minnesota's taxes more regressive and more complex. Equally significant, even with the new taxes passed in 2023, the state's revenue isn't likely to be enough to sustain the massive amounts of new spending, a reality Democrats recognized in their failed efforts to add a new fourth tier to the income taxes and impose even more taxes on Minnesota businesses.

Many Minnesotans accept high taxes as the price for the state's quality of life. Still, high taxes are posing a competitive challenge for the state. On top of that, Minnesota is losing the qualities important to any system of taxation: fairness, transparency and sufficient to meet legitimate government needs. Transitioning to a system that taxes consumption from the current focus on taxing labor, savings and investment can maintain the state's high standards while keeping Minnesota economically competitive.

Finally, Republicans can't simply sit on the sidelines. They had their hats handed to them in the legislative session. They can respond with more "Walz failed" ads and an agenda that exploits fear and prejudice. Or they can offer conservative alternatives to the liberal agenda and be more effective custodians of tax dollars. Rhetorical bomb-throwing rarely imposes accountability on public spending.

When Republican legislators moved beyond their narrow anti-tax agenda, they were productive. In particular, they were mainly responsible for gaining $300 million in desperately needed funds for nursing homes. They need to continue playing the role of effective opposition to help monitor and manage the state's new programs.

Walz and the DFL promised Minnesotans they are building the foundation for a better state in which to live and work. And they may be right. But "trickle-up" policies are as risky as the failed "trickle down" economic theories. Good governance — starting with accountability and reform — enhances the odds of success for everyone.