Monday, February 28, 2011


Minnesota’s newest revenue forecast came out today showing that the state will collect about a billion dollars more than previously expected. Democrats immediately went into spin mode about how, now that we “only have a $5 billion deficit”, it might be easier to convince us to raise taxes to close the gap – after all, raising taxes is the only sane thing to do to solve a state government budget crisis in the middle of a recession.

The problem is that the current budget assumptions increase spending nearly 30%, at a time when the rate of inflation is closer to 2%. We will take in almost 9% more revenue than we did the previous budget and yet the Democrats are still whining that we have to raise taxes. The problem is not that we don’t have enough money. The problem is that the Democrats want to spend still more money than we have. This is what we call a false crisis.

Imagine, if you will, that you are doing your own budget projections for your home or business. Over the next two years, you expect that you will bring in 9% more money than you did the last two years. First of all, most of us would be grateful that we’re seeing any increase at all considering the state of the economy. Secondly, we would go about planning our expenses to fit that revenue. That does involve having to prioritize our budgets and then sticking to our plan. If healthcare or energy costs go up more than planned in our own budgets, we cut back on other things. The same is true for governement spending.

Democrats are trying to create a false crisis to generate sympathy for their projects and bully us into extracting more money out of the private economy for their wish lists. Voters told us in no uncertain terms in November they aren’t interested in that agenda. By voting overwhelmingly for fiscally conservative candidates (remember that 56% of Minnesota voters voted AGAINST Mark Dayton), voters told us they want government to spend less money. They told us to focus on the few things that government is actually supposed to do, and cut the rest.

Lawmakers and the governor would do well to heed this advice. Voters want government to spend less money, but they also want to change the budgeting process on a fundamental level. Most of us are not strangers to this prioritization process, but it seems there are some folks who don't seem to understand how it works. For review: First, fund mandated/essential functions. Second, fund, as best as possible, the things that have a serious impact on the quality of performance and service. Lastly, look at funding the things that are nice to have but not really necessary. This process removes a lot of the personal biases and ties that inevitably grow up around any budget line item. It also prevents politicians from using certain hot button expenses like police and fire as political footballs to generate sympathy for spending. Essential services like law enforcement funding comes first. Effective initiatives to improve economic development are not mandated, but they can make a big difference to the health and productivity of the state, so they might fall into the second category. Items like park improvements and arts grants, while nice to have, would most likely fall into the third priority category in the middle of a recession. Within those categories, how do we most wisely spend the money we have?

By prioritizing categories and remaining committed to our promise to the voters that state government will live within its means, we can achieve a balanced budget without raising any taxes. #falsecrisis solved.

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