Shot in the Dark

“Unexpected”

For the fourth straight month, Minnesota’s revenues came in below forecast – and the rate of the shortfalls is accelerating.  That is according to Minnesota Management and Budget, which is nominally non-partisan (but whose leadership depends on Mark Dayton for their employment, and whose rank and file work for AFSCME). 

Exactly as fiscal conservatives said they would.

Over the past four months, the shortfalls add up to over $200 million dollars – enough for a couple of Senate Office Buildings (hat tip: Ben Kruse). 

So what does this mean? 

Forward To The Past!:  Remember 2010?  When the DFL/Media harped on the “six billion dollar deficit” that two years of DFL control of the legislature had left us? 

The deficit that two years of GOP control in the Legislature erased and converted – in the year after the DFL took control, when GOP policies were finally taking effect – to over a billion in surpluses? 

The “D” word is back.  Oh, not that the Strib is going to make anything of it, not yet – not until there are Republicans to blame – but this adds new impetus to the predictions that the state budget – which the GOP dragged out of six billion dollars worth of deficit in 2011-2012 – is heading back to deficit in the budget’s off-year. 

So what does this mean?

Remember that $1.1 billion surplus that the DFL inherited from two years of GOP control?

Well, memories are all we have. If revenues keep falling at this rate, and the shorftall keeps growing at the rate it’s been accelerating this past few months, we’re going to be at over a billion dollars in deficits by the end of this year. 

And the worse news? 

Underperforming:  The budget forecasts were based on the projections of economic activity using the activity of the years of GOP control as a baseline, with growth predictions factored in.

The growth isn’t happening as predicted. 

So for all the DFL/Media’s happy talk about Minnesota’s economy, the MInnesota economy is like a Summit Avenue mansion; the main floor, where the Fortune 500 folks like Target, Best Buy, Ecolab, 3M and the like hang out looks just great – but the foundation is rotting away.

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Mitch Berg

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9 responses to ““Unexpected””

  1. Bill C Avatar
    Bill C

    In a FB debate in 2008 over McCain vs Obama, a liberal friend (who has since unfriended me because of my conservatism) made the remark “Why is it that the economy does better under democrat leaders than under republican leaders?” My response was “Because the republican leaders implement policies that grow the economy, but that always takes a couple years to “trickle down”. Then when a democrat is in office, they get to enjoy the fruits of a good economy while implementing policies that hurt the economy. Then when another republican is in power, they get stuck with the bad economy thanks to the policies of the democrat.”

    And this is exactly what has been happening with the budget for the last decade + in MN.

    (of course, leaving out the political intricacies of Bush devolving into a statist and economic enemy in the 2nd half of his term, and so on…she wasn’t that politically sophisticated anyway)

  2. bosshoss429 Avatar
    bosshoss429

    Good points, Bill. I’ve had the same arguments with my liberat friends. When they quote the “Clinton surplus” that GW squandered, they shut up pretty quickly when I point out that it was due to the fact that he had a GOP controlled house and senate that kept him from spending like a liberat. I also point out that GW had the reverse during the last two years of his second term.

  3. Chuck Avatar
    Chuck

    Clinton surplus.
    -As you say, it occurred after the landslide Republican victory in 1994
    -Tech boom led to large capital gains tax (you know, those 1%ers getting richer)
    -Gas prices were around $1.45 a gallon. Actually less in the late 1990s
    -No war on terrorism sucking up billions of dollars
    -Wouldn’t it have been cool if Clinton would have used this time to work on the long-term inherent problems with unfunded entitlement programs?
    Democrat thought:
    A) Clinton surplus good.
    B) Bush $200 billion deficit bad
    C) Obama $900 billion deficit good

    When you discuss the massive Obama deficits and larger ones coming down the road, all Democrats say is “But Bush, but Bush, but Bush……”. Democrats don’t care about solving the debt issue. All they care about is winning elections.

  4. Prince of Darkness_666 Avatar
    Prince of Darkness_666

    Why do you think my saying, it’s still Bush’s fault, won the slogan contest last week?

  5. justplainangry Avatar
    justplainangry

    Solution: Raise taxes and spend more on trains and public art and a new statium for… for… help me out here! That will start money rolling in!

  6. bikebubba Avatar
    bikebubba

    Link to the report? It would be interesting to see which tax revenues are dropping the most. Or is a Pareto beyond the ability of this group?

  7. Night Writer Avatar
    Night Writer

    Hey, revenues are down because of the hard winter, and the wet spring, and, and – the mosquitos! The high number of mosquitos! That’s the ticket!

  8. bikebubba Avatar
    bikebubba

    Strib link:

    http://www.startribune.com/politics/national/262602601.html

    And the state link:

    http://www.mmb.state.mn.us/doc/fu/14/Aprupd2014.pdf

    It’s worth noting that the worst parts are the corporate franchise tax and “other revenues”, while the best are income taxes and sales taxes.

    In other words, the trailing indicators are holding steady, and the leading indicators are bleak. Oops.

  9. bikebubba Avatar
    bikebubba

    If I’m reading the documents correctly:

    1. The big hike in tobacco taxes led to an eleven million dollar shortfall in actual revenues. In other words, the DFL forgot that they sell cigarettes in Wisconsin, Iowa, the Dakotas, and Michigan, too.

    2. A big new state gift tax led to….a big gap in actual gift tax revenues as givers figured out smart ways of avoiding it. There’s another seven million dollar gap.

    3. The Obamacare health care surcharge is being avoided. Hmmm…..14 million bucks there we’re short.

    4. And corporate revenues are sharply down.

    Again, it is as if the DFL is unaware there are people out there who earn a living by helping their clients avoid the bite of the taxman. With the exception of income taxes (hey, let’s break it out by bracket and see how that looks!), there is an amazing correlation of the gaps in the budget with the Dayton tax bill. “Oops.”

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