Budgeting in Minnesota
Minnesota’s budget debate will begin in earnest soon, when Gov. Mark Dayton makes his budget recommendation.
As the deabte begins there are some points that everyone needs to agree upon. Gov. Dayton has said, and we think all will agree, that we can’t keep balancing the budget with funding shifts, accounting tricks and one-time infusions of cash raided from other funds. It is time to match spending and revenues fairly, without “borrowing” from our school districts, for example.
Dayton is also going to push for tax reforms to restore fairness and stability to the tax system. We agree that the system is needlessly complex, and fixing it will take more than the tweaks and Band-aids that have been applied in the past. Dayton should have the support for his dearly-loved tax increases on the wealthiest Minnesotans, but true tax reform will be much more than that.
A big question will be spending. The Minnesota Business Partnership recently released a study, “Meeting Minnesota’s Budget Challenge,” that shows how Minnesota’s government spending has been growing at a faster rate than the economy for quite some time. Right now, the state’s revenue is expected to grow about three percent annually, about the rate of growth in the economy, but expenditures are expected to grow at closer to five pecent. At that rate, even increasing tax rates won’t solve the state’s deficit problems, just push them off a bit.
Most of that growth, of course, is in the cost health and human services. These are hard areas to cut. The state should not be turning away from helping the sick, the elderly and impoverished who need help, but we need to develop ways to fund and encourage more efficiency and better outcomes in health care. Allina’s Heart of New Ulm initiative is one example of exploring better ways of providing health care.
We don’t pretend that all these issues will be solved in one legislative session, but if the budget debate can get away from the “cutting vs. taxing” argument, and explore balanced approaches, there may be hope.