here for PDF format
here for participants' responses to this interview.
of Discussion with Tom Triplett
8301Creeekside Circle, Bloomington, MN 55437
David Broden, Janis Clay, Marianne Curry, Paul Gilje, Jim Hetland (phone),
Dan Loritz (chair),
Popham (phone), Clarence Shallbetter, and Bob White
Context of the meeting—Having
served in many capacities during his career in state government, including
Commissioner of the Departments of Finance and Revenue, Tom Triplett is in
a prime position to speak to the implications of the current state
forecast, and to provide his ideas to deal with it.
Welcome and introductions—Dan
and Paul welcomed and introduced Tom Triplett, principal
consultant, Fieldstone Alliance, where he focuses on the financial
restructuring of nonprofits and social sector systems with an emphasis on
revenue streams, collaborations, and strategy development. He has served
as CEO of four nonprofits, Commissioner of three Minnesota state agencies
(Finance, Revenue and Planning), and as an attorney with two of the Twin
Cities’ largest law firms as well as the Minnesota Attorney General’s
office. He is an adjunct faculty member of the Opus College of Business of
of St. Thomas where he teaches nonprofit finance. Triplett also
participates on several nonprofit boards and is chair of the Washington
County Housing and Redevelopment Authority.
Comments and discussion—During
Triplett's comments and in discussion with the Civic Caucus, the following
points were raised:
1. Focus on a limited number of issues for redesigning--Responding
to Different Choices, the Civic Caucus statement on redesign of
public systems, “I’d suggest focusing in on a couple of issues,” he
responded. “Find a horse and ride it. People are compelled to redesign by
hardship. There will be a willingness now that is not otherwise there.
are going to be discouraged and angry with only taxing and cutting. We
need also to look to the future. If the Legislature is redesigning to
improve performance or cut costs, let the public know. Build in incentives
out Public Strategies Group, a locally-based consulting group, as
"probably the best in the nation on redesign.”
2. State budget forecasts not wildly popular
December 2 the Minnesota Management and Budget office
forecast a budget shortfall of $1.203 billion for the remainder of the
The budget gap for the following biennium, ending
is projected at $5.426 billion—$995 million larger than previous
projections. See the press release here:
“Governors have historically disliked it,” Triplett
said of the forecast. “They say, and they’re right, ‘It’s three people
sitting over at Finance (now Management and Budget) telling me how much
money I have.’”
Stinson, state economist, has said that the only sure thing about the
forecast is that it will be wrong. And former Governor Rudy Perpich had
his "Crane Theory": Driving through the commercial centers, he’d look to
see whether there were construction cranes, and if so, whether they were
moving. “Don’t tell me about the budget deficit,” he’d say, “There’s
X-number of cranes working!”
we’re seeing now,” Triplett said, “is a delay of economic start-up. It
takes some time for that to register. And that was the issue with Rudy –
he was right that the sight of cranes indicated a recovery was underway,
but it takes time for the fruits of the recovery to show up in tax
3. Don't keep shifting expenses to the next
biennium--“A big chunk of the shortfall for the next biennium
is a result of shifting a portion of this biennium’s deficit into the next
biennium. We could keep shifting expenses, legally, from one biennium to
the next.” For the sake of argument, what would stop us from doing that, a
member asked? “Our bond rating would eventually be affected,” Triplett
responded, “and we’d be subject to an increasingly heavy burden for debt
4. Future "good times" won't be good enough
to offset today's "bad times"--“We
have a structural imbalance,” Triplett said. “During the usual ebb and
flow of economic life a government experiences times of abundance and
times of shortfall. One can offset the other. But we cannot reconcile the
gap now with the returns from good times: Because of health care spending,
especially, as well as the permanent tax cuts enacted when Ventura was in
sense of urgency is lagging,” he added. “We’ve got to have a major
restructuring. It will be helpful after the elections, when we have a new,
fresh governor of either party. Not that Pawlenty can’t get involved
now—he certainly can.”
emphasized that the public does not understand the seriousness of the
5. A two-part plan to undo the ‘Minnesota
for his ideas on resolving the budget problem, Triplett unveiled what he
called a "nuclear option". “I’d like to undo the Minnesota Miracle.”
His idea has two components.
state tax relief aid to local governments--First he drew
attention to the statistic that 9.2 percent of state revenue is sent back
to localities in some form of tax relief. “We tax, only to redistribute.”
This comes in the form of the homestead credit, LGA, state assistance for
property owners, and other local aids.
The Department of Administration says this about
Local Government Aid (LGA), and the homestead credit:
counties, townships and school districts receive state aid from two major
programs -- local government aid and homestead and agriculture credit aid.
Both types of aid are general-purpose funds that local units of government
can use for any local purpose.
Local government aid
is distributed to cities and townships based on need and past aid levels.
Communities with higher populations, declining populations, older housing,
and less commercial and industrial property are considered higher-need.
So-called "grandfather provisions" protect local governmental units from
declines in their allocations; this practice directs higher payments to
local governments that historically have received the most aid.
agriculture credit aid is subtracted from a taxing jurisdiction's property
tax levy, reducing the actual levy against property owners. Homestead and
agriculture aid was originally intended to replace pre-1990 credits to
individual taxpayers' bills. Now it is based on a jurisdiction's payment
in the previous year and the tax base lost because of any legislative
change in the tax rate on a certain class of property (for example,
residential, commercial or industrial). For counties, the aid is also
affected by growth in new households. Homestead and agriculture credit
funds also have been used by the state to offset welfare program costs. In
such cases, the state pays for the program but reduces the amount of
homestead and agricultural credit aid to that jurisdiction.
“This is a question of buying things down,"
Triplett said. "Part of
Minnesota’s high state
tax rate is that we are lessening the impact of cost: transit assistance,
property tax relief for senior citizens, rent credit, homestead credit,
LGA, others. Add them all together and they amount to closer to 20 percent
of the state’s budget.
“The idea of the Minnesota Miracle was
equalization,” he said. Is it now coming back to snap us? Half of LGA cost
is the result of grandfathering-in municipalities, when the formulas
change. “The state says, ‘We are going to tinker with the formula, but
nobody will get less.’ It is no longer equalization then—that’s been
history,” for some time.
“We do need equalization,” Triplett concedes. “It
would be unfair for low-property wealth local governments to tax their
people at exorbitant rates simply because they do not have much
commercial/industrial property. But today we’re spending much more than
we need to – much beyond what’s required for “pure” equalization. Years
ago, LGA and the other local relief programs were highly valued by the
locals, but now they’re not sure they can count on the aids from year to
localities to impose local income taxes if approved in referenda--The
second part of the plan follows doing away with much of local government
aid and property tax relief programs. The state couldn't just take away
payments to localities without any replacement. “Let the cities have a
referendum,” Triplett proposed, “whether to have local option income or
sales taxes as alternatives to property taxes” to make up the resulting
gap. He cited the ability of local governments and school districts in
to hold referenda on local income taxes as a precedent for his proposal.
He noted that about 80% of
school districts now have an increment of income tax added to the state
With the growth of local option sales taxes in the
state and the addition of a state property tax levy, Minnesota has been
gradually moving away from the notion that some taxes are “reserved” for
the state (e.g. income and sales taxes) and for the locals (the property
tax). Triplett sees his proposal as a continuation of what is already
happening in a haphazard fashion.
Triplett wasn't sure whether all local units of
government--cities, schools, and counties--would have such referendum
authority. In response to a question about whether the
local-income-tax-referendum proposal might be designed to stimulate
localities or levels of government to merge, Triplett said that's an
interesting question, but he's not thought about it.
6. Don't be afraid to talk openly about the
biggest cost-pressures in health care--We
might not like to face the reality--but we should--a Civic Caucus member
said, that “A small, narrow band of people are making demands on the
public and on the insurance systems in the last six weeks of life.”
needs from its next Governor--A
member asked Triplett what he thinks of the notion of a Watershed
Governor—someone who can navigate the present crisis while setting a
vision into the future. “After being around elected office for so long,”
he replied, “It’s going to be hard.” Party endorsement matters much, and
the caucus system is a challenge itself.
these days for a strategic, forward-thinking governor to emerge from our
electoral system which relies so heavily on party caucuses. There’s no
reward for being visionary. Today it is politics first, good government
second. It didn’t used to be that way—they were reversed.”
8. The importance of good ideas in
overcoming political realities--“This is Kolderie’s theory,” a
member said, “that politics is politics and doesn’t change much. But the
power of politics is dampened when there are good policy ideas to chew on.
Consensus occurs more frequently. Ted’s idea is that we are at a low point
in the presence of ideas.”
“The public has a responsibility as much as, if not more than,
party leadership,” Triplett said. “We have got to get people involved
beyond the caucus. People get very creative when there is economic
squeeze. There are many examples of creative problem solving going on, but
we don’t hear about it.”
“If I’m a
candidate for Governor,” a member said, “I’m spending 85 percent of my
time getting delegates,” indicating there is a lack of time for discussion
of issues affecting the entire state.
are saying here, Triplett closed, is that we need significant structural
changes. Can we bring in redesign of service delivery to reconcile this
structural imbalance? We’ll have to try.
9. Thanks--On behalf of the Civic
Caucus, Dan thanked Triplett for meeting with us today.