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 Response Page - Kiedrowski, Jay & Gunyou, John  Interview - The Minnesota Budget    


These comments are responses to the questions listed below,
which were generated in regard to the
Kiedrowski, Jay & Gunyou, John interview of 11-21-08.

 
Here are the Questions:


A. If you could wave a magic wand, what steps would you take to erase a
possible $4-billion-plus shortfall in Minnesota's next biennial budget?


See comments below by each name.

B. Which of the following options most closely resembles your views (please
check one only):


1. _47.0 percent___ With the large budget problem facing the state, it's probably
best that the Governor and Legislature proceed very cautiously, do whatever is
necessary to balance the budget, but avoid significant initiatives until the
economy recovers.

2. _38.2 percent___ Now is a very good time for the Governor and Legislature to try
new initiatives that are expressly designed to improve service delivery in an
atmosphere where revenues are severely constrained.

3. _14.7 percent___ The need for vastly improved state services is such that the Governor and Legislature must pass needed legislation, even with major tax
increases, to maintain and improve services.

C. _7.8 average___ On a scale of (0) strong disagreement, to (5) neutral, to (10) strong
agreement, should the recommendations from the State Budget Trends Study
Commission as outlined in the summary be enacted by the Legislature?

D. _0.1 average___ On a scale of (0) strong disagreement, to (5) neutral, to (10) strong
agreement, should more constitutional amendments be proposed in 2009 to dedicate
tax revenue to selected services?

Wayne Jennings (3) (7) (0)

Robert J. Brown (2) (8) (0)

Bill Frenzel (1) (10) (0)

Question A: Beats the hell out of me!

Bert Press (1) (5) (0)
Question A: Cut spending across the board.

Tom Teigen
Great conversation! 2009 session is going to be interesting. Keep up the good work. Happy Holidays.

Alan Miller (1) (7) (0)

Eric Schubert (2) (10) (__)

Question A: I don't have the magic wand for the biennium. But I know one place that I'd focus innovation efforts on right away for beyond the biennium and that's to figure out a new way to pay for long-term care in Minnesota. A fully government-paid funding system isn't working now and it isn't sustainable. That's the elephant in the room that we just ignore, yet it's the one eating nearly $2 billion today and much more tomorrow. We shouldn't wait for intergenerational warfare.

Question C: We need to have to proactive long-range planning rather than always being in crisis management and playing catch up.

Question D: If we don't lead and innovate as a state in how we pay for these services, more constitutional amendments will be the norm even though it's horrible public policy . . . we get what we pay for, and if we don't pay for innovation and results, we're going to pay more taxes through poor patchwork policy called constitutional amendments.

Charles Lutz (3) (9) (0)

Tim McDonald (2) (5) (0)

This is great, and well timed. Very well timed--I was putting together an article this morning for a magazine and wanted to say a few things about the budget--this was the perfect context. Note: the Minnesota Private College Council has done some good work on projected demographics.

Question A: Start-from-zero budgeting; cut social services; find innovations in efficiency--increasing processes.

Question D: I consider this an anathema to the way our state governments are meant to run. It is very frustrating and troubling that someone chose to go this route.

Don Fraser (3) (10) (0)

Ann Berget (1) (8) (0)

One doesn't "erase" a shortfall. Instead, one plans how to deal with it: reducing future spending, raising future revenues. A projected shortfall is a looming threat that has not yet materialized. I tend to the fiscally conservative side, so I'm inclined to prefer cutting back before I consider raising taxes/fees. I found the apparent Kiedrowski/Gunyou preference for property taxes and fees disturbing since this revenue stream, though less volatile, is often not linked to ability to pay.

Question D: ABSOLUTELY NOT. In fact, legislative steps should be taken now to prevent more of this before it becomes a trend (i.e., like school district excess levy volatile, is often not linked to ability to pay. referenda).

Dennis L. Johnson (1) (5) (0)
Question A: Do just what I do when money is short - I spend less! Or is this incredibly naive to expect of our government?

Kent Laugen (2) (10) (0)
Question A: Stricter review of charter schools. Huge dollars being drained from local school districts with little accountability. Huge administrative costs for DOE.
Establish a commission to review the effects of raising user fees. Review unintended consequences. Example, court filing fees increased, more pro se litigants resulting in more time for court personnel, such as judges, bailiffs, law clerks, court clerks. Eliminate non-pension retirement benefits, such as retiree health care.

Donald H. Anderson (2) (5) (0)

David Broden (2) (10) (0)

Question A: 1. Form a bipartisan citizen high quality commission to independently look across the budget to identify any possible savings--benefit--some saving realized but gains public visibility and sets the agenda for objectiveness in the legislature decisions. This group must act within 60 days--Complete by approx 1 March.

2. Look for reasonable approaches to add "fees" to the state services that can be viewed as user fees--could be some state parks--over and above current fees

3. Extend Sales Tax to some services--lets get to applying this to the type of economy we are living in--could be at some level lower than other sales tax.

4. Look for tax areas where a "surcharge" could be considered reasonable--I am generally against this but as a "temporary" deal it and handled correctly may have some merit.

5. Education should be generally not a focus for cuts but some creative thinking on how to fund special activities--look for public/private partnerships. Hhow about the pro sport teams providing funding to schools for sports teams? How about the tech industry offering support to STEM areas in terms of funds, people as teacher aids, equipment etc.?

6. Ensure State government unified message of leadership and why all Minnesotans must participate in making the budget balance objective--a great opportunity for a lesson in government operation and civics. This will take leadership not only from the elected officials but community leaders across the state. If done right it could do a great thing to get people buying into what needs to be done and not turning this into a war of words that have no purpose.

Question B: New initiatives are key--status quo will not do the job.

Lyall Schwarzkopf (1) (8) (0)
Question A: Change the formulas that set the amount of money the state must spend for municipal/county state aid, K-12 school state aid, nursing home care for elderly, and higher education. Consider charging prison inmates for part of their daily cost to be paid from their income and/or saving, if they have any. These are the areas that most of the state's general fund finances. Then implement many of the ideas that may come from the Commission on State Budget Trends. We do not need to raise more taxes at a time the economy is in the tank.

John S. Adams (1) (8) (0)
Human resources have Minnesota's main economic resource, and we are slipping badly. Yankee business leaders working with Northwestern European immigrants and their descendents made good use of "the good hand" that nature supplied to our state.

For over a century, we were able to rely on a relatively homogeneous "home+school+student culture" in which there was consensus on what was expected of young people, and what public and private investments were needed to achieve agreed-upon public and private outcomes. Because we did not confront the continuing diversity of successive waves of newcomers after 1914 (until the 1970s), we could proceed with business as usual--until the last few decades, when we've been pounded on the head.

Since the "cultural revolution" of the 1960s, our state-wide consensus has evaporated. The 1973 TIME Magazine "State That Works" story lulled our state and its leadership into a smug complacency at the very time that a fresh understanding was needed about what investments and new thinking would be required in coming decades to sustain and enhance what the state had benefited from in the post-WWII era and earlier.

Governor Orville Freeman's 1956 Tax Study Commission Report gave us a modern, progressive income tax structure, but beginning with the inflation of the late 1960s when President Johnson and the Congress decided to finance the Viet Nam War with borrowed money rather than higher taxes, the inflation that followed moved Minnesota taxpayers into higher marginal tax brackets so that by the time of the TIME story, our state was garnering additional tax revenues without the Legislature deciding to raise tax rates.

The extra money just flowed in, and was spent--schools, roads, welfare, environment, etc. That was termed: "the state that works" but it was not understood that more money for public programs without effective debate about which programs, how much to pay, and the opportunity costs associated with money diverted from private (personal, household, business) spending and investment has proved not to be such a great idea. Government should never proceed on auto-pilot.

At the same time that this transition was underway in the 1970s, Minnesota manufacturing as a share of the state's economy began slowly to erode. Theories were advanced that basically argued that "we are now in the service economy" and that "this is the natural next step in the economic maturation of the U.S.--remember "product-cycle theory"?" and that "we don't have to produce what we consume--that's what world trade and NAFTA are all about" (Let the NICS do it--Korea, Japan, Hong Kong, Singapore, Taiwan; remember??) and "we don't have to consume what we produce." "We are in a new world, etc."

What was not realized at the time, was that these new (high-class, high-prestige) "service industries" [hospital-medical, insurance, government, banking and finance, law & courts, education at all levels] were different from the (low-class, low-prestige) manufacture and trade of widgets. [One writer termed this attitude "the British Disease", that is, a fundamental disdain for the doing of useful work.]

Manufacturing normally contains elements of competition, along with more-or-less informed willing buyers and willing sellers. BUT the new services industries increasingly have operated in a different environment--the buyers were often NOT willing buyers, and the sellers have increasingly been able to dictate the terms under which they did business (Education Minnesota; higher education). The result has been excessive state (and national) treasure flowing to these industries without a corresponding value returned to the economy.

The recent collapse of financial markets is only the latest example of the consequences of this kind of dislocation, and the structural problems of the economy that have emerged during the last 30+ years. Increasingly, firms, public organizations, and their employees are compensated without a check on their productivity or their contribution to the economy's current or long-term health.

That's why I am dissatisfied with the work of those able and well-intentioned folk who are trying to fix our state government budget. The state government budget (and the U.S. government budget as well--replete as it is with dishonesty in reporting revenues, expenditures, and accrued obligations) cannot be fixed until the U.S. economy is fixed, and I do not see--either in the Bush administration, or in the incoming Obama administration, a clear understanding of what the basic problems of our economy have been-and are today.

It has not passed my notice that the 40-somethings who are close to our president-elect have grown up and have been educated during the past 25 years--a time when this defective economy has surrounded them. Unfortunately, what is familiar is too often taken as necessary, and goes unquestioned.

At bottom, the inability of our school systems to prepare young people for full and effective participation in the economy and in constructive civic life is thee worst omen.

The fact that our public budgets focus on annual cash flow without reference to any concept of a State Balance Sheet is a further indication of how shallow is our thinking about what is wrong, and what is needed to fix things as we move into the future.

Alas!!

William Kuisle (1) (8) (0)
Question A: No new taxes and budget cuts.

Scott Halstead (2) (10) (0)
Question A: Bid out performance of the bus routes in the metropolitan area. Suspend any further action on the Central Corridor and future LRT until proper performance and cost guidelines are established. Enact a capital/worth gain tax where land values are substantially increased because of government investment in transit and roads. Establish a surface parking fee dedicated for transit in the metro area to encourage transit, encourage better uses of land and reduce runoff from hard surfaces.

I suggest a metro area income tax surcharge dedicated to roads and transit in the metro area.

Clarence Shallbetter (1) (8) (0)
Question A: Start the process of reducing the legacy costs of public employees of the state and local units of government.

Shari Prest (3) (6) (3)

Hans Sandbo (1) (10) (0)
The state and the country are going to have to do something drastic with entitlements. Those on SS will need to be divided into groups, able bodied, non able bodied. Those who are able bodied will need to work for full benefits -in health, education or government. (or some such program ). Those who are not able bodied will basically be on SS plus welfare.

David Pundt (1) (_) (_)
Now (any time really, the sooner the better) is the time for government to radically reduce spending and cut taxes to enhance private investment and private employment and thereby increase revenue to the state. Weird, I know, but it worked in the past and will work again. But that would take courage and lawmakers would have to be willing to do the right thing regardless of what they think it would do to their re-election chances. Almost sounds like I'm thinking about running for the state legislature again, doesn't it.

Terry Stone (2) (8) (0)
Question A: My magic wand would swap Minnesota Government with the government of South Dakota that is supplying $1 of Minnesota public services for 46Ę. Assuming a Minnesota general fund expected expenditure of $35 billion for the current biennium, the newly swapped legislature would provide the same services for about $16.1 billion. Subtracting a $5 billion deficit, we would be left with a $13.9 billion surplus. Since Minnesota is six and a half times more populous than South Dakota, applying the same governance formulary would make additional savings available through the economies of scale. Itís magic.

The magic wand would also protect the integrity of the Minnesota Constitution, protect the budgeting process and empower the voters by amending Article IX in the following way.

Section 1. AMENDMENTS; RATIFICATION. A majority of the members elected to each house of the legislature, or one fourth of the number of voters in the last general election, by petition, may propose amendments to this constitution. Proposed amendments shall be published with the laws passed at the same session and submitted to the people for their approval or rejection at a general election.

If a majority two-thirds of all the electors voting at the election vote to ratify an amendment, it becomes a part of this constitution. If two or more amendments are submitted at the same time, voters shall vote for or against each separately.

Question B: The An Agenda for Reform is a treasure trove of innovative ideas that delineate the fundamentals of good governance. Brandl and Weber presented a cornucopia of timeless ideas in need of a motivation for implementation. Todayís economic stress is a unique motivation to deploy innovation. Itís an opportunity that should not be wasted.

Question C: [recommendation (a)] The idea of a state planning organization is useful, but it may want to have more authority than the previous attempt. The Minnesota State Planning Agency, Office of Jobs Policy Coordination, disappeared in 1991 when the incoming Carlson Administration failed to renew the Perpich executive order. While a list of its work products seems wide-ranging, there is little evidence of its efficacy.

Question D: The September 8th, 2008 Civic Caucus Statement on the Constitutional Amendment for outdoors, water and the arts contains this prophetic statement:
"Despite the language, it can be argued that the amendment will not restrict legislative flexibility. The Legislature will set appropriations at wherever level it chooses. It might always treat the amendment funds as something special. But imagine the dynamics of a session facing a significant deficit. To erase the deficit the Legislature could cut other general fund appropriations for outdoors, water, and the arts, and use constitutionally guaranteed revenue to offset the cuts."

In September, the state budgetary deficit was widely believed to be a billion dollars. By mid November, that deficit is now being appraised at $5 billion. For the attentive, thereís a trend line here; and a take-home message on funding amendments. If the Legislature was to revisit the idea of placing a funding scheme for non-essential state spending on the ballot today, in this economic climate, the idea would have no support beyond the usual special interest legislative suspects. If the voters were to have the opportunity to revisit the issue today, it would be unlikely to pass. While the Civic Caucus, Rod Grams, the State Chamber of Commerce and a handful of others saw this train wreck coming for months, if not years, only now is the full imprudence of the amendment obvious to our taxpayers.

Make no mistake, the legislative placement of this referendum and the passage of this amendment by the voters was a mistake of monumental proportions for all of the reasons pointed out by the Civic Caucus and a number of additional reasons missed by the position paper. Some of these missed reasons now rise in import.
A scramble for dedicated funding is likely to follow the successful 2008 referendum; further exacerbating legislative finance responsibilities. It is particularly disquieting that this constitutional funding precedent was set on three completely non-essential spending categories.
The Amendment was an 80-word run-on sentence, written in legislative language. The sentence contained 4 semicolons, 14 comas and 13 verbs--- hardly a concise statement; and arguably well beyond the reading and comprehension level of many voters.
When the text of the 2008 amendment was tested, these results of standard readability standards were obtained.
The numbers of years of formal education that a person requires in order to easily understand the Amendment on the first reading:
Gunning Fog index: . . . .35.50 years of formal education
Approximate U.S. grade level needed to comprehend the Amendment by these standard tests:
 Coleman-Liau index: . . 13.27
 Flesh Kincaid Grade level: . . 34.49
 ARI (Automated Readability Index): 42.12
 SMOG: . . . . 20.32
Additionally, the Amendment text was tested by the Flesch Reading Ease scale with this result:
Flesch Reading Ease: . . . -9.72 (best understood by college graduates)
According to the National Assessment of Adult Literacy, only 13% of adults are proficient in prose.


By contrast, this response to Civic Caucus is typical of my writing and tests at:
Flesh Kincaid Grade level: 16.24
ARI (Automated Readability Index): 16.59
SMOG: 16.04
Civic Caucus policy papers typically test at:
Coleman Liau index: 13.13
Flesh Kincaid Grade level: 15.24
ARI (Automated Readability Index): 15.98
SMOG: 16.96
Conclusion: Voters with from 13 to 42 years of education best understood the Amendment; and even then, perhaps, tenuously. The voters were duped and disenfranchised by the legislature.
Simple legislation can restore a measure of basic legitimacy to any future dedicated funding amendment; should the Legislature choose to again abdicate its fiduciary responsibility.
Legislative recommendations for preemptive amendment reform
 All amendments that, if passed, will or could result in a tax increase shall commence with this statement: YOU ARE VOTING ON A TAX INCREASE.
 If the tax increase if for a finite time, that time shall be stated as in this statement: YOU ARE VOTING ON A TAX INCREASE FOR A PERIOD OF 25 YEARS.
 This statement shall be in all upper case and in a bold font of no less than 12-point type.
 No sentence shall contain more than 18 words (FOG Index recommendation).
 No sentence shall test over the 7th grade reading level. (It is common for health information to be written at the 5th grade level.)
At the very least, our Legislators owe the voters some chance at understanding just what it is upon which they are voting. So long as the opportunity to obfuscate the implications of an amendment exists, it will be used. The fact that special interest money will, as with this 2008 referendum, swamp any potential for objective analysis, only makes the matter more critical.

David Hutcheson (3) (10) (0)
Question A: 1) Adopt the recommendations listed as "possible". 2) Scrub the state budget thoroughly, to the tune of about $2B, but be very careful with LGA until we are sure we understand the size and impact of declines in market value of real estate. 3) Raise taxes, mostly income, to make up the remaining difference. 4) Lobby the federal government to route "stimulus" funds through states so as to help solve similar problems in all 50 states.

Marianne Curry (1) (10) (0)
Question A: 1) Get back to the fundamentals and focus on high quality employment generation, including manufacturing products and the trades. This is the source of all revenues. Align education curriculum accordingly. 2) Eliminate charter schools. There's plenty of evidence that they are not working. Little accountability. Drain resources away from public schools. Greatly increase bus transportation costs. Require students to ride long hours away from home community . 3) Devolve K-12 education funding back to the least volatile source: Local Property Tax with state and federal funding restricted to special programs. Eliminate unfunded or inadequately funded programs mandated by federal/state regulations. Restore responsibility for K-12 to local school district boards, who enjoy less and less discretion under current formulas, thereby weakening a sense of community. 4) Reduce and eliminate federal/state unfunded programs. 5) Two-track 8-12 students to prepare for either technical training in the trades or higher education in the professions (the European system). 6) Stop LRT in its tracks until we figure out how to control congestion. 7) Improve Capital infrastructure planning to include operating and
maintenance costs upfront. 8) Legislature report all funding sources for programs and department functions. The General Fund is only part of the story. Stop nickel and
dime-ing the taxpayers to death with "off-budget" fees, surcharges and other euphemisms for taxes. 9) Ask the Star Tribune editorial board to feature the MN budget from January to May in a series to educate the public to the crisis we now face but don't know it. 10) Force the legislators to tell all on "tails" (obligations that carry into the future indefinitely). 11) Pay close attention to demographic implications on HHS budget expenditure of aging population. Consider policies to curb heroic care in final stages of dying. 12) Educate the public on relationship between jobs/trade/health insurance/competitive position of MN and U.S. jobs. Support uniform national health care insurance focused on maintaining health, not treatment of disease.

Jim Keller (1) (4) (0)
Question 1: Extend the sales tax to clothing and cut 5% across the board on all current expenditures.

Chris Brazelton (1) (10) (0)
Increase the state income tax on the top 5% of income earners so that when all state taxes and fees are considered that group's tax burden is more equal to everyone else's.

Paul Hauge (2) (9) (0)

Ed Dirkswager (2) (_) (0)

Question A: Start with the Weber-Brandl recommendations and analyze the budget from that perspective.

Question C: As much as I like most of the suggestions the Jay and John have suggested that may be the recommendations of the Commission I think that they are not sufficient and in one case need a significant change. The deficiency is that I think that the Weber-Brandl report recommendations, or something equally as thoughtful, must be included as guidance about the principles necessary in addressing budget concerns. The Weber-Brandl recommendations get to the heart of how the state ought to think about the delivery of services. The Commission report seems to be heading in a somewhat more structual direction. The structural changes are necessary but not sufficient. As Stated by Jay the Commission suggestions may include some areas that are critical to look atóthe achievement gap and health care. The Weber-Brandl report suggests the going in principles in how to develop solutions.

The one area where I may disagree, at least in part, with the potential Commission recommendations is the re-establishment of the State Planning Agency. The State Planning Agency was once a vibrant contributor to long range planning discussions and policy making. However, while there is a need for and agency to do long range planning that planning must include a fiscal component that has never been present with any degree of completeness in the past. While an imperfect example the OMB might serve as a better example than the State Planning Agency as we knew it. It is not sufficient to say, as we have in the past, that State Planning and the Finance Department can each do part of the long range planning task. The demographic, programmatic and fiscal dimensions must be looked at together and not in relative isolation.

Al Quie (1) (5) (0)
Question A: In the early 1980's it worked best when we did 1/3 cuts, 1/3 deferred expenditures, 1/3 tax increase.

Carolyn Ring (1) (5) (0)
Question A: Start with zero budgeting. Government departments and agencies too often just look at past budgets and increase from that. Every program and expenditure should be analyzed and justified.

Tom Swain (2) (8) (0)

Bill Hamm (2) (8) (0)

Question A: There is no magic wand so we have to look at real cuts in programs, push the deficient into the future, or look at decriminalization of marijuana and pardon those now sitting in our prisons and jails for this healing non-lethal herb. This one step would bring in enough sales tax coupled with reduction in prison costs to help save the state as well as going a long way to reducing and controlling county budgetary problems state wide. Free the weed and its people.

Question B: As stated in A this new initiative alone brings us what we need to balance the budget, although it should not stop us from looking for more ways to streamline state government.

Robert A. Freeman (2) (7) (0)
Question A: Simplify our HHS programs as Wisconsin has done. Fold the manifold programs into one large program. Do the same with taxes - get rid of all the health care assessments and taxes and instead roll into one provider tax that falls equally on all people instead of placing undue burdens on small businesses that are not protected from state mandates by ERISA.

Increase sin taxes on alcohol and tobacco. Broaden sales tax and work to make tax revenues more dependable. Put all budget items on the table for potential cuts, including education. Lower corporate tax rates to encourage new business growth and offset by raising income taxes on upper echelons. Simplify simplify simplify.

Question C: Not passing future deficits onto the next legislature is a key priority.

 

    

The Civic Caucus   is a non-partisan, tax-exempt educational organization.   The Core participants include persons of varying political persuasions, reflecting years of leadership in politics and business. Click here  to see a short personal background of each.

   Verne C. Johnson, chair;  Lee Canning,  Charles Clay, Bill Frenzel, 
Paul Gilje,  Jim Hetland,  John Mooty,  Jim Olson,  Wayne Popham  and  John Rollwagen.  


©
The Civic Caucus, 01-01-2008
8301 Creekside Circle #920,   Bloomington, MN 55437.  civiccaucus@comcast.net
Verne C. Johnson, chair, 952-835-4549,       Paul A. Gilje, coordinator, 952-890-5220.

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