I’m not going to claim to be an expert on taxes or state funding. Far, far from it. I certainly don’t have the depth of knowledge or research that, say the folks at MN2020 have on the subject.
This subject, anyway. (Charter schools? They’re another story completely).
Anyway – MN2020’s Jeff Van Wychen responded to my critique of MN2020’s take on Local Government Aid last week. And he made a few valid enough points; my interest in the subject (as opposed to, say that of charter schools) is, admittedly, more polemical than academic. I claim no special expertise…
…which doesn’t take away from the overriding points; Minnesotans are taxed too much; our government spends too much; the system we have enables units of government to conceal and dilute that spending. In some cases, that’s acceptable and even advisable. In others? Not so much.
Although Van Wychen’s reliance on the academic leads him down some strange corridors:
Mitch’s primary gripe is against the Minnesota Miracle, a major restructuring of the state-local fiscal relationship enacted in 1971. In his screed against the Minnesota Miracle, Mitch blames it on “gigantistic DFLers and a Republican minority.” In fact, Republicans held a majority in both the Minnesota House and Senate when LGA and the Minnesota Miracle were enacted. Since 1971, many GOP state lawmakers have fought to preserve these reforms. In short, the fingerprints on the Minnesota Miracle and LGA are bi-partisan.
Of course, the GOP – the “IR” through most of those years – was pretty indistinguishable from the DFL. Remember – the “Reagan Revolution” came to Minnesota, or at least the MNGOP, almost two decades late. “Limited government” was something to which the “IR” of Dave Durenberger and Arne Carlson paid unconvincing lip service, if any service at all.
So Van Wychen’s point is both correct, and doesn’t change mine at all; the “IR” that helped bring us the “Minnesota Miracle” practiced the same kind of “bipartisanship” the DFL still wants from Republicans; the kind where you go along with everything the DFL wants.
Mitch fails to mention an important fact about the Minnesota Miracle. While it is certainly true that the Minnesota Miracle included a large increase in state revenue to local communities, the state also took local governments’ ability to levy sales taxes and placed limits on their ability to levy property taxes. In short, the redistribution of resources that Mitch whines about was a mixed blessing for local governments.
What Jeff “fails to mention” – indeed, what Jeff “whines about” (Note to Mr. Van Wychen – down this road leads madness. Turn around – Ed.) is that I didn’t “fail to mention it”, at least indirectly.
My claim – my big complaint about how the “Minnesota Miracle” and its detritus have manifested themselves over the past couple of decades – has been that it has been a shell game, allowing cities to conceal their spending by shuffling it up to the state level.
So if the “Blessings” were “mixed”, it was in that if you were a government that needed to spend more money than it had (say, tiny towns outstate with no tax base but serious improvement needs), or just wanted to (Minneapolis, Saint Paul and Duluth), it allowed you to detach that spending from your taxation, spreading the pain and attendant desire for accountability far afield. In exchange, the cities lost some ability to levy some local taxes – meaning they had to get creative about finding new ones. And local governments are boundlessly creative at that.
But I digress.
Mitch disputes the fact that CPA cuts have been disproportionate. During the entire span of the Pawlenty administration, real per capita state general fund spending is projected to decline by 16.9 percent. (This decline is somewhat overstated due to the fact that some of the cut in state spending is being shifted or replaced by federal dollars.) After the July unallotments, the cut in real per capita CPA over the same period is 51.4 percent—three times greater than the cut to the state general fund. Only the ill-informed or the innumerate would dispute the fact that the cut to CPA has been disproportionate.
Ill-informed? Perhaps. Innumerate? 5 out of 4 times.
Disproportionate? Yes. And justifiably so.
Mitch appears to assume that county spending is driven entirely by local decisions. Not so. In addition to human service and corrections costs, counties must also implement state mandates in the areas of solid waste management and recycling, wetland mitigation, and burial of indigents, to name a few. Given that state government imposes substantial costs on counties, it is incumbent on the state to provide the dollars to help pay for these costs.
Mitch’s defense of Pawlenty’s aid cuts would have some intellectual credibility if he was also calling for the elimination of state mandates on counties.
And Mr. Van Wychen’s call for my intellectual credibility would be more intellectually credible if he’d broken out how much of this local and county spending goes to social engineering projects…
No, Mr. Van Wychen, I’m all for rationalizing of state mandates on the counties. Can’t say as it comes up at parties much, but since you bring it up, let’s go find that list and start slashing.
Anyway, my complaints about the LGA system really break down to two things:
- LGA is part of a complex shell game that diffuses accountability for local government spending, enabling local and county governments to hide their spending.
- Timing notwithstanding, its part of the noxious Minnesota media myth about the “Minnesota Miracle”, which has become a rhetorical pipe-wrench that the “Happy To Pay For A Better Minnesota” crowd trots out to try to flog the myth that Minnesota isn’t over-taxed.
However, Mitch’s blog is silent on this subject. To defend the massive cuts in state aid without also noting the role of state decisions in driving county costs is irresponsible.
[Closed-Circuit to audience: Do you feel like you’re in a high school debate class?]
Rather than reducing state mandates, more costs have been shifted on to counties during the tenure of the Pawlenty administration. For example, additional medical assistance and felony offender incarceration costs have been dumped on counties. This was done because it was easier for state leaders to shift their budget problems to counties rather than deal with them responsibly by increasing state taxes or by making deeper cuts to state spending. Mitch might want to note these costs shifts the next time he chooses to preach about “accountability.”
Of course, Jeff might want to check into the root causes for all of this corrections and social spending – which is a larger subject that I also didn’t address, which I’m sure is also irresponsible of me, but then Van Wychen didn’t either, so let’s call it a wash.
Local property taxes have increased not because of real growth in local budgets, but because state leaders have chosen to solve their budget problems disproportionately on the backs of counties and other local governments.
…by transferring spending that the counties and cities should be doing, fairness of any mandates notwithstanding, back to the local and county government!
And therein lies the problem: for all the pearl-clutching of partisan, pro-spending pundits like MN2020’s stable of tax paladins, spending has been growing in Minnesota, vastly faster than inflation, in good times and in bad. When times are good, the DFL wants to spend the (temporary) surpluses; when times are bad, the DFL wants to raise taxes, so that government wants for nothing.
You can niggle about with where any given dollar goes and how it gets there; the main issue is that there are so many more of them being spent, and the DFL wants to take so many more of them from you and I (and then launder them through a system designed to obfuscate where they come from and what they go to).
In a bit of a digression, Mitch asserts that the prosperity that Minnesota enjoyed in recent decades would have likely occurred “without government intervention.” In the same paragraph, Mitch notes the role that “a highly-educated” workforce played in promoting Minnesota’s economic growth. That highly educated workforce was largely the product of the public investment that Mitch appears to spurn. According to Art Rolnick, Senior Vice-President at the Federal Reserve Board Bank of Minneapolis:
Back in the late 1950s and early 1960s, when Minnesota was an economic laggard, the state made a long-term commitment to upgrade its education system. That kind of foresight helped forge a strong economy that has lasted for decades.
Mitch would have us believe that public investment has been irrelevant to Minnesota’s prosperity.
Well, no. That’s a bit of a strawman that relies more on the belief that if you support any “
Public Investment” government taxation spending, you have to be justify it all or risk being called “inconsistent” or “hypocritical”. Some of us are a bit more nuanced than that.
The University of Minnesota – a leading land-grant university, an institution that was itself a key example of how “public investment” can shape society, usually for the better – long predated the explosion of statism in Minnesota.
Contrary to Mitch’s assertions, the economic prosperity that Minnesota enjoyed since 1970 was far from inevitable.
Well, doy. Nothing but death and, er, taxes are “inevitable”.
But since the ongoing hagiography of the “Minnesota Miracle” focuses on Minnesota’s prosperity in reference to the region (you don’t see many comparisons with, say, California or Texas or Arizona or New Jersey, right?), let’s do compare apples with
Our natural resources, while notable, are certainly not extraordinary relative to other states. Our climate is a drag. We are not particularly well situated in terms of our geographic location to major markets. To prosper, smart public investments are essential.
Our resources are notable, though, compared with four other states; the Dakotas, Iowa and western Wisconsin; our climate no draggier (indeed, better than most of the neighbors’); our geographic location is indeed precisely why the Twin Cities and Duluth became not only the key cities in the state but in the region; the rivers and the railways always focused on the Twin Cities, and always connected the entire region and its immense agricultural wealth to the rest of the country and world. And yes – among the land-grant schools in the region, the U of M’s access to a critical mass of population, communication, exposure and capital gave it advantages that, say, the University of North Dakota, another contemporaneous land-grant school, did not.
For Van Wychen to paint Minnesota as a cold, hapless South Dakota (or…Omaha? Hmmm?), waiting for the beneficent hand of government to rescue it, is curious.
While reasonable people can disagree on whether CPA is a smart public investment, the debate on this subject should be based on fact, not ludicrous appeals to ideological co-religionists.
And there’s the clinker, right there.
Remember the grand finale to MN2020’s attack on charter schools (which I pretty thoroughly attacked earlier in the summer)? How John Fitzgerald (and John Van Hecke) tried to tie the critiques of his deeply flawed analysis to partisanship (ignoring the fact that the vast majority of charter school families, especially in the Cities, are traditional DFL constituents)? Say what you will about the numbers and the history – but at the end of the day, Minnesota’s tax and budget policy is a Holy War between sets of “co-religionists”, as opposed to a fundamental difference in outlook on government’s mission that we get to settle, by his leave, via the political process.
Van Wyche’s critique seems to boil down to…:
- Berg didn’t do his research: I’ll cop to it, since it really doesn’t take away from the larger point.
- If you question any government spending, you question all government spending: That’s just an absurd way to try to frame ones’ opponents.
- Opposition to the tax and spend policies that MN2020 supports (and needs), and that LGA in its various forms helps to conceal is based on pseudo-religious superstition: Minnesota’s culture of spending needs a sober assessment, preferably in the context of a two-party debate with two different points of view. Am I the one to carry on the debate on LGA’s technicalities? Let’s not get crazy here. But does the system we have dispel accountability and effectively launder spending? Absolutely.
And that’s the part that actually matters.