Black And White And Green And More Black

Doug Grow – DFL stenographer and reporter for the Joyce-Foundation-supported MinnPost – is convinced that the GOP is lying about the effects of the Warehouse Tax.

Exhibit A?

Grow writes about the Red Wing Shoes’ opting out of building a new distribution center in Red Wing; it’s something we wrote about here in SITD a few weeks ago.  

According to Grow, the GOP’s line is wrong because the executives involved didn’t step out on stage and burn an effigy of Tom Bakk as the cameras rolled. 

Business Is Hard:No, really; asked if the tax was the sole reason Red Wing Shoes deferred its expansion…:

Sachen couldn’t say that it necessarily would have.

Would the project definitely go ahead if the tax were eliminated?

Sachen couldn’t say that was necessarily the case, either.

He did say that the company, which has a facility in Potosi, Mo., is “in talks with Potosi.” But again, he wouldn’t say that there’s a direct link between the tax and the warehouse project.

Who’da thunk it; a businessman whose business depends, on a certain extent, on not pointlessly pissing people off over politics in this rent-seeking environment, gave an honest answer; there are many reasons that a company does or does not go ahead with an expansion.

Which on the one hand means there’s not a smoking gun hovering over “jobs that won’t be created” leading back to the DFL’s Warehouse Tax (point for Grow).  And on the other hand, it means that there never will be that smoking gun. (Take a point away from Grow). 

By the way – Democrats get hurt when conservatives say they don’t understand economics or business.  Reading this next bit, one would have to say “hurt” is probably less appropriate than “chastened”:

Additionally, it should be noted that the Red Wing Shoes warehouse wouldn’t create jobs — other than construction ones in building the warehouse. Rather, it would allow Red Wing to consolidate its current the five warehouses into one facility. Those warehouses, by the way, employ about 80 people, a number that would not increase with a new warehouse.

Er, yeah. 

Making the business – and the efforts of those 80 existing warehouse workers – more efficent gives the business more profit.  Which gets used to hire more people, design more shoes, improve existing products…heck, even just make staying in Minnesota more tenable.  Which means those 80 warehouse jobs stand less risk of becoming 40, or 20, or 0 warehouse jobs. 

It’d also speak to the long-term commitment on Red Wing’s part to keep those jobs in Red Wing, rather than someplace else. 

Leave The Gotchas To The Comedians: Of course, it’s not just Doug Grow.  Dave Mindeman of mnpAct thinks he’s got the DFL Warehouse Tax’s MNGOP critics over a barrel:

In addition, Rep. Garofalo apparently missed the June 28th Star Tribune clarification on where the tax actually applies…..

Myron Frans, state revenue commissioner, said Dayton has asked him to study the issue, and he has spoken with Red Wing officials about their concerns. He said the tax only applies when the producer or manufacturer purchases warehouse or storage services from another firm.

Garofalo offered no other examples of a potential problem. Thus the Red Wing Shoe factory will NOT be affected by this tax.

In other words, Rep. Pat Garofalo is, as usual, making it up.

And Mindeman deigns to condescdend:

I would hope this legislator will someday learn to get the facts right before making another condescending statement of inaccuracy.

Um, yeah.

Garofalo has actually worked in the private sector.  I know this because we worked for the same company, once upon a time; it was he that actually introduced me to the Drudge Report back when we were both minions at a local Fortune 500.

And he knows – as all of us who work in the private sector and pay attention to things do – that businesses rarely make decisions based on single factors, or on short-term stimuli.  Running a significant brick-and-mortar business (shaddap, consultants) is the ultimate long bet; it involves considering everything; access to the needed workforce, communications, supply chain, price to get product to market, taxes…

…and long-term outlook. 

Red Wing – and Laurence Transportation in Red Wing, who also held off on a warehouse expansion that will be directly affected by the DFL’s Warehouse Tax – is betting against Minnesota in the long term, given the way the climate looks now.

And since Mindeman wants to play the “they curiously ignored a Strib article” game, it’d seem he missed one too; Navarre is up and moving to Texas.  It warehouses products – providing the “value add” that the state is taxing – and also works in e-commerce, which is getting slapped by the DFL’s Amazon Tax. 

So it’s gone:

That was the first time the 30-year-old Minnesota firm had said publicly that it planned to move not just some of its warehousing operations but also its headquarters to the site of its recently acquired Speed FC e-commerce operation based in Texas. Navarre acquired Speed FC Inc. last November for $50 million in cash and stock.

Was it just the DFL’s Warehouse Tax?  Or the DFL’s Amazon Tax?

No.  But both of them, and other changes to the state’s business tax code, had to look ugly to a business that’s already losing money – money that will probably be made up by consolidating operations in a lower-tax locale alone. 

If you’re one of the almost 300 employees being pink-slipped, do you think it makes a difference?

They Also Think Penelope Garcia Is Like A Real Investigator: Back to Grow’s column, where in a quote of Governor Dayton’s chief of staff Bob Hume, he shows that…:

  • he is aiming his piece at economic low-information voters, or…
  • …he’s an economic low-information voter himself:

Hume is commenting on Garofalo’s call for a special session to get rid of the tax.  If you work in the  private sector, see if you can spot the clinker:

Bob Hume, the governor’s deputy chief of staff, made it clear that a special session is not in the offing.

“This is a stunt, not a solution,” Hume said in a statement. “The Legislature is coming back more than a month before this tax would take effect, which is more than enough time, if revenues permit, to review and possibly revise this tax.”

A whole month?  To make a decision affecting the profitability, well-being or survival of a business?

These decisions get made based on long-term outlook.

And while the state’s long-term outlook is subject to debate, let’s remember that when the DFL-shilling media says things like…:

To date, though, the Minnesota economy is humming at a far healthier rate than the economies in such business-friendly states such as Wisconsin and South Dakota.

…that the economy still largely reflects Republican policy, set when the state had responsible two-party rule (shaddap about Ventura) between 2002 and 2012.   The DFL’s tax and spend orgy still hasn’t largely gone into effect; even the first of the taxes have been wending their way through the process for about a week now, and the worst is yet to come.

Get back to us in a year. 

Around election time, preferably.

The “Wreck Everything” Legislature

Before the 2012 elections, the DFL tried to call the previous, GOP-run legislature a “do-nothing” legislature.

Leaving aside the obvious – the government that governs best governs least – it was a lie. The 2011-2012 legislatures accomplished some useful stuff – hobbled by a “governor” who was fully-owned by extremist special interests and some very un-conservative detours like the Vikings stadium.

But as we wait at the halfway point of a session of one-party government, what does the DFL have to show for their unfettered power?

  • Business taxes – especially the warehousing tax – that lop a serious chunk off of Minnesota business’ bottom line, and that already have businesses heading for the exits.
  • Two extra billion dollars taken out of the productive parts of the state’s economy.  Remember – Minnesota’s GDP is about $267 Billion.  Another two billion is nearly a percent – on top of the 30-odd billion in state spending that the state already sucks out of productive use.  Imagine having an additional 1% of your productive income taken out of circulation – $500 a year if you make $50K.   It’s not chicken feed. 
  • A home daycare system saddled with useless graft to the public employee unions, and with its revenue further cut by the state’s move into all-day kindergarten – which adds virtually nothing to kids’ education, but does create lots of new union jobs that pay dues to the DFL. 

And all of that at the end of a session that wasted months arguing about DFL social-domination issues (gun control, gay marriage) and power-acquisition. 

In exchange for what? 

So far, nothing but damage.

I’ll take “do nothing”, thanks.

Eggs For The Omelet

The Warehouse tax is going to cause all sorts of damage – and some GOP legislators want to do something about it:

Reps. Tim Kelly of Red Wing and Pat Garofalo of Farmington said lawmakers must act soon because the looming sales tax on warehousing services is already prompting businesses to delay planned warehouse expansions.

But the DFL could scarcely care less:

But a spokesman for the Democratic-Farmer-Labor governor dismissed the request as “a stunt, not a solution.

“The Legislature is coming back more than a month before this tax would take effect, which is more than enough time, if revenues permit, to review and possibly revise this tax,” Bob Hume, Dayton’s deputy chief of staff, said in a statement.

Hume is speaking like a bureaucrat and party stooge who thinks the private sector is the same of a hip club in Northeast Minneapolis.

The tax is already killing jobs!

Kelly said two large Red Wing businesses are delaying expansions because of the tax, and the prospect of losing those new jobs calls for quick action.

Stephen Lawrence, president and CEO of Lawrence Transportation Services in Red Wing, said a 6.5 percent sales tax on his company’s services would put them at a competitive disadvantage with firms in neighboring states, none of which has a warehousing tax. He said his business is considering building facilities in Wisconsin.

Governor Dayton was apparently waiting for Alida Messinger to tell Carrie Lucking what he was supposed to say about this.


Governor Messinger Dayton: “Eat The Poor!”

Governor Alida Messinger Mark Dayton, 2011:  “Rorra rammma hassa humper thunt”.  (Translation:  We’re only raising taxes on the top 1%)

Govenor Alida Messinger Mark Dayton, 2013:  “OK, poor people gotta pony up too!

The DFL’s current tax plan not only raises taxes on all Minnesotans across the board, but actually raises taxes on the poorest Minnesotans by more than the wealthiest.

2013 Minnesota Tax Bill Incidence Analysis by minnesoda238

Down below is the key table, showing net tax hikes by income “decile”:

That’s right – not only did taxes rise more for the bottom 20% than for the top 10%, but under the DFL plan taxes rose more for the bottom 10% than for Dayton’s friends, family and neighbors in the top 1%!

To add stupid insult to pointless injury – the report (prepared by Dayton’s employees) notes that the taxes on the lower deciles might drop because of “property tax relief”.  But that assumes that city and county governments will pass “their” local government aid raise on to taxpayers, rather than plowing it into more spending – an assumption that history shows is too stupid even to laugh at.

This is the change you hoped for, Working Minnesota?

Hello Steeltown; Goodbye, DFL

Jamestown, North Dakota.

15,000 people.  At confluence of the James and Pipestem rivers, about 90 miles west of Fargo.  Home to a state hospital and psychiatric prison (which sounds like something the MN DFL would build for Republicans, but it’s really pretty normal), a school for the profoundly handicapped, a college (my alma mater, as it happens), and a whooole bunch of agricultural businesses…

…and, soon, an iron mill.

A North Dakota company plans to build a $60 million iron producing plant near Jamestown, N.D., using iron ore concentrate from Minnesota.

A subsidiary of Bismarck-based Carbontec Energy Corp. called E-Nugget North Dakota LLC has unveiled plans to churn out 100,000 metric tons of iron annually using North Dakota sugar beet residue in the mix instead of coke coal.

It’s an interesting project; the plant will extract ore from tailings from the old iron mines up north that used to be economically un-feasible to extract.  There are millions of tons of now-usable ore piled up up north.

It’s Minnesota ore, and the research has Minnesota ties…:

The E-Nugget iron making process was developed by Carbontec and Michigan Technological University over the past five years, including large-scale batch tests at a Minneapolis facility, John Simmons, president of Carbontec, said Monday. The company already has plans to expand to a 300,000-ton plant if the startup goes well.

But the plant is being built in North Dakota.  Granted, it’s Jamestown, which – as it’s been throughout most of it’s history – has been safely tucked away from excessive prosperity.  100 miles east of the oil fields and their jobs, and 90 miles west from cha-cha, booming Fargo (yes, I said “cha-cha Fargo”; it makes sense in context), Jamestown is one of few parts of North Dakota that isn’t overheating economically so far.

But it’s not Flint or Newark or Cleveland.  It’s not even Minneapolis, much less Grand Rapids or Virginia, unemployment-wise.

So why there?

Simmons said the Jamestown site is well-situated because of easy access to sugar beet residue feedstock and also because it is adjacent to a Great River Energy power plant and directly on the BNSF rail line. He said the iron ore concentrate could move from the Grand Rapids area to North Dakota in rail cars that move western coal east but generally have been empty on their return trip west.

“We can get the right quality material from Grand Rapids and the rail routes make sense,” Simmons said.

So let’s get this straight;  Jamestown ND, which is about 90 miles from the sugar beet waste, and probably 300 from the iron ore tailings, gets the plant.

Why’s that?

Magnetation expects to start construction on a fourth plant northwest of Coleraine this year. That plant will produce 2 million tons of concentrate [that’s the part you dig up, before you process it into iron] annually and will be ready to feed a new Indiana pellet plant the company now is building to supply partner AK Steel with iron ore for its furnaces by 2015. That new Itasca County facility is expected to employ another 160 people. The Coleraine plant ultimately will shift to get its ore from traditional open pit mining. (The company has shelved plans to build a recovery plant at Calumet.)


Simmons noted Carbontec also created an E Nugget Minnesota LLC and considered building the plant in Minnesota using wood waste from logging sites as the reductant or binder. He said the company chose North Dakota instead, in part because it’s so much easier to get permits in North Dakota.

Score one for the DFL Environmental Lobby!  More jobs exported to North Dakota!

Let’s let that one sink in; between taxes and permits, it’s cheaper to ship rock 300 miles than it is to process it in Minnesota.

Thanks, Minnesota DFL!

The Mulligan Session, Part II

The same DFL employees who gave us “E-Pulltabs” as a means of supplying “the state’s share” of an extorted payoff to an out-of-state billionaire for his real-estate upgrade (which fell 95% short of predictions, as predicted by certain right-wing bloggers) are going to try to take a mulligan and get it right on the second try, says this piece from the MinnPost’s James Nord:

The governor’s proposal would increase the cigarette tax from $1.23 per pack to $2.52 per pack – a larger jump than the 94-cent target he’d earlier proposed — and would require retailers and wholesalers to make a one-time payment on existing inventory that would funnel $24.5 million into the stadium reserve account, solving the shortfall there.

Where have we seen this before?

Oh, yeah – cigarette taxes never, ever raise the money they’re supposed to.  They rarely get 2/3 of the way to their goals.  Ever.

And a “one-time tax on existing inventory?”  Look for a fire sale on smokes the week before the tax goes into effect, and for chain convenience stores to shuffle inventory out of state pronto.

Then, if electronic pulltabs or linked bingo games fail to produce the revenue necessary to fund the state’s appropriation bonds for the stadium [“if” – heh.  Ed], the commissioner of Minnesota Management and Budget would have the authority to direct revenue from a closed corporate income tax loophole toward the stadium.

Frans said that closing the “tax avoidance loophole” would prohibit the current legal practice of some Minnesota companies that avoid paying full corporate income taxes on sales they make by shielding themselves through a subsidiary in a different state. He said more than 20 states have similar regulations in effect.

Dear Mr. Nord:  Not that I’m going to tell you how to do your job, but did you happen to ask Mr. Frans what states those were?  And how they’re doing in terms of business climate?  How well “closing” that particular “loophole” worked?

Remember – these are the same people who said “E-Pulltabs” would…y’know…work.

That measure is projected to bring in $26 million in the first year and roughly $20 million annually after that, although those totals could change as the conference committee works out the specifics of their compromise.

Frans said with the new contingency plan, which would also be backed up by current taxes on suites and memorabilia if for some reason it doesn’t perform, officials are ready to close the book on the shaky stadium funding issue.

“We believe it’s reliable, it’s consistent,” he said.

The Messinger Dayton Administration “believed” a lot of things that didn’t turn out to be true.

If only we had an institution, with printing presses and transmitters and websites, staffed by people who see themselves as part of a truth-seeking monastic order, whose job it was to tell the public about these things.

Governor Messinger Dayton: “The Beatings Will Continue Until Morale Improves!”

Governor Messinger Dayton famously appeared at the Chamber of Commerce yesterday.

And boy, did he give ’em what-for!

Gov. Dayton told a stunned luncheon audience that Minnesota is among the best places for business in the country, contrary to the Chamber’s message.

He said government spending is right in the middle, and that the state’s tax rank is dropping.

Dayton said he never heard the same criticism when Republican Tim Pawlenty was governor for eight years, and he asked his staff to investigate.

“And we could not find a single instance of the chamber calling for spending reforms during those eight years,” Dayton said. “Evidently, in your view, spending reform is needed only when a Democrat is governor.”

Messinger Dayton also said he was sticking firm to his promise to hike taxes on “the rich” (meaning “successful entrepreneurs and professionals who didn’t have the foresight or the fiscal and legal clout to move their money to dynasty trusts in South Dakota”, as opposed to, say, him).

A couple of observations:

Gov. Dayton told a stunned luncheon audience that Minnesota is among the best places for business in the country, contrary to the Chamber’s message.

He said government spending is right in the middle, and that the state’s tax rank is dropping.

Dayton said he never heard the same criticism when Republican Tim Pawlenty was governor for eight years, and he asked his staff to investigate.

“And we could not find a single instance of the chamber calling for spending reforms during those eight years,” Dayton said. “Evidently, in your view, spending reform is needed only when a Democrat is governor.”

A few observations:

Governor Whinypants:  Business never complained about spending on Pawlenty’s watch?   Huh?

During the first term, business complained about things like “health impact fees” – stealth taxes framed as compromises with the DFL in a legislature he didn’t completely control.  Just ask Sue Jeffers.   On the other hand, he generally held the line on taxes, pursuant to his pledge to the Taxpayers League.

During the second?  Pawlenty was faced with a wastrel DFL legislature; business rightly figured he was the last line of defense against the sort of pillaging the Messinger Dayton Administration and the Legislature have in mind.

And they were right then, and they’re right now.

Profiles In Leadership:  This is leadership?  “If you don’t see things my way you’re a poopyhead?”

Reverting To Stereotype: Conservatives pillory liberals for being innumerate, having  stunted knowledge of economics outside of Paul Krugman’s ravings – the type who think raising the minimum wage cures poverty.

It’s on stories like this that you realize; the stereotype exists for a reason. .

Dave Mindeman at mnpACT put it a little differently, by way of cheering Governor Messinger Dayton on in a piece titled “To the Chamber of Commerce: SHOVE IT” in a flight of Oscar Wilde-like whimsy..:

So Dayton dropped the sales tax proposal with the caveat that his increased income tax on higher income earners would go forward.

But they object to that as well.

“Hey, we left your top line alone, more or less; you can’t complain if we attack your bottom line, now, can you?”

They continue to promote the addage that this tax will affect small business…and yes, here we go, the “job creators”. They continue this argument even though the Department of Revenue has shown that only 6% of small business would be affected. And again, we are only talking about the highest portions of their income. If they are making substantially more than $250,000, why the huge objection to paying some back to a state that has benefitted you greatly?

I can see Messinger’s Dayton’s disconnect; she he has never worked, and has no concept of what business is about.  Not sure where Mindeman comes at it from, and I’m not sure that it matters.

Messinger Dayton is daring business to pick up and leave.

She He doesn’t think they will.

I imagine we’ll find out sooner than later.

Elections Have Consequences, Part CXXIX

Saint Paul business owners, trapped between Saint Paul’s crushing property tax burden and Dayton and the DFL’s tax hikes, are finally speaking out:

Paul Wagner’s family has manufactured and sold conductive wire to the medical and defense industries for nearly 50 years, but he and his wife haven’t ruled out moving the entire company from St. Paul to Wisconsin, where they already maintain two-thirds of their operations.

Smart Minnesota businesses, in other words, got a head start on the exodus.

I know that MN Wire is far from the only one.

Proposed taxes on business transactions and a possible increase to Minnesota’s minimum wage could doubly impact their decision to stay or go.

“In the past three years, there’s been 12 new costs (added) to hiring employees,” said Wagner, president and CEO of Minnesota Wire on Energy Park Drive.

It’s not just (sarcasm on) big plutocrats (sarsasm off) like Wagner.  It’s small service providers, like this woman:

Stephanie Laitala took out a second mortgage on her home and maxed out credit cards to open Owl Bookkeeping in St. Paul a decade ago. Starting out, she paid vendors and employees before herself, sometimes skipping her own paychecks entirely. The idea of a new sales tax on her accounting services leaves her cold, and one step closer to going back to working for someone else.

Wagner and Laitala joined a handful of fellow business owners Thursday, Feb. 28, at Minnesota Wire to speak out against DFL Gov. Mark Dayton’s proposed tax package.

The governor’s plan would lower the state sales tax rate from 6.875 percent to 5.5 percent but also broaden it, applying the tax to clothing sales of more than $100, business-to-business transactions, and memberships to gyms and other organizations.

Someone should tell PiPress writer Fred Melo that taking $2 Billion more out of the economy is not “lowering” a tax.

Question to the businesspeople involved:  how active were you in trying to not get Mark Dayton, Chris Coleman and the rest of them elected?  Just curious.

Chanting Points Memo: Ryan Winkler, Brezhnev-Style Economist

Conservatives joke that liberals just. Don’t.  Get. Economics.

We joke, at times, that at some point a liberal is going to push for a “living wage” statute calling for a $100/hour minimum wage as a means to end poverty, followed by a bill barring any layoffs and banning bankruptcy.

It’s a joke.  Some liberals shake their heads and go “yeah, yeah, we’re not nuts”.

And then something comes a long to prove that they really, really are that dissociative.

Rep. Ryan Winkler (D St. Louis Park), also known as “The Eddie Haskell of the House” – is introducing a “Kill All” amendment to House File 92 that bars businesses from laying off workers, cutting hours or benefits due to minimum wage increases. 

I’m going to write that again, just to let it sink in.

Winkler’s bill would make it illegal for businesses to lay off workers, cut hours or benefits due to minimum wage increases.

No, I’m really not making it up; I’ve added emphasis to the original:

(c) Notwithstanding paragraph (b), during the first 90 consecutive days of employment, an employer may pay an employee under the age of 20 years a wage of :

(1) $6.07 per hour beginning August 1, 2013;

(2) $7.24 per hour beginning August 1, 2014;

(3) $8.41 per hour beginning August 1, 2015; and

(4) the rate established under paragraph (d) beginning January 1, 2016.

2.11 No employer may take any action to displace an employee, including a partial  displacement through a reduction in hours, wages, or employment benefits, in order to hire an employee at the wage authorized in this paragraph.

(UPDATE: Commenter Master Of None points out, the above section refers to a training wage – a wage that employers may pay for up to 90 days – and says it’s not quite as dire as I’d made it out to be.   I disagree; Winkler’s bill raises the already existing training wage, causing all the same problems that raising the minimum itself does, which negates most of the utility of a “training wage”, as well as starting some sort of enforcement mechanism to painstakingly adjudicate all disputes related to training and minimum wages.  Because Minnesota businesses needed more niggling regulations)

And as the Obama Administration launches into permanent quantitative easing, Winkler wants to key the minimum wage to inflation, ensuring that no wages will ever keep up with inflation:

2.14 (d) No later than November 1 of each year, beginning in 2015, the commissioner  shall determine the percentage increase in the rate of inflation, as measured by the Consumer Price Index for all urban consumers, United States city average, as determined by the United States Department of Labor, during the most recent 12-month period for  which data is available. The minimum wage rates in paragraphs (b) and (c) are increased by the percentage calculated by the commissioner, rounded to the nearest cent. The new minimum wage rates determined under this paragraph take effect on the next January 1

In other words: Ryan Winkler wants to…:

  • arbitrariliy set wages (higher than the federal minimum, no less!)
  • bar business from compensating for the arbitrary change in labor costs in any way but by increasing revenues in the middle of a crap economy (which Dayton’s business service taxes and Obamacare are making worse by the day).

It’s the sort of thing any Economics 101 student knows is madness if he or she wants to get better than a “C”.

Bonus Question:  Do you think Rachel Stassen-Berger, Tom Scheck, Tim Pugmire or John Cronyn will bring any of this up with Winkler or the leadership that enables him?

Slouching Toward Hawley

First things first: Charlie Quimby of “Growth and Justice” and Dave Mindeman of MnpACT are two of a small, select set of Minnesota liberal bloggers who needn’t be under police surveillance or at the very least restraining orders.  I’m just giving credit where it’s due (although the idea that a group can be named “Growth and Justice” yet still stand for neither is just a tad bemusing).

But over this past week, both of them assailed Rep. Pat Garofalo’s statement on this past week’s “TPT Almanac” program; the Lakeville Republican claimed, in what struck me as a bit of hyperbole, that the broadening of the state’s sales tax to cover clothing will “destroy” border communities like Moorhead.

Always on the lookout for hyperbole to dissect, Mindeman and Quimby were on the job pronto.

Quimby was – as is his unfortunate wont – dismissive, in a post subtitled “Do We Believe Our Lying Eyes?”

Back in 2007 when Growth & Justice was presenting its Invest for Real Prosperity tax proposals to the legislature, I recall a member waxing nostalgically about his parents hauling the family across the North Dakota border to buy untaxed clothing in Minnesota.

The point of his anecdote was that if Minnesota lowered its sales tax and broadened its tax base—as economists recommend—this lucrative cross-border school clothing traffic would dry up, with terrible consequences for Minnesota’s border city retailers.

We’re hearing a version of the same tale…This week, Rep. Pat Garofalo objected on TPT’s Almanac: At the Capitol. He reported that a North Dakota Democrat was proposing eliminating the state’s tax on clothing as a form of tax relief.

“Retail businesses in border communities like Moorhead will be destroyed,” Garofalo said, attracting blogger Dave Mindeman’s skeptical response:

Mindeman interspersed some facts with the snark (which is to his style what dismissal is to Quimby’s) in his piece, noting – correctly – that North Dakota has a 5% sales tax, onto which Grand Forks and Fargo lard 2% in city sales taxes.

Oh my God….how would Minnesota compete?…Garofalo loves that flaming rhetoric doesn’t he?

Fact: North Dakota sales tax is currently 5.0%. Fargo, ND which is the booming ND metropolis across the river from Moorhead adds a 2% city tax. So here is the facts. Under Dayton’s tax proposal, Moorhead (which adds no city tax) would be 5.5%. Fargo would charge 7.0% Clothing may be exempt in the future, but Moorhead will still have clothing under $100 exempt as well.

And like most DFLers, Mindeman, like Quimby, can’t resist taking a homer shot at the Dakotas:

But let’s suppose North Dakota finally drops its state clothing tax just when the gap with Minnesota is closing.

Then what? Will Minnesota border towns really suffer? Were North Dakota retailers in the thriving cities of Fargo and Grand Forks suffering in silence all these years?

To which Quimby assents – with, to be fair, an actual study with real numbers:

As the Minnesota legislator said in that 2007 hearing, should I believe you or my lying eyes?…Looking at the literature studying economic activity in response to sales tax rates, I found research that supports the following points:

Response to differences in the sales tax depends on proximity of border communities. In other words, the farther you have to drive to avoid the tax, the less likely you are to do so.

How much does distance matter? A 2010 Utah study of local option sales taxes PDF* that investigated distance as a variable found increasing the tax rate lowers taxable sales (all else held equal) when there is a jurisdiction with a lower tax rate within 5 km, or about three miles. The effect disappears altogether within about 40 miles. This is to be expected for low-cost goods and everyday commodities. But it also appears to hold for expensive major purchases such as new or used automobiles.

All of that may be true.

But the effects of an individual tax like the Sales Tax, and its nuts ‘n bolts comparison with other sales taxes, while potentially interesting and certainly economics-class-fodder, are the trees that help you miss the forest.

For the real comparison between the states’ tax burdens – not just sales taxes, mind you, but taxes across the board – you need to ask yourself a key question:

“What did I see last time I went to the Moorhead/Fargo area?”  Or you could fill in the “East Grand Forks / Grand Forks area”, or the “Breckenridge / Wahpeton” area, or for that matter the “Worthington/Sioux Falls” metro area?

For starters, you’d know they’re called “Fargo/Moorhead”, and “Grand Forks/East Grand Forks”, “Wahpeton/Breckenridge” and “Sioux Falls”.  Because in every case, the North/South Dakota side is where the action is.

And it’s not just force of habit; it’s not even close.  The Minnesota sides of each of these metro areas (or clusters, in the case of Wop/Breck) are sleepy, moribund and dismal out of all proportion to their North Dakota neighbors.  They’re not competitors in any meaningful way.  They are all sleepy little bedroom communities with highway exits; whatever commerce, dynamism and action is happening in the area is happening west of the Red (or the Bois de Sioux, or County 17, as the case may be).

Forty years of wide tax disparity – Minnesota has the #7 overall tax burden in the US, while North and South Dakota are 35 and 49, respectively) has left a clear choice to all of those places; move west, and keep more of what you have.  The choice was more nuanced, of course, 40 years ago – when North Dakota was a sleepy agrarian backwater.  Today, with my home state an economic dynamo in both energy and technology, things are a little clearer-cut.  And at any rate – as noted by Quimby and Mindeman – fluctuations in the sales tax, or any individual tax, are background noise to the larger effect of decades of disparity; the Dakotas have better business climates; while the western 3/4 of both states are limited by their sparse populations (which is why working on the rigs out in the Bakken pays so very very well), but Fargo, Sioux Falls and Grand Forks are all well-developed cities with young, highly-educated populations and, at least in North Dakota, K-12 schools that are as good as or better than those in Minnesota.

So once you take a step back and stop the pointillistic crabbling about this remark or that individual tax rate, you see that the real issue is the long-term effects overall tax burdens have.  As the Dakotas prosper more generally and gain more people and – as seems to be their goal – turn more of that prosperity into tax relief, that disparity is only going to get starker.

Put briefly – the reforms of the sales tax won’t destroy Moorhead, because tax policies took care of that forty years ago.  There’s really not that much to destroy.  It’d be like harming business in Saint Anthony compared to Minneapolis; who’d know?

So here’s another question:  Up until 2 years ago, Wisconsin was addled by governments more dementedly “progressive”, as a rule, than ours.  That changed in 2010, right about the time Minnesota seemed to have some hope of shucking off some more of the dross of DFL legislative control.  Now, as NPR noted last week – in a report I’ll be going over later this week – Minnesota’s economy is stronger as a whole than Wisconsin’s.  But the improvement in Wisconsin since 2008 is dramatic;it’s improving fast, bouncing back from decades of neo-socialist perfidy.  What’s going to happen in Minnesota?

What do you think?  We’re raising taxes in the middle of a recession!  What happened in California, Illinois and France?

That said – we won’t know what’s going to happen until things tamp down for a while.  Will Minnesota’s government remain the shiny toy of Alida Messinger’s band of plutocrat dabblers and union fixers?  Will Republicans retain control in Wisconsin?  If so, give it a few years.  Then we’ll check back.

As to Fargo versus Moorhead?  That train left the station decades ago.  Changing the sales tax one way or another is just bouncing the rubble, as it were.

When You’ve Lost The Strib

The Star-Tribune editorial board brutalized a key component of the Messinger Dayton and DFL tax plan over the weekend.

The editorial starts out with a half-squib…:

We urge Dayton to reconsider and the Legislature to reject a sales tax on business-to-business services, a tax idea the Star Tribune has long opposed. While expanding the consumption sales tax to a larger share of the economy and reducing its overall rate, as Dayton proposes, is sound tax policy, taxing businesses’ service inputs is anything but.

The lowering and broadening the sales tax is a fine idea, but broadening it to the point where it takes $2.2 billion more out of the state economy during a recession is just plain stupid.

But taxing business services?

Messinger Dayton may have done the impossible:  forced the Strib and me into a common cause.

We’ll get to the common cause.  First, the Strib accurately describes the inevitable consequences of this tax plan in a way they never did with the Governor’s personal or political record, which shows, I guess, their priorities, but better late than never I guess:

A tax on business-to-business services would distort the choices businesses make about purchasing or keeping in-house accounting, legal and computer services. It would favor large companies with big back-office operations over small firms. It would put Minnesota engineering, architectural, scientific and consulting firms at a disadvantage. And it would turn the sales tax into a price inflator of every Minnesota-made product through a process economists call “tax pyramiding.”

For example, a law firm would pay tax on its cleaning service, and add that cost to the legal bill it sends to a trucking company, which would pay tax on that bill and pass the cost on in its charges to a farmer, who would pay tax yet again on the whole accumulating amount. At that point, the state’s long-standing policy of not applying sales tax to food will have faltered.

To answer the inevitable question:  of course the Strib editorial board is acting in its own enlightened self-interest:

Consider the impact on one particular industry sector — one this Editorial Board serves and understands well — advertising, information and communications. Providers of those services together employ nearly 68,000 Minnesotans. Many of them serve clients outside Minnesota and compete with rivals around the country and the globe.

The American Association of Advertising Agencies ranks the Twin Cities ad industry ninth-largest nationally and second-largest in the Midwest. It reports that none of the top eight markets have a tax commensurate with the one Dayton proposes. A cautionary tale can be found in Florida, where in 1987 a sales tax was placed on advertising and a range of similar services. An advertising boycott quickly ensued. So did a repeal of the tax, only six months after its passage.

It could certainly happen here.  Of course, the spending that’s being matched with that revenue under the Messinger Dayton / DFL budget won’t get repealed any time soon…

But here’s the issue where, for the first time ever, I find myself on the same side of the barricade as the Strib:

More than large enterprises would be affected. Sole proprietor David Aquilina, a “strategic storyteller” whose PR business is based in Minneapolis, said he would be contractually obliged to absorb all of Dayton’s proposed 5.5 percent tax.

“I will have to pass along the full cost of the tax to my employee: me,” Aquilina said. The proposed tax “would effectively impose a 5.5 percent cut in the top-line revenue of my business and in my income.”

The tax would apply to lawyers, accountants, cleaning services, networking jobbers, PR flaks like Aquilina – and freelance IT architects like yours truly, who frequently work “corporation to corporation”, and have nobody to pass the cost of the tax on to.  And it will favor the big IT solutions shops, who can absorb the extra top-line costs and pass them on – although they won’t be much happer about it that…

…I almost choke to say it…

…the Strib and me.

Defaulters, Frauds, Liars: The DFL Has Never Said The Shift Was A Gimmick, Winston!

Let’s take a quick jaunt through history.

Spring 2011: Governor Dayton proposes a budget with a school payment “shift” – a delay of payments to schools until after an arbitrary date, the end of a fiscal year, to “move” the spending from one budget to another – of something well over $2 billion dollars.

May 2011:  The GOP delivers a balanced budget that includes a shift of a little over a billion dollars.  The DFL whinges that the GOP is “using a gimmick” to balance the budget.  Notwithstanding the fact that Governor Dayton had himself proposed a “shift” twice as large as the GOP’s.

June 2012:  The GOP proposes a bill to completely “repay” (i.e., pay before the arbitrary date) the existing “shift”.  Governor Messinger Dayton, incomprehensibly, vetoes it.

DFLers muttered that paying back the shift would have been  irresponsible, although they never really said why.

Election Season, 2012:  The DFL relentlessly beats the GOP over the head with its chanting point about “Short-changing the children!”, notwithstanding the fact that the GOP had made an effort to fix it, only to be thwarted by Governor Messinger Dayton.

At this point, to the DFL, the “shift” is a campaign bludgeon.

Mid January 2013:  The DFL proposes a budget that proposes paying back half of the “Shift”, but in a bill that – notwithstanding that the flood of other new spending and the tsunami of new taxes – has no funding mechanism, so the whole proposal is vapor.

Late January 2013:  A DFL legislator says the shift “is just another tool”.

Summary:  to the DFL, the “shift” has gone from “Irresponsible to pay back”, to “a fiscal assault weapon aimed at our children!” to “just a tool“.


Conclusion:  The DFL defaulted on their promise “to the children”; they defrauded the voters by saying they’d pay “the shift” back, and they lied about the Republicans’ plans to do the same. 


Special discussion point:  why haven’t Rachel Stassen-Berger, Tom Scheck, Tim Pugmire, John Cronan, Pat Kessler and the rest of the elite capitol press corps reported on this?

CORRECTION: First two grafs were 2011, not 2012.  Time flies when you’re fighting rapacious spendthrifts, doesn’t it?

Gov. Messinger‘s Dayton’s Budget: One Dry Well After Another

A few months back, those of us who figured Zygi Wilf should pay for his own real estate improvements rather than plunder the state treasury were vindicated when turned out that the “mechanism” (read: gimmick) the state planned to use for its share – “electronic pull tabs” – wasn’t going to deliver anywhere near the planned revenue.  If things didn’t turn around fast (note: they will not), the state’s “contribution” to Zygi Wilf’s investment the Vikings stadium will have to be paid for by all of us taxpaying ripe sucks out of the general fund.

That’s bad enough – and it’s just to cover a putatively fixed bill.

Now, Governor Messinger Dayton has started coming out with budget proposals.  And along with some of those proposals (although, notably, not the one to repay part of the education budget “shift”) come some “mechanisms” to pay for them.  Gimmicks, if you will.

Minnesotans, being virtuous in a passive-aggressive sort of way, love “sin taxes”; tobacco is a common public policy kick toy in this state.  And Messinger Dayton intends to jack up the price of cigarettes by 94 cents a pack.

It’s not going to work, of course.

For starters:  cigarette taxes never, ever deliver the kind of revenue that their proponents expect.

Despite fanciful claims to the contrary, many tobacco tax hikes across the country have failed to produce the promised revenue. In 2009, Washington, D.C. raised its cigarette tax from $2.00 to $2.50 per pack. The District projected the new tax would generate $45 million in revenue, about 20 percent above 2009 levels. Instead, revenues came in $12 million below projections and $4.2 million lower than before the tax was imposed. Similarly, New Jersey reported a $52 million shortfall in tobacco tax revenues after it raised its cigarette tax by 17.5 cents in 2007.

The reason for this?  Addiction notwithstanding, cigarette smokers are people – and people alter their behavior to avoid paying taxes on discretionary things like smoking.  If a tax increase jacks up the price of a pack of smokes by 10%, then all other things being equal, people cut their spending.

“Yay!” say the tax’s proponents.  “10% of people quit smoking!  Or they smoke 10% less!”.  Some do.  Others switch to cheaper cigarettes, or buy from the black market that always, inevitably burgeons whenever government cracks down on something people want; at any rate, people avoid paying the tax as best they can.  It’s Econ 101.

(Indeed, the public health benefits of taxing smoking seem to have stalled over the past twenty years)

But government can’t seem to avoid the spending that was to be based on all that tobacco money, and goodness knows no DFL administration would ever roll back an expenditure that we can’t afford.  Which means:

Due to these declining revenues, states often turn to broad-based tax increases to pay for an overspending problem. A recent NTU study also showed that 41 of 59 state tobacco tax increases from 2001-2006 were followed by more expansive tax increases within two years, as states attempted to make up for tobacco revenue that never appeared.

Just like the Vikings stadium; they’ll be after us to fill in the shortfall.

Oh, yeah – and for all of Governor Messinger’s Dayton’s palaver about making the rich pay their “fair share”, it’s worth noting that the cigarette tax is the most regressive tax of all – according to that noted conservative tool, Governor Mark Messinger Dayton.

Why, if I didn’t know better, I’d assume the Governor‘s ex wife was just saying things to get elected…

Gary Gross has also been covering this.

Know Your Place, Animals!

This piece is sort of a natural follow-on to yesterday’s post – all the “Deep Thoiughts” about man’s relationship to government, and the different philosophies liberals and conservatives bring to the table on the subject.

But first, a brief digression.

I don’t normally rebroadcast other peoples’ ads – but this one was just too good not to pick up and run with, just a little bit.

It’s a riff on President Obama’s “You didn’t do it” scold to entrepreneurs and, by extension, really anyone outside government:

Nope, nobody paid me to rujn it. Although they sure could.

Of course, this sentiment is pandemic on the left.  Yesterday Jim Schowalter, Mark Dayton’s budget director, was at a meeting in Thief River Falls with, among other people, the CEO of Digi-Key.  You may not have heard of it – it’s a privately-owned billion-dollar company based out of Thief River Falls that is one of the biggest success stories and major employers in northwestern Minnesota.  The company started in the CEO’s apartment forty-odd years ago – guy didn’t even have a garage at the time – and grew into a billion-dollar operation employing thousands (I have family in the area, so I hear things).

And, according to a report from the scene, Schowalter told the CEO that  without government, he could never have done it

The theory among lefties is that without all the “infraastructure” government “provides”, entrepreneurs would be huddled in caves, helpless, banging rocks together to try to get fire.  It’s only through the nurturing hand of government that any human activity is possible.

But once government – at some level – has dealt with banditry, brigandry, barratry, piracy and piracy, really, you’re into the mundanities of laws, roads and regulations.   And when those are the subjects…:

  • What?  Government wants a cookie for doing what it was set up to do, and for which generations of people before the entrepreneur paid taxes – sometimes grossly overpaid in taxes – to get?
  • By the way, where do people suggest the money to build that “infrastructure” came from?  Brought down from heaven on the backs of unicorns?  No – people, entrepreneurs and company guys and executives and high school kids working at Tastee Freez and trust fund billionaires alike – had it taken out of their paychecks.

So yeah, government – good job and all, “providing” things that I and millions like me paid you to do.  Isn’t that like me going to my boss and saying “thank me for the design I handed off, on top of paying me to do it?”

By the way – try as I may, I can not find a single reference to this episode anywhere in the mainstream media.

The Dayton Way

National Review ran yet another dissection of the complete collapse of Detroit last week.

One of the key lessons – giving unions carte blanche neither bolsters middle-class wages nor general prosperity:

One lesson to learn from Detroit is that investing unions with coercive powers does not ensure future private-sector employment or the preservation of private-sector wages, despite liberal fairy tales to the contrary, nor do protectionist measures strengthen the long-term prospects of domestic firms competing in highly integrated global markets. We cannot legislate away comparative advantage or other facts of life. But the problem of unions’ coercing distortions in the private sector is at this point a relatively small one, given the decline of unionization outside of government. Organized labor being a fundamentally predatory enterprise, its attention has turned to the public sector, where there are fatter and more stable rents to be collected.

Also – taxing ones’ way to prosperity is merely the road to madness:

The second important lesson to be learned from Detroit is that there are hard limits on real tax increases, a fact that will be of more immediate significance in the national debate as our deficit and debt problems reach crisis stage. Even those of us who are relatively open to tax increases as a component of a long-term debt-reduction strategy must keep in mind that our current spending trend is putting us on an unsustainable course in which our outlays will far outpace our ability to collect taxes to pay for them, no matter where we set our theoretical tax rates.

Detroit was a cold Greece long, long ago.

 But tax rates are not the only incentive: Google is not going to set up shop in Somalia. Healthy governments create conditions that make it worth paying the taxes — which is to say, governments are a lot like participants in any other competitive market (with some obvious and important exceptions).

And one of the keys to that is that creating a “healthy government” isn’t much different than creating a “healthy teenager”, in health doesn’t’ mean “giving them everything they think they need”.

The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case. It is not as though one cannot profitably manufacture automobiles in the United States — Toyota does — you just can’t do it very well in Detroit. No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.

The lesson there:  while government is necessary to create the legal stability needed to do business of any kind, when government’s main mission becomes sustaining itself, it defeats that purpose.

The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit?

Without some other overarching reason to stay there?  And in Detroit – without the location and markets of a New York (I’m thinking in the Dinkins era, of course) or the resources of a New Orleans or the weather of a Miami?  There’d be no reason.

What is true of Detroit is true of the country. Our national public sector not only is bloated and parasitic, it is less effective, less responsible, and less honest than that of many other developed countries, including New Zealand, Canada, Australia, and Germany. I am not an unreserved admirer of Transparency International’s global corruption-perceptions index, but I believe that it is in broad outline accurate. Liberals are inclined to learn the wrong lessons from the relative success of countries such as Canada or New Zealand, concluding that what we need is a bigger welfare state, government-run health care, etc.

And as it’s true for the nation, it’s true for Minnesota.

Who has spent the last year trying to expand the coercive power of Minnesota unions, by trying to unionize home daycare providers and expending boundless political capital on stopping the Right to Work amendment?

Whose entire substantive platform (other than “create chanting points for the Alliance for a Better Minnesota”) is “raise taxes?”

Whose administration is focused on obstructing efforts to curb corruption and safeguard the state voting system?

I’m not saying Mark Dayton is trying to be a Detroit-style governor.

I’m just saying that if he were, I can’t think of anything he’d be doing differently.

Maybe “get indicted for something”.  Other than that, I got nothing.

The Dayton Dustbowl: The Veto Scorecard

Dayton and his minions in the paid PR racket – and I count the editorial board of the Strib among that crowd – are doing what they can to label this past legislature a “Do-Nothing” one.

It’d be more accurate, naturally, to call it “The Sandbagged Legislature”.  Now, I’m not going to say all of “Governor” Dayton’s vetoes, even for bills with astonishing bipartisan support, even for bills Dayton himself had claimed to support, seemed to run according to some kind of script or another.  But I will say that if you look at the video closely, you can see strings attached to his hands and jaw, being pulled by Alita Messinger, Elliiot Seid and Javier Morillo.

But let’s take a moment to go over the winners and losers from this past few weeks in the legislature:


  • Small businesses – who lost out on the front-loaded sales tax exemption, the angel investor tax credit, and reforms to Minnesota’s dismally-high business property taxes.
  • Students – who, if you accept that the “Shift” that has been a centerpiece of DFL budgetary policy for over a decade actually harms them, surely must have been hurt by Dayton’s veto of the GOP plan to accelerate the repayment of the “borrowed” money.  Right?
  • Private sector workers, whose businesses needed the tax help, and whose jobs are in that much more jeopardy today than they were six months ago.


  • Zygi Wilf – The resale value on his real estate investment has just gotten plumped up astronomically, on the backs of you, the taxpayer.  Especially in DFL-addled Minneapolis.  Hey, all you foreclosed DFL-voting homeowners on the North Side – hope those warm thanks from Zygi Wilf and Jared Allen keep you warm when the Sheriff’s moving y our stuff out on the lawn!
  • Minneapolis and Saint Paul – who got a slew of little plums and bailouts.  Thanks, all you outstate rubes!

That’s a start, anyway.

Kombucha Out; Koolaid In

The Strib, mirabile dictu, reaches the same conclusion I did about Dayton’s “Jerbs Bill”, although a good deal more gently in this editorial:

Last week, Dayton dressed up his biennial bonding request as a “jobs bill,” and linked it with another short-term stimulus idea: a proposed one-time tax credit for employers who hire a new veteran or recently graduated or unemployed Minnesotan before June 30, 2013.

That credit — $3,000 this year, $1,500 the first half of next year — is probably too small to convince employers to shoulder the long-term commitment that hiring entails. Dayton would do better to focus on building long-term prosperity, and to cast his bonding bill in that light.

Which is exactly what I wrote on Friday.   The tax credit – as Ed pointed out on the show on Saturday – might reinforce some larger companies’ decisions to make hires they were going to make anyway, but it’s not going to affect small-business hiring in any substantial way.

The Strib; last week’s criticism of Dayton, next week.

But they’re all aboard with the $775,000,000 bonding bill – which is actually on top of the $500,000,000 in bonds floated in the last session.  They just think it’s the wrong argument:

But the argument Dayton made Tuesday as he unveiled his wish list was backwards.

“This bonding proposal is about putting thousands of unemployed Minnesotans back to work,” the DFL governor said at the top of his media briefing.

Only after touting the short-term gain for the construction industry that comes from state building projects did Dayton add: “The bill is also about investing in the future of our state.”

It’s not often I shrug my shoulders and say the Strib got something right.  But they are; Dayton’s “Jerbs Bill” at best creates a few thousand temp jobs (almost entirely to benefit his construction union benefactors) that we’ll be paying for for the next three decades.

But the Republicans make a good point: Short-term construction job gains — even the 21,700 jobs Dayton says his proposal would create — aren’t sufficient reason for the state to shoulder 30 years of debt service.

Now, bonding is a perfectly legitimate activity for state government; we’ve always paid for our major projects with the even-year-session bonding.  If we’re smart, that bonding pays for long-term capital expenses we actually need.

So what’s the shopping list of things that’ll foster all this long-term happiness?

For example, $42 million is devoted to clean-water infrastructure projects requisite to industrial expansion.

It’s worth looking at.

Higher-education buildings, many of them sites for science and technology education, comprise 22 percent of Dayton’s recommended total.

When the Strib throws in the “…many of them…” qualifier, it means it’s time to look the bill over; I suspect there’s a “Many more of them are site for administrative deadwood and PC fripperies”.

Investing $25 million to repair local bridges draws down $50 million in federal funds while keeping goods moving to markets.

Remember when the 35W Bridge collapsed?  All the caterwauling the Dems did about the need to update the state’s most critical infrastructure?

That’s about 3.3% of the bonding bill.

And guess what is going to get exactly the same amount of money?

The biggest lever for federal and local funds is the $25 million Dayton asks the Legislature to authorize for the next leg of the Twin Cities’ light-rail network, running southwest from downtown Minneapolis.

That’s a sufficient match to net $225 million in local and federal funds, a major down payment on a 15-mile rail link between Minneapolis and Eden Prairie.

And so there’s your DFL priorities; as much money spent on a nearly-useless train (albeit marginally  more useful than the two we’re already stuck with) that will shackle Minnesotans to generations of long-term spending (expense and capital) for virtually no benefit is exactly on par with repairing the bridges that the vast majority of us use daily, and that all of our commerce depends on.

Dayton’s package is unabashedly pro-downtown — not just downtown Minneapolis, but also St. Paul, Rochester, Mankato and St. Cloud. He’s backing Nicollet Mall’s renovation, a new baseball “regional sports facility” in St. Paul, and long-postponed business-backed civic center projects in Rochester, Mankato and St. Cloud.

History teaches the value of keeping downtowns strong, Dayton said.

History may show it, but it probably won’t show it for very long.

There’s a place for bonding bills; building the infrastructure this state needs.

The Strib editorial board points out several times that Dayton’s emphasis on the plan’s dubious job benefits is a “mistake”.  Their intent is right, but their description is wrong.

The SEIU, AFSCME, Teamsters, MFT, IFO, MAPE, IBEW and the various trade unions all paid lots of good money to get Dayton into office.

Strib Editorial Board: “Feed The Rider, Starve The Horse”

The Strib Editorial Board has declared itself in the bag for Mark Dayton and the DFL.

Not a huge surprise, if you follow these things.

More importantly, and much worse, it expresses the Minnesota Left’s real priorities.  Although it does it in a slippery, weaselly way designed to actively disinform voters – which, of course, is another way of supporting the DFL.

The state budget is set and in the black, if only temporarily.

But that hasn’t stopped DFL Gov. Mark Dayton from expounding on the virtues of the budget proposal he touted and the GOP-controlled Legislature spurned last May.

Those virtues include a bottom line that would remain in positive territory in 2014-15, according to a new “what if” analysis by the state Revenue Department.

Wow.  Positive territory!  That sounds good – right?

Let’s read on:

It applied the Dayton offer of last May 16, which included $1.8 billion in new tax revenue in 2012-13, to the latest forecast for 2014-15. Do that, and the $1.3 billion deficit that’s been forecasted for 2014-15 disappears, leaving a $35 million surplus.

Let’s be clear on a couple of things – since the Strib and the DFL (pardon the redundancy) desperately want the reader and voter not to be clear on them:

  • The “bottom line” they’re talking about is the state budget.
  • The “deficit” is the gap between what the bureaucracy wants and is demanding, and the revenue expected at current levels.  It is not a budget passed by a legislature.
  • We, the people, elected a legislature that promised to take a different approach to how this state handles budgeting; to give this state an intervention, and wean it from its addiction to limitless spending and the assumption that we’re just going to like it or lump it during a recession.
  • This charade has nothing to do with “bottom lines” in any sense that a business owner (or family budgeteer, for that matter) would recognize.  It’s about making sure that government’s various stakeholders – who are suffering from a few mild diet pangs after the last session – needn’t want for their least desire any more.

As long as we’re clear on that, we can move on:

Dayton was seeking an increase in taxes on the wealthy plus an equivalent sum in spending cuts back in May. (The Editorial Board agreed with that split between tax increases and spending cuts, but disagreed with Dayton about which taxes should be raised.)

And, as we showed back then, the “tax on the wealthy”, in addition to being callow, DFL style (again, pardon the redundancy) class-baiting, was BS.  It would not raise the revenue it claimed, even before “the wealthy” used their wealth to shield their income.

Like Dayton does.

Instead, the final budget deal rejected tax increases and employed two one-time measures, borrowing against expected future revenues and delaying payments to schools, totaling nearly $1.4 billion. When those two measures expire in June 2013, voila! The deficit returns.

Which goes to show you the GOP bent too far in the 2011 session; we should have cut the crap and held to the $32 billion budget.

Why reprise this argument now, when the 2012-13 budget is showing an $876 million balance?

Call it Dayton’s midterm election year kickoff. He evidently wants to remind Minnesotans that there was a better way to balance the state budget in 2011 than the one divided government delivered.

“Divided Government” – AKA “democracy”.

The Strib, Dayton and the DFL (ptr) case is this:  the state’s budget is more important than yours.  It is more important to keep government satiated than to give you, the overburdened taxpayer (and the state’s economy) a break.

The DFL/Strib/Dayton want to take food away from the horse – you, the taxpayer – and feed it to our rider.

And yet again, we’re going to have to tell them “no”.

And so it begins.

The Dayton Dustbowl: The Gucci Marionette

People ask “why is Dayton squiggling so hard to avoid any form of negotiation with the GOP?  He’s clearly beaten; public opinion largely opposes his “all taxes” approach to the deficit, and the GOP isn’t getting browbeaten into submission anymore?”

It makes no sense, if you assume that Mark Dayton is making any kind of decision at all.

So it only makes sense that he’s not making the decisions.

Mark Dayton is a marionette.

Think about it.

He’s A Rental: Mark Dayton had less to do with his own election than any governor in Minnesota history.  He owes his election to four things:

  1. An immense infusion of cash from the unions, and liberals with deep pockets, including himself and his family, which funded…
  2. …the most toxic, sleazy disinformation campaign in the history of Minnesota politics, which outspent the Emmer campaign by a minimum of 3:1 and foisted upon Minnesotans a drumbeat of half-truths, untruths or thirty-year-old, context-deprived twaddle about Emmer, which combined with…
  3. …a suddenly deeply-incurious media that couldn’t bring itself to write about Dayton’s record in the Senate, much less his known issues with alcohol abuse and mental illness, which meant that…
  4. …the 43% of Minnesota voters who don’t think very critically about politics didn’t have any of their assumptions challenged.

Let’s face it; Dayton is less a governor than a delivery man for an agenda set by the special interests that helped him into office; the public employees unions, deep-pocketed liberal plutocrats, and the non-profits that feed off the entitlement culture.

And like Dayton, those stakeholders know that…

Progressivism Desperately Needs A Win: It’s been a horrible year for big institutional progressivism.  The Tea Party tsunami in 2010 has rocked “progressive” government in former strongholds like Ohio, New Jersey, Michigan, and even New York and California, where the likes of Andrew Cuomo and Jerry Brown have become spending hawks all of a sudden.   And Wisconsin – the home of LaFollette, the buckle in the public employee union belt – was a gut-shot for progressives.  If the progressives’ “support government at all cost” creed can crumble in New York, California and Wisconsin, where is it safe?

Which is why…

Minnesota Is Progressivism’s Last Stand: The prognosis for progressivism isn’t good.  Sure, the GOP suffered setbacks in 2006 and 2008 – precisely because the Bush Administration and its attendant GOP caucuses didn’t act like a conservative government.  The economy is making progressive entitlement programs unsustainable – and, even moreso, undercutting the idea that they must be sustained at the cost of the viability of the sector that pays the taxes.  The conservative parts of the country are growing; the liberal ones are largely shrinking.  And with even the biggest showcases of “progressivism” defecting from the gospel, “progressivism’s” big stakeholders – unions, non-profits, plutocrats and the like – are faced with a stark reality; they need a win to stanch the bleeding.

Those stakeholders put him in office.  They will get their money’s worth.

And as the Administration itself telegraphed weeks ago, they don’t care who they hurt to get it.  Government employees?  Entitlement recipients?  Consumers of “services” like jobs at Canterbury?  All just eggs to be broken for the greater omelet.

So are you a citizen, or are you an egg?

Dayton: Rejected

Ramco Judge Kathleen Gearin has ruled on “critical services” for a potential upcoming government shutdown:

Ramsey County Judge Kathleen Gearin’s ruling came Wednesday, just two days before a state government shutdown would begin. DFL Gov. Mark Dayton and the Republican-controlled Legislature would have to agree on a budget before Friday to avoid the scenario.

Dayton and top lawmakers were sequestered in the governor’s office on their sixth straight day of budget negotiations. They have yet to report a breakthrough in a drawn-out dispute over the level of spending in the next two-year budget and how to pay for it. The state faces a projected $5 billion deficit in the two-year budget cycle, which begins on Friday.

Dayton wants to raise income taxes on high earners, while Republicans insist on no new revenue.

One wonders if MPR’s reporter – Elizabeth Dunbar – is aware of the distinction between “no new taxes” and “no new revenue”.  New revenue happens when people become more prosperous and pay more in taxes.

I’ll chalk it up to carelessness, and continue.

Gearin said state payments to school districts and local governments should continue even if there’s no budget by Friday. She said the state must also fulfill its obligations to the federal government and continue to administer those programs, including food stamps, welfare payments and Medicaid.

“The failure to properly fund critical core functions of the executive and legislative branches will violate the constitutional rights of the citizens of Minnesota,” Gearin wrote in a 19-page written order.

But Gearin emphasized that state payments during a shutdown should be limited “only the most critical functions of government involving the security, benefit, and protection of the people.”

What a radical notion; limiting government to what it’s actually needed for.

I need to read the order (and so do you, so go and do it) more completely, but it’s hard to read what I’ve seen so far as anything but at least a qualified victory for the MNGOP.  Mark Dayton’s attempt to push all the pain of this shutdown onto this state’s most vulnerable residents – which we’ve been documenting for weeks, although the mainstream media can’t seem to be bothered – has been rebuffed for now.

With government doing the things it actually needs to be (or should be) doing, I think Governor Dayton just got chopped off at the knees.

The Dayton Dustbowl: Petty, Venal, Vindictive

SCENE:  The Emergency Room at Regions Hospital in Saint Paul.  It’s July 5.  Mrs. JACKIE SZCZYMCZYK, sits in the waiting room, surrounded by other people waiting for results.  She appears distraught.  A BYSTANDER, sitting next to SZCZYMCZYK, is holding a hankie on a cut foot.

BYSTANDER (to SZCZYMCZYK):  “What are you here for?”

SZCZYMCZYK:  My husband – he…he…(sobs)…he choked on a buffalo wing.


SZCZYMCZYK: While he had a lit bottle rocket in his butt.

BYSTANDER:  Um…oh.  Wow.  My.

SZCZYMCZYK: It was all so trivial – such a stupid thing, really – but he fell over and cut his toe on a piece of glass from the bottle he’d broke over his head.

BYSTANDER: Oh, I’m sorry.  Well, none of it sounds life-threatening…

SZCZYMCZYK: It wasn’t supposed to be.  But it took us an extra half hour to get to the hosital, what with the Stillwater Lift Bridge being out because of the budget shutdown.

BYSTANDER:  But – wait.  I’m sorry, but I heard that Governor Walker of Wisconsin offered to pay the bill to keep the bridge open.

SZCZYMCZYK: Oh, my Chuck is a teamster.  He never woulda had nothing to do with Walker.  But why isn’t the bridge open, then?

BYSTANDER: Governor Dayton turned it down.  He wanted to make sure the bridge shut down.  No matter what.


(DOCTOR MANOJ BALAKRISHNAN enters the scene, along with nurse Excedrine MCCARTHY, RN)

BALAKRISHNAN: Mrs. Szczymczyk?


BALAKRISHNAN:  I’m Doctor Balakrishnan.  I’m afraid your husband is dead.  There was nothing we could do…

SZCZYMCZYK:  (Breaks down crying).

BALAKRISHNAN: If only he could have gotten here half an hour earlier, I coulda done sometihng….

(SZCZYMCZYK breaks up in squalls of crying).

PANJAKRISHNAN: There was nothing we could have done.  I’m so sorry.  That extra half hour was a matter of life and death.

MCCARTHY: “By the way, on behalf of the nurse’s union, I hope you’re happy to pay for a Better Minnesota!”.


MCCARTHY: “Way to stick it to that top two percent, sister!”


Well, OK.  I usually play these mock dramedies for yuks.  There are usually plenty of yuks in the workings of the DFL mind.  But a death in an emergency room isn’t funny.

So why is Mark Dayton – and only Mark Dayton – insisting on virtually guaranteeing it?

Scott Walker offered to keep the bridge open.  Stillwater businesses offered to keep the bridge open.  Dayton spurned both offers…

…and, for that matter, the Legislative GOP passed a balanced budget that would have taken care of all of this.  And Dayton vetoed that – them, actually – for what?

…to protect a tax hike that is utterly meaningless, except as a way to try to dictate what’s on Minnesota’s moral conscience?

We know what his priorities are.

All The News That Fits The DFL Narrative

The regional leftysphere is tweeting up a busy little storm today; as the MNDFL noted on Twitter, “Former head of the MN Business Partnership: the @mngop budget is a “job-killer””.

The uninitiated might think “Wow. That’s quite an indictment of the GOP budget!”

And the tweet linked to a Strib article, entitled “The governor’s budget plan won’t send businesses scurrying“, by one Roger L. Hale, which didn’t do much to disturb that conclusion.  I’ll let you read it yourself; if you’re observant, you’ll note the subtle red herring; tax hikes might not send businesses “scurrying”, but it’ll inhibit them from forming in the first place, or hiring more Minnesota workers.  What good does having 3M or Best Buy or Ecolab plopping their headquarters here do us if they’re not expanding, building and hiring?

But the DFL and Strib (pardon the redundancy) are even less transparent and more perfidious than meets the eye.

The Strib piece notes that Hale is “…a former: CEO of Tennant Co, director of five NYSE companies, chairman of the Minnesota Business Partnership and the Governor’s Workforce Development Council, and successful start-up investor.

And to those who don’t pay much attention, a businessman is a businessman is a businessman.  And probably a Republican.  Right?


Roger Hale, as I noted last summer, contributed six figures to “Alliance For A Better Minnesota”; $110,000 as of this time last year, and tens of thousands more to other DFL candidates and organizations.

But the Strib didn’t see fit to let the reader know that.

The fix is in.

The Dayton Dustbowl: Circling The Drain

Mark Dayton’s budget – and worse, what his budget would mean for the state’s long-term fiscal viability – is a disaster waiting to happen; the equivalent of going out and buying a new Beemer when you’re four months behind on the house payments.

Senator Roger Chamberlain of White Bear Lake has been an inspiration this session; he’s one of the freshmen firebrands that just plain gets it, the fact that if we don’t tame the beat now, there will not be a fiscal tomorrow.

He’s circulating the following email.  Read it, and forward it to your friends; it is that important.  I’ve added some emphasis:

This may be a bit unconventional but it is time to be heard. I know many of you have done much already, but we all need to do more. This will not be easy, it was always a possibility that we would be on this path. If we are to win this struggle with the governor and the progressives, we need all of you. We need to mobilize the troops to answer and counter the lies of our opponents. For 5 months the governor has not made a single difficult decision. He has had the luxury of standing on the sideline; doing nothing but criticizing and name calling. Now the ads have started. Much is at stake.

Our struggle is not only against a destructive progressive ideology but also against an entrenched bureaucracy and a complacent media.

Some facts:

1. $30.1 billion – Mn dollars spent during 2010-2011 biennium

2. $34 billion – Our balanced budget proposal to the governor. this is the amount in the checkbook.

3. $37 billion – the governors budget proposal

4. Revenue projected to increase by 8.5% next budget cycle

5. $400 million increase in K-12

6. Almost $600 million increase HHS spending

7. All other areas receive CUTS and reforms

8. I and other legislators will meet with any of you to discuss ideas, etc.

All of these numbers are supported by MMB, our spreadsheets and the governors published proposal. Those are the FACTS.

Share with your family, friends, co-workers; post on blogs, comment on blogs, letters to the editors, post on telephone polls and message boards, call MPR, call or write to the governor and his commissioners. Work with Taxpayers League, MN Majority, Free Market institute, et. al.

The governors plan will destroy this state. If we were to accept his plan, what will we do next year or in two years when expenses will increase another 10-25%?

Thank you and God Bless!


Roger Chamberlain

The worst thing about the Dayton budget isn’t that it increases spending by the levels Arne Carlson did back during the cha-cha boom years of the nineties – although that’s bad.  The worst thing is that his budgets will continue the “autopilot” for budget increases, with no end in sight.

Which means that in the next biennium, “the rich” will be everyone earning over, who knows, maybe $75,000?   There will be no way for revenue to keep up with spending

…and the spending is not , by and large, to benefits students or the poor, but to keep state government workers in benefits like most of our employers can’t afford.   The spending will require you to keep working until you’re 70 so they can retire at 55.

Stop the madness.

Strikepocalypse 2011: Shutdown Stories You Won’t Read In The Strib

Kwama Heaton of Richfield wanted to sign his kids up for basketball camp.  But when he got laid off from his job as a car salesman, due to a lack of used cars (due to Obama’s Cash for Clunkers program and cost cutting for Obamacare), he had to cancel those plans.

Cynthia DelAmitri of Woodbury told her family that their annual trip to visit her parents for a week of camping and fishing in the Upper Peninsula of Michigan were on ice because the small recruiting company for which she works is cutting staff (they can’t afford the taxes) and she couldn’t afford to take time off; the big national recruiters would eat her lunch.

Rey Jimenez, your grandmother’s oncologist, quietly decided that added onto the state’s confiscatory business tax rates and absurd healthcare mandates, the added income on couples who earn over $135,000 (he and his wife, your grandmother’s internist) was the last straw. He’s moving to Phoenix.

The media doesn’t cover those sorts of stories (and yes, mine are fictional, but only literally).

But let the government suddenly feel not all fat and happy, and “human interest” is the order of the day for the Twin Cities media:

Camille Miller hasn’t signed her daughter up for Girl Scout camp this summer. The state health care analyst from Woodbury is not sure she’ll have the $500 to pay for it.


Not sure I ever paid $500 for kids camp…

Jim Ullmer has told his extended family to forget their annual July 4th get-together at Lake Itasca State Park. Ullmer, a state truck inspector from Crystal, is unsure if the campground will be open.

Because everyone knows family get togethers in local or national parks, or private camp areas, just aren’t the same.  There’s something about that patina of “state ownership” that brings people together, right?

They are just two of more than 54,000 state workers bracing for an uncertain summer as the Capitol budget impasse threatens to shut down government services on July 1.

To which the roughly two million of us in the private sector say “welcome to every day in our world, government worker”.

And half of us add “so quit electing obstructionist DFL governors”.  The GOP submitted a budget – one that’d keep government running, increase most spending that “needs” it and demand some new efficiencies.

Look for the same cavalcade of woe to accelerate; the Strib seems to be even more in the bag for the DFL this year than they did in 2005.