Chanting Points Memo: “LGA Cuts Are Destroying Minnesota!” (Part IV)

In the first three parts of this series, I showed that the example of government fiscal starvation Jeff Rosenberg used in his plaintive plea for more Local Government Aid (LGA) – Brainerd shutting off some of its streetlights – was not borne out by the numbers.  I also showed that the DFL’s claim that cities are raising property taxes to make up for LGA cuts isn’t even half the truth – indeed, it’s more like 1/7th the truth, as property tax levy increases have outstripped LGA cuts by a factor of 7.5 to 1  – and that’s after Governor Pawlenty’s “unallotment”, without which the disparity would have been more like 16 to 1.

On Tuesday, we’ll be looking at LGA in Greater Minnesota – on the many, many cities that get no LGA, and on one city that receives it, but has run its fiscal shop much more responsibly than the DFL-clogged Big Three cities.

That’s next week.

For today, though, I just want to answer some questions.

A couple of people, on blogs and in the comment sections, sniffed “but you’re not controlling for inflation”, with one suggesting if I didn’t use constant dollars the whole exercise was moot. 

Inflation is a factor, and as I noted people need to take it into account when considering the numbers. 

But as I noted the other day, property tax levies have risen 59% in the past eight years.   Even with the cuts to LGA, the total amount of LGA plus levies has risen 34%. 

Inflation during the same period was 21.94%.

“But the government inflation rate is higher!” 

Well, that’s part of the problem, isn’t it?  Government is more expensive than most things – mostly due to labor.  The median government job pays much better than the median private sector job; add in benefits, and the fact that government is the most-unionized sector of the economy (thus immune to the salary contraction that we in the private sector have dealt with in recent years. and “government inflation is higher” is a key reason to cut, not raise, the amount we spend on them.

And it brings up a key question that ties into liberals and conservatives’ views on what government really is: should government be immune to hard times in the private sector?  More to the point – should the taxpayer be required to keep government immune at all costs, when they themselves are suffering in a way that government employees are not?

This will be an especially important question next year, when the current “recovery” grinds to a halt under the avalanche of new Obama administration taxes; indeed, stagnancy or a double-dip recession will likely be tied directly to the growth and voracity of government.

So not only is the complaint about inflation numbers wrong, but it completely avoids the real point; government should not be immune to hard times in the rest of the economy.  Government is not a family member that we are obligated to support; it is at best an employee.  Not much different than the millions that are getting laid off, although the worst government can expect is that they’ll get a pay cut, and it’ll be temporary, and that when things do turn around (when the grownups are in control again), they’ll bounce back just fine.

More next week.

6 thoughts on “Chanting Points Memo: “LGA Cuts Are Destroying Minnesota!” (Part IV)

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  2. “But the government inflation rate is higher!”

    Well, that’s part of the problem, isn’t it? Government is more expensive than most things – mostly due to labor.

    – – –

    I think you’re missing the point here, Mitch. The government inflation rate isn’t higher than general inflation (CPI) because government employment costs are greater than in private industry. It’s higher because the CPI deals with buying *things*, while most local government expenditures go towards paying *people*.

    Particularly due to rising healthcare costs, employment costs have risen faster than inflation. That’s true of the private sector as well as the public sector — I can send you the data if you’d like. Since local governments’ costs are driven largely by employment costs, indexing them to inflation underestimates what’s needed.

    On another note, the notion that government employees are immune to contractions is nonsense. Just ask state and city employees who have been receiving unpaid furloughs.

  3. I think you’re missing the point here, Mitch. The government inflation rate isn’t higher than general inflation (CPI) because government employment costs are greater than in private industry. It’s higher because the CPI deals with buying *things*, while most local government expenditures go towards paying *people*.

    Well, true enough, sort of – but the *people* government pays cost disproportionally more than people in the private sector.

    Particularly due to rising healthcare costs, employment costs have risen faster than inflation. That’s true of the private sector as well as the public sector — I can send you the data if you’d like.

    Yeah, but public sector salaries and union-contracted healthcare have risen faster than their analogues in the private sector.

    Since local governments’ costs are driven largely by employment costs, indexing them to inflation underestimates what’s needed.

    Perhaps, but now you’re missing the point. You treat government employment costs as something that it is our duty to treat as inelastic. Nonsense; companies downsize; my family budget has downsized; why not government?

    Just ask state and city employees who have been receiving unpaid furloughs

    I’ll get some of my private sector friends who’ve been laid off or whose companies have gone under to lend them shoulders to cry on.

  4. “Yeah, but public sector salaries and union-contracted healthcare have risen faster than their analogues in the private sector.”

    The existence of MAPE and the Teachers Union (aka “Education Minnesota”) make one wonder:

    Do true “Professionals” need a “Union” and the “protection” it provides?

  5. I’ll get some of my private sector friends who’ve been laid off or whose companies have gone under to lend them shoulders to cry on.

    I currently have an excess of time and fairly broad shoulders. I live in New Hope, Jeff. Right off the bus line.

  6. On Tuesday, we’ll be looking… on one city that receives [LGA], but has run its fiscal shop much more responsibly than the DFL-clogged Big Three cities.

    What is Long Lake under the leadership of Randy Gilbert?

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