Spikeable Moment
By Mitch Berg
Katherine Kersten spits on the grave of the “Growth for Justice” gang’s logical and ethical case.
You remember “Growth For Justice” – the group of 200 Minnesota millionaires who called for sweeping tax increases, that the gaping insatiable maw of government never go unfilled. They portrayed themselves as a “non-partisan” group (a conceit that area bloggers crushed), and claimed that state government needed two billion more dollars to “invest” in the state’s future.
Even after the budget forecast grew rosier, however, calls for higher taxes continued. In June 2006, one high-profile group, dubbed the “Gang of 200,” announced a plan to raise $2 billion for the state treasury by boosting income tax rates.
These zillionaires, including the likes of Jim Pohlad and Bruce Dayton, touted their “Real Prosperity” strategy in a full-page newspaper ad. “We can afford to pay higher taxes,” they proclaimed, “and we can’t afford not to.”
But the well-heeled members of the Gang of 200 weren’t content to write big checks themselves. They wanted to hit up most Minnesotans — down to some families making only $45,000 a year.
Once again, Pawlenty didn’t blink.
But six months later, Pohlad and Co. got their wish. The $2 billion that they saw as necessary for “real prosperity” appeared. Last week, Pawlenty announced a state budget surplus of $2.17 billion.
And not one Minnesotan had to pay higher income tax rates.
The governor’s implementing of the “No New Taxes” pledge – the single event that most exercised this state’s piddlers on merit, limo liberals and entitlement pimps – has been a demonstrable success.
It remains to be seen if the chastened, “kinder and gentler” GOP in the legislature, as well as the Governor, know it.
December 4th, 2006 at 9:08 am
Google “Taxpayers League” and the first hit is:
The Taxpayers League of Minnesota A non-partisan, non-profit grassroots taxpayer advocacy organization for Minnesota.
http://www.taxpayersleague.org/
Is this really any different than G&J’s claim to non-partisan?
Also the $2 billion surplus is more like $1 billion after you account for inflation.
December 4th, 2006 at 9:50 am
mitch mitch mitch, dont’ forget the tax levied entitled the “health impact fee.” futhermore, take inflation into account for expenditures and that surplus gets a lot smaller….
December 4th, 2006 at 10:11 am
“Also the $2 billion surplus is more like $1 billion after you account for inflation. ”
“take inflation into account for expenditures and that surplus gets a lot smaller…”
Serious question: Could either of you please explain how you arrive at these claims?
December 4th, 2006 at 10:28 am
Mike is onto something here
How does 50% of $2 billion get swallowed by inflation? Its not the Carter years any more.
December 4th, 2006 at 11:00 am
The way the budget has been accounted for during the past 4 years does not take inflation into account on the expense side of the budget i.e. we budget as if costs will not go up due to inflation. It does, however, take inflation into account on the income side of the budget. So what we are doing is intentionally underestimating expesnses in order to balance the budget.
The $1 billion dollar amount reflects the inflation related to the entire state budget.
December 4th, 2006 at 11:09 am
http://www.governor.state.mn.us/mediacenter/pressreleases/PROD007851.html
“Inflation on existing state government programs is about $990 million during FY 08-09”
December 4th, 2006 at 11:17 am
What rate of inflation on the income side are you (or the state) factoring?
Isn’t it double-dipping to count inflation on both the income and expense sides? (ie. doesn’t the inflation adjustment on the income side by definition take into account the buying power of future income dollars – meaning the effects of inflation on proposed expenses are already accounted for?)
Again, serious questions from someone with limited accounting knowledge.
December 4th, 2006 at 11:23 am
My understanding is that the state budget is around $30 billion so $1 billion would be about 3.3% which is pretty reasonable.
They project receipts (income) from taxes to go up by inflation. For example you will likely make about 3-4% more next year due to raises and pay in about 3-4% more in state income taxes etc. That increase in tax reciepts is included in the budget.
However on the expense side, they budget as if the state will not have to pay its employees more, as if health care costs will not increase, as if other costs will all stay flat ,etc.
Consequently you can get to a balanced budget that does not truly balance. It is bad accounting and I am disappointed that there has been no real effort to change it.
December 4th, 2006 at 11:48 am
MN has 2 year budget cycles.
December 4th, 2006 at 11:48 am
We all agree that governmental accouting stinks. If governments were bound by Sarbanes Oxley, they’d all go to jail.
The point is that taxes did not have to be raised and do not have to be rasied now. We still overspend on many items and the surplus isn’t going to help.
I say throw the whole Billion into roads and see what happens next year.
December 4th, 2006 at 11:50 am
Haven’t we been putting real money “in the bank” as represented by the growing budget reserve accounts? Couldn’t that be considered a “validation” of prior budgeting decisions (regardless of your opinion on the merits of the state carrying huge reserve balances)?
As an aside, would you mind telling my boss about the 3-4% raise that I’m due?
December 4th, 2006 at 12:01 pm
My uderstanding is that a large part of the surplus was generated by higher than expected corporate tax receipts. This is predominately a function of business cycles. The recession in 2001 was not the result of state government policy (ie taxes being too high) and it would be overreaching to argue that the recovery is primarily the result of maginally lower state government spending.
I expect that corporate receipts will be down in 2007 in real terms (not necessarily nominally) due to a slowing economy especially in light of recent economic indicators in manufacturing and weaker than anticipated retail.
December 4th, 2006 at 4:31 pm
I sense a great disturbance in the force
I sense the scream of a piqed punchinello on the easterly side of a great nation and the nothing
So good to be the Fish
December 4th, 2006 at 10:45 pm
I’m always amused at the very wealthy pretending to support tax increases. If these hypocrites paid income tax like most wage earners do, they wouldn’t. They don’t file a W2.
Hey, when you bump the tax rate on a seven digit income one precent it doesn’t make the same dent as doing the same on a five digit income, does it? Sure, it’s a bigger total, but you still have all that money, unlike the little guy who really feels that one percent.
Did I say hypocrites? Good.
Growth for Justice my ass.
December 7th, 2006 at 7:19 am
Is this really any different than G&J’s claim to non-partisan?
The TPL is honest about its stance; it supports tax-cutting politicians (including, in not a few cases, tax-hawk DFLers against Carlsonian GOPers). It’s a simple fact that the GOP, imperfect as it is, is vastly the lesser of two evils when it comes to taxes (as most things).
The blogswarm we did last summer gutted the notion that G’nJ was anything close to “non-partisan”