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participants' responses to this interview.
Minnesota State Senator David Hann
Caucus, 8301 Creekside Circle, Bloomington, MN 55437
February 25, 2011
(chair), David Broden, Paul Gilje, Tim McDonald, Clarence Schallbetter,
Janis Clay, Jim Hetland, Dan Loritz, Wayne Popham
State Senator and chair of the Health and Human Services committee, David
Hann, describes his goals for the legislative session; how to slow rising
costs of health services by moving to models of more personal
participation and contribution; and his vision for the state.
Welcome and introductions
first in 2002, Senator Hann is in his third term representing Eden Prairie
and Minnetonka in the Minnesota State Senate. He is assistant majority
leader and chair of the Senate Health and Human Services Committee. He is
now a business process consultant after spending 25 years with Eden
Prairie based E.A. Sween Company.
In his second year at
Gustavus Adolphus College, Hann enlisted in the U.S. Army and served a
tour of duty in Vietnam. After completing his degree in Religion, he did
graduate work at the University of Chicago. He served eight years on the
Eden Prairie School Board prior to his election to the State Senate. Hann
has been recognized by the Minnesota School Board Association for his
service to education in the legislature, and has been named "Best Friend
of the Taxpayer" four times by the Taxpayers League. He and his wife,
Anne, have four children.
Comments and discussion
principal goals for session
A participant opened
the meeting by asking the Senator if he had any major, principal outcomes
he hoped for this session.
First, he responded,
the main task faced this year is to produce a budget under some very
difficult circumstances. Internally, the Republican caucus has made a
commitment that they don't need to create a budget that adds revenue.
Changes in tax expenditures need to be looked at closely, but not in this
session, he said. Changes in tax expenditures ought to be considered in a
overall reform of the tax system, which will have to come after this
session, he said. A "tax expenditure" occurs in connection with statutory
exemptions from all or part of a tax. Such exemptions, which have the
effect of reducing revenue, are regarded as tax expenditures.
Hann said the state
budget should be adopted by relying only on revenues from existing taxes
at existing rates which allows about a 5 percent increase in spending..
Most businesses would see that as a good thing, he said. "Only in
Minnesota would that be seen as a bad thing, where there is an expectation
of 30 percent." Past rates of spending growth are not sustainable, he
ways to lessen the budget shortfall
Make the unallotment
permanent ($1 billion)-Part
of the problem, Hann said, is that last year the Legislature kept certain
spending cuts temporary. Those spending cuts originally had been made by
then-Governor Pawlenty as "unallotments", to bring revenue and spending
into balance. When the courts ruled that such unallotments exceeded the
Governor's authority, the Leiglsature approved the unallotments as
temporary cuts. The budget projection assumes that spending will come
Shift (cash flow)-By
delaying some state aid payments to schools, the Legislature can postpone
certain appropriations to the upcoming biennium, thereby helping reduce
appropriations needed in the current biennium. For the biennium ending
June 30, 2011, 30 percent of state aid payments to schools is being
delayed until the upcoming biennium, with a stipulation that such a shift
would be paid back to schools quickly. Hann said he does not think there
is reason why it has to be paid back all at once. This is a common
practice of business, paying 70 percent now and the balance at a later
date. It's part of managing cash flow.
"If we had done
something considered more normal to most people, we'd have a deficit
closer to Wisconsin's. The strategy to pay back all at once was chosen by
opponents as a political tactic to argue later on for raised taxes."
cost inflation in HHS
Senator Hann told the
group he is also interested in making changes in policy and structure to
slow down the pace of growth in Health and Human Services. "We have to do
One way, he suggested,
is through a plan that he and State Rep. Steve Gottwalt have been working
on that would change a health insurance program called "Minnesota Care"
that is designed to provide health insurance for
Minnesota residents who otherwise would not have access to affordable
health care coverage. A drawback of the program, he said, is that all
levels of care are provided, but with a very limited cap on total amounts
paid. The result, he said, is that people having reached the cap will
show up at a hospital emergency room, receive treatment, but payments for
the emergency care aren't available.
"What we do in HHS
today is not an insurance structure; we just pay bills. In the present
structure there is a disconnect between what people do and no incentive on
consumer or provider."
"We have areas of our
economy that are very complex-but health care is the only place that we've
decided to run like the Soviet Union where we form committees and control
everything." He described meeting with the Chamber of Commerce last week
where they shared a plan and he questioned whether the plan does anything
to move people off state programs.
Instead the state
needs to create the incentives for people to care for themselves through
true insurance providers. "If we tried to apply the principles to other
industries we apply to health care they would fail."
How, a participant
asked, would you apply these principles to other areas of HHS? "There are
private insurance mechanisms to pay for things. Most people expect the
government to care for them. I ask people all the time, do you have long
term care insurance? Few people do; people don't think a lot about it."
He described a
mechanism at his previous company that very successfully utilized a
tax-guarded account. An employee benefits plan was offered where the
employees would buy in and the employer would match contributions. "We
need to enable those incentives."
A participant observed
that Hann is saying that instead of raising more revenue, the state needs
to fundamentally change things. Some people advocate that the state needs
to figure out what it wants to do and then figure out how much revenue is
needed. Hann believes that the state should start from the revenue it has.
already has a vision
Responding to a
question regarding whether Minnesota needs a common vision for where the
state wants to go, Hann said that Minnesota already has one-a longstanding
"We need to go back
and acquaint ourselves with the founding fathers. They outlined a very
specific vision of people being free, people making decisions, people
having the opportunity to make choices and pursue their own vision. We
have become so used to the government constraining things, he continued,
that we think the smart people in the Legislature like me should be making
A major part of
Minnesota's vision is education, he said, as stipulated in the third
article of the Northwest Ordinance (http://1.usa.gov/icWdIb):
"Religion, morality, and knowledge, being necessary to good government and
the happiness of mankind, schools and the means of education shall forever
"I don't think we're
going to be able to tell people how to live in 100 years," Hann said. A
participant responded that he didn't think the people that wrote the
constitution and Northwest Ordinance were trying to tell people how to
live their lives. "But whatever you do," Hann replied, "you can't violate
the way people are. For example interfering in the marketplace."
of local control
The vision for local
control has been eroded, Hann contended. In 1958 the state budget for
transportation was significantly larger than the state budget for
education-something like 10 times. In 1958 most of the cost of education
was paid for by local communities. Now 70 percent of education funding
comes from the general fund; one of the highest percentages among the 50
states. So the decisions are made away from the local officials.
"My concern frankly
is nobody ever anticipated the size and scope of federal government role
in budgetary questions over how the state will operate. We almost created
a dynamic where the cities are dependent upon the state, and the states on
the fed. If we don't decide where responsibility for decisions lay, we
trying to make waivers from the federal government because we know how to
do things better. We have people in the federal government that have
exceeded their self-constraint that the founders thought they would have
On behalf of the Civic
Caucus, Dan thanked Hann for meeting with us today.