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 Response Page - Marx  Interview -      


These comments are responses to the statements listed below,
which were generated in regard to the
Bill Marx Interview of
12-17-2010.
.


Today's discussion covers a Civic Caucus meeting with Bill Marx, Chief Fiscal Analyst, Minnesota House of Representatives. Marx discusses the projected $6.2 billion shortfall in Minnesota state government's biennial budget beginning July 1, 2011.

He outlines factors contributing to the shortfall, including carryover from the current biennium. He describes various options for dealing with the shortfall, including delaying more payments of school aids, delaying income tax refunds to citizens, cutting spending, and raising taxes.

Response Summary:  Readers have been asked to rate, on a scale of (0) most disagreement, to (5) neutral, to (10) most agreement, the following possibilities for addressing the $6.2 billion shortfall in the state's budget for the upcoming biennium. Average response ratings are shown below.  Note:  these average ratings are simply the mean of all readers’ zero-to-ten responses to the ideas proposed and should not be considered an accurate reflection of a scientifically structured poll.

1. Continue school shifts. (2.9 average response)  Continue to shift 30 percent of school district revenues into the following biennium.

2. Expand school shifts. (1.0 average response)  Increase beyond 30 percent the percentage of school district revenues that are shifted to the following biennium.

3. Delay tax refunds. (1.6 average response)  Delay individual income tax refunds, so that the refunds would be received in the following fiscal year, instead of the current fiscal year.

4. Cut spending (6.0 average response)  Cut spending, including state aids to school districts and other local governments.

5. Increase taxes. (5.8 average response)  Increase taxes.

6. Redesign services. (8.2 average response)  Redesign services to help maintain and improve their quality, to help address long-term budget shortfalls.

7. Spur economic growth. (8.2 average response)  Enact strategies to grow the economy, to help address long-term budget shortfalls.

 

 Response Distribution:

Disagree Strongly

Disagree Moderately

Neutral

Agree Moderately

Agree Strongly

Total Responses

1. Continue school shifts. 

53%

16%

2%

16%

12%

43

2. Expand school shifts.

70%

26%

0%

0%

5%

43

3. Delay tax refunds.

65%

19%

2%

12%

2%

43

4. Cut spending

19%

12%

9%

30%

30%

43

5. Increase taxes.

26%

14%

5%

23%

33%

43

6. Redesign services. 

7%

5%

2%

26%

60%

43

7. Spur economic growth.

12%

0%

0%

26%

62%

42

Individual Responses:

Anonymous  (7.5)  (2.5)  (0)  (5)  (0)  (10)  (10)

4. Cut spending. This is a bad question.  Yes cut spending, but in the areas that do the most good, i.e., the things that the state government does where it competes with private industry and/or has no constitutional authority to be involved.

Roger Scherer  (7.5)  (2.5)  (0)  (7.5)  (2.5)  (10)  (10)

Ray Ayotte  (0)  (0)  (7.5)  (7.5)  (7.5)  (10)  (10)

Paul Bergley  (10)  (10)  (0)  (10)  (0)  (10)  (0)

6. Redesign services.  http://www.minnesotabudgetsolutions.com/documents/RealStateBudgetReform.pdf

7. Spur economic growth.  The government doesn't grow the economy. Small businesses do. Just get out of their way. Cut corporate taxes and reduce regulations and fees.

Lonn M. Kiel  (7.5)  (2.5)  (7.5)  (7.5)  (0)  (10)  (10)

1. Continue school shifts.  If all else fails and there is gridlock between the Governor and the Legislature.

5. Increase taxes. Maybe for every 10 percent in gross sales enjoyed by a small business every employee of that business gets to deduct 1 percent of their State income taxes.

6. Redesign services.  A team of surgeons rather than a camp of lumberjacks would be better here.

7. Spur economic growth.  We are not an island distant from other economies.  We have North Dakota with a 600 million dollar reserve poised to have businesses cross over to their side.  South Dakota is in the same category.  Minnesota needs a New Year's resolution to diet.  Not a crash diet or a fad but a stable long-term healthy way of maintaining a healthy "weight".  We need to draw more people back to Greater Minnesota so that the State taxes less from more.

Anonymous  (0)  (0)  (2.5)  (2.5)  (0)  (2.5)  (10)

Craig Johnson  (2.5)  (0)  (0)  (7.5)  (0)  (10)  (10)

1. Continue school shifts.  This just pushes off the problem rather than dealing with it.  The only scenario (IMHO) that would make sense is if we have reliable expectations of a stronger income in the next biennium that would fully cover the shift.  If so, this would be managing our cash flow.  But to close our eyes and hope, while delaying the problem, is nonsense.

2. Expand school shifts. see answer above - just makes the problem worse.

3. Delay tax refunds. People need to receive their refunds on time -- if enacted, this measure would not be uniformly applicable to all citizens.  It would mostly affect those who over-withheld, which is not fair.  This is also probably the more economically challenged demographic also and is regressive.

4. Cut spending. Selective cuts are potentially good -- but we have to be guided by our values and what's right.  That is, there is judgment involved, which is impossible to summarize in this survey.

5. Increase taxes. Some increase in taxes may be required; however, we are currently one of the top 10 states relative to how we tax our citizens.  The "common good" is important; however, how we pay for it is a challenge.

6. Redesign services.  We should have an attitude of continuous improvement to how we offer and deliver services.  Also, "who does what" and at what level of government is always important to re-examine -- local vs. county vs. state vs. federal.

7. Spur economic growth. This needs to be "Plan A" for the long range approach to the problem -- creating the economic environment that attracts and retains business growth.  Let's increase the size of the pie rather than fight about dividing a smaller one.

Vici Oshiro  (0)  (0)  (0)  (7.5)  (10)  (10)  (10)

7. Spur economic growth. Emphasis on infrastructure repair including green jobs such as insulating buildings would help to employ some of those in trades hardest by recession.  More can be done in bonding session in 2012.

W. D. (Bill) Hamm  (0)  (0)  (0)  (10)  (0)  (0)  (10)

1. Continue school shifts.  Shifting only sets us up for failure later; we don't need any more of that. The answer is much simpler than this, pass legislation outlawing the use of education funding for sports programs or sports facilities. That will wipe this 30% shift almost out in one year.

2. Expand school shifts. No more shift; force school district funding and control back to the local property tax and school boards. End the "carrot and stick" top-down State socialist control mechanisms.

3. Delay tax refunds. Politically ridiculous, it will not happen because neither party has the will to resist public sentiment on this issue.

4. Cut spending. The only way to get back to a quality education system is to get both the State and Federal government out of the picture by returning power to local control.

5. Increase taxes. Good luck with that socialist idiocy with a Republican-controlled legislature. Tom Horner shot himself in the foot with that nonsense.

6. Redesign services.  While I support change of control and pushing power back to the local level, that is not what this redesign talk is about. The present redesign talk is more about maintaining Socialist top-down control than it is about doing anything based on common sense. It is about elitist stakeholders again taking the reins and leaving "We the people" out of the discussions.

7. Spur economic growth. Even this strategy will fail if it doesn't push the power back to the local level. Top down politically manipulated economic development has a bad habit of only helping those communities with the least need.

Melenie Soucheray  (0)  (0)  (0)  (0)  (0)  (0)  (0)

1. Continue school shifts.  Postpones, doesn't solve problem.

2. Expand school shifts. Shifting doesn't solve problem, regardless of the amount shifted.

3. Delay tax refunds. Also postpones the problem. Make tax forms (Federal and State) more clear and easy to fill out so there is a better chance that the taxpayer will not get a refund (withholds the correct amount from the beginning of the tax year). This may cut out some potential for the State to earn interest money, but it would also give the public a better sense of the actual amount to spend -- hold lawmakers accountable.

4. Cut spending. Reform spending and spend smarter, first; then cut spending, if necessary.

5. Increase taxes. Reform spending and spend smarter, first, then increase taxes, if necessary.

6. Redesign services.  Part of reforming spending and spending smarter. If the current spenders can't do it, get new spenders in to do the job.

7. Spur economic growth. Absolutely!!

Jack Evert  (0)  (2.5)  (10)  (7.5)  (10)  (10)  (0)

1. Continue school shifts.  It is time to stop the "smoke and mirrors" and make the tough decisions.

2. Expand school shifts. I believe that school funding is going to have to be among the areas of true cuts.  Allowing shifts only postpones the inevitable.

3. Delay tax refunds. "Pain" is going to have to be inflicted on the voters.  This is as good a place as any to start.

4. Cut spending. Every area of state spending is going to have to be cut.

5. Increase taxes. There is NO WAY we can get out of this mess without more revenue.  Increases are okay, but they must be fairly and equitably applied to EVERYONE is affected to some degree.  This ought to get voters’ attention to the seriousness of the problem.

6. Redesign services.  There is no doubt that there are services provided that are being done poorly or are unneeded; however, each has its own constituency and lobbyist.  True redesign will be very difficult, but hopefully we are in such a critical situation that the politicians will actually do what the State needs rather than follow the campaign contributions (aka bribes) that they all receive from said special interests.

7. Spur economic growth.  Everyone is doing this so that the net effect will be zero in the long term.  It is worthwhile trying to insure that we don't fall too far behind in this endeavor, but it won't provide significant relief from the deficit.  Only the generally (national) improving economy (a serious question in my mind) will get our economy growing.

Don Anderson  (2.5)  (0)  (0)  (0)  (7.5)  (2.5)  (7.5)

1. Continue school shifts.  Doesn't this shift only avoid dealing with the problem of short revenues?

3. Delay tax refunds. Again does this solve the problem or just delay the outcome?

 5. Increase taxes. Problem - raise individual taxes, add sales tax to clothing, add additional taxes or make cuts on programs people want?

6. Redesign services.  How would you get a consensus on "improving quality"?

Anonymous  (10)  (10)  (2.5)  (2.5)  (7.5)  (7.5)  (10)

Bob White  (0)  (0)  (0)  (7.5)  (7.5)  (10)  (7.5)

Jay Kiedrowski  (7.5)  (0)  (0)  (7.5)  (10)  (10)  (7.5)

John Branstad  (0)  (0)  (0)  (7.5)  (10)  (10)  (10)

1. Continue school shifts.  Like Mr. Marx states, this is an absolutely terrible budgeting practice.

2. Expand school shifts. If a 30 percent shift is a terrible budgeting practice, I cannot imagine how shifting more would make things better.

3. Delay tax refunds. Another unwise accounting gimmick. Doing this instead of fixing the fundamental budgeting problems is a mistake.

4. Cut spending.  Cuts will be needed. They will be terribly impactful and damaging. Cuts to education and LGA should be minimized as they have borne more than their share of cuts and gimmicks from the previous administration.

5. Increase taxes. The size of this deficit is so large that a mix of significant spending cuts and some tax increases is the most prudent, fiscally responsible approach. Refusing any and all tax increases is putting ideology ahead of the needs of the State of Minnesota.

6. Redesign services.  Absolutely critical.

 Terry Sluss  (0)  (0)  (0)  (0)  (10)  (7.5)  (10)

1. Continue school shifts.  Schools pass on the excess cost of borrowing to property taxes.

5. Increase taxes. As suggested by Governor-elect Dayton, on those making more than $250,000.

6. Redesign services.  Eliminate some of the pork in Omnibus bills that should be local responsibilities.

7. Spur economic growth.  Long-term credits for Minnesota small businesses that expand and hire unemployed workers.

Carl Scheider  (2.5)  (2.5)  (0)  (0)  (7.5)  (0)  (7.5)

1. Continue school shifts.  Further compounds the problem and pushes it down.

 3. Delay tax refunds. Has the benefit that it makes all of us pay for it - modestly.  We can afford it - make it so.  Would likely be permanent.

4. Cut spending. As much as possible.  Will put more pressure on the property tax.

5. Increase taxes. Not many other alternatives, and otherwise we will reduce the quality of our education and work force and start a downhill slide.

6. Redesign services.  Shift to a VAT tax might work - making it transparent, unlike the sales tax.

7. Spur economic growth. Sure - but how.  We are all in this together and MN is not going to fix the world's ills at the moment.

Peter Hennessey  (0)  (0)  (0)  (10)  (0)  (7.5)  (7.5)

1. Continue school shifts.  Stop the immoral accounting games and learn to live within your means. That's what private individuals and companies have to do. Their government should do the same.

2. Expand school shifts. Ditto

3. Delay tax refunds. So you just kick the can down the road and make the problem worse in the next budget. Yeah, that is a good idea.

4. Cut spending. Cut spending? Isn't that some kind of a nutty right wing Republican fascist Tea Party idea?

5. Increase taxes. Seriously? Look around. MN and others have done that and poof! -- higher taxes, less revenue. There was a study done in Oregon, as the latest example, that showed this. Again.

6. Redesign services.  Yea, yea. Redesign. Sure, as long as it results in cutting the head count especially in the highest pay grades of the bureaucracy, cutting the pensions,   cutting the pay rates and benefits down to their equivalents in the private sector,   privatizing most services, cutting the rest of the services down to the bare essentials,   being more strict about who gets welfare and other aid, refusing to obey unfunded mandates imposed by the feds, instructing the State's congressional delegation to rein in the federal government's hunger for revenue, standing up for States' rights, etc.

7. Spur economic growth.   But you can do that only with more of the same nutty right wing Republican fascist Tea Party ideas, such as CUTTING tax rates and the regulatory burden.

Tim Utz  (0)  (0)  (0)  (10)  (10)  (10)  (0)

6. Redesign services.  Need to produce a government compliant with our constitution; that action (with leaders who have courage) would produce a state government affordable and in balance.

7. Spur economic growth. Until Minnesota state government stops growing, spending no growth strategies are workable. Function of government is not controlling our economy or employment opportunities.

Dave Broden  (7.5)  (0)  (0)  (2.5)  (2.5)  (10)  (10)

1. Continue school shifts.  This is only a short-term stopgap solution but may have to be done as a interim part of development of a long term strategy and related actions. If done the legislature and governor should agree that this will not occur again except for some very specific conditions that are written into law.

2. Expand school shifts. Increasing shifts only make the situation in the long term worse. A rigorous long term solution must evolve.

3. Delay tax refunds. This is a reasonable approach since it is only a slight delay and must be paid regardless; the decision of course should be made only after an understanding of the length of the delay. One consideration could be to make this a bit progressive would be to pay the low-income filers first and on schedule and defer larger income on some form of a time scale related to income level and amount of refund. Also size of refund could be a criteria or it could be paid in two installments. Some good options to look at.

4. Cut spending.  Spending cuts are one thing that sounds easy and amounts to only a shift. Yes cuts to these areas shift decision making to the local area which has a plus, but overall quality of life and uniformity of services must be a factor, not just cuts for cutting sake. If cuts are made they must be done on a purpose, value, and impact basis and the rationale must be shared by those making the cuts and those who are impacted to have real ownership of the purpose and impact by both sides. Before more cuts are applied there should be consideration of some form of priority and criteria for what is cut and what is maintained as an essential or valued capability--education is one example.

5. Increase taxes. Tax increases are appropriate if they are part of an overall redesign effort of services, revenue, and growth. The increase in taxes if applied must be pro-economic growth; it must provide for revenue stability. This will mean some form of expanded sales tax and a good look at how the state addresses some of the deductions. Credits or investment incentives for small and large businesses, innovation, focus on export business opportunities etc. should be integral to the tax reform--that is the key tax reform not tax increases

6. Redesign services.  Cleary Redesign is catching on as a buzzword--media and the public--now the challenge is to translate the ideas and concepts into reality. This can be done but will take not only the legislature and the governor to buy in --people and units of government across Minnesota must understand and agree to the sacrifice as well as the benefits short and long term. Special interests will be key to make this happen. For example consider the Pension costs and refer to the Tom Friedman column in the NY Times on Sunday regarding pensions in Atlanta and how changes were made.

7. Spur economic growth.  Economic growth continues to be an overlooked factor in the budget balancing discussion and decisions. As a growing number of politicians, economists, business groups, and even labor are recognizing the attitude of how the US and states include growth in the equation of solutions, there is a recognition that jobs are opportunity in many ways and a sense of growth generates confidence for individuals, workers, and business. Short-term gains will occur even if small and will set the stage for greater growth ahead. Again Freidman included growth in his statements on Sunday-- we in Civic Caucus must move to include this element of the discussion in our mix as we seek redesign solutions and included economic development in that mix.

Richard C. Angevine  (0)  (0)  (2.5)  (2.5)  (7.5)  (10)  (10)

4. Cut spending.  Cut where possible but we must improve our education system rather than cut it back further.

5. Increase taxes. I am okay with increased taxes as long as the money is spent wisely.

Tom Spitznagle  (2)  (1)  (4)  (10)  (4)  (10)  (10)

Tom Triplett  (10)  (3)  (2)  (6)  (10)  (8)  (10)

Re-do K-12 and LGA formulas to get rid of grandfather(ing) and reduce aid levels to minimums required for true equalization.  Expand revenue-raising authority of cities and school districts to make up for reduced state aids (without requiring referenda).

Al Quie  (10)  (0)  (0)  (10)  (10)  (10)  (10)

Set a date when the school district shifts will be brought back to the year spent.

Don Fraser  (0)  (0)  (0)  (0)  (10)  (6)  (6)

A temporary surcharge on the income tax might be helpful.

Wayne Jennings  (3)  (1)  (2)  (7)  (9)  (10)  (10)

This is the classic being caught between a rock and hard place. Every problem has within its grasp opportunity if we have the courage to confront it.
 
I am most uncomfortable about unbalanced budgets solved with phony shifts. While redesigned services are easy to talk about, they simply don't happen. This will require a reduction in the tangle of rules, regulations and procedures that tie the hands of innovators. Charter schools and authorizers are an example. They started with exemptions from statutes but are now strangled with rules and reports. Present innovators have to "fly under the radar" in order to exist.
 
I think we have to force the issue with permanent cuts to K-12 and higher education in order to create pressures for redesign. And it will take the encouragement of pilot programs freed from bureaucratic procedures.
 
I also think revenues must increase with a temporary surtax in order to pay for the services we expect.

Norman Carpenter  (0)  (0)  (0)  (10)  (10)  (10)  (10)

Bite the bullet now.

Chuck Lutz  (0)  (0)  (6)  (0)  (10)  (6)  (10)

Joseph Mansky  (2)  (2)  (2)  (10)  (10)  (5)  (10)

 I will restrict my comments to #6. I am not sure that there is much benefit to redesigning something that is obsolescent. Perhaps the better long-term strategy would be to figure out what kinds of activities best help us achieve our goals, then fund those activities. The activities that do not support this mission could then be eliminated.
In my view, our current revenue structure is obsolete. It cannot be reformed. The government it supports cannot be saved by reformation. We need to start doing things differently in Minnesota. First and foremost, change what we choose to tax and how we collect and distribute the proceeds. As we have heard from several speakers, the goal here is simple: broad tax base, low tax rates; a revenue system into which we all pay, without exemption; and a government from which we all benefit.
Need a few examples? How about these:
1.   Cut the sales tax rate substantially, then apply the remaining rate to all retail level transactions for goods and services, without exception. Consider making the sales tax geometrically progressive (that is a standard rate for the first $100, a somewhat higher rate from there to $1000, again from there to $10,000, and so on.)
2.   Eliminate the gas tax, which I can evade by driving a plug-in hybrid vehicle. In its place, substitute a parking tax. Unless, of course, it’s ok with you that I use your streets and freeways for free.
3.   Tax the oxidation of carbon – that would include the use of refined petroleum, coal, natural gas, shale, peat and so on. Use the proceeds to subsidize activities that lead to a safer, more energy-efficient future. Or, keep writing that weekly check to al Qaeda, every time you visit the gas station.
4.   Cut the individual income tax – all rates.

Ray Cox  (10)  (0)  (0)  (10)  (2)  (10)  (10)

Minnesota has let school shifts stand from one biennium to another in the past and it seems we may need to do it again now. I think the legislature needs to enact permanent legislation to implement the budget reductions made in the past legislative session….that should ease the deficit by close to $2 billion.
The raw revenue numbers of going from $30.2 billion to $32.4 billion indicates a 7% increase in revenue. A 7% revenue increase in these economic times should be sufficient to run the state.
It is essential to redesign services and delivery of services to reduce the overall cost to the state.

Tom Swain  (8)  (2)  (2)  (5)  (8)  (9)  (10)

Robert J. Brown  (8)  (0)  (8)  (7)  (4)  (10)  (10)

Mary Tambornino  (0)  (0)  (0)  (0)  (0)  (10)  (na)

Bert Press  (0)  (0)  (0)  (10)  (5)  (10)  (10)

Paul and Ruth Hauge  (3)  (2)  (7)  (3)  (9)  (8)  (9)

Alan Miller  (0)  (0)  (0)  (0)  (9)  (7)  (9)

 Let's not continue with our collective head in the sand.  We have to balance the tax structure, get people back to work and off the public dole, and use innovative new strategies, not the same-old, same-old "no new taxes" mantra which has dug the economic hole even deeper.

Terry Stone  (0)  (0)  (0)  (10)  (0)  (10)  (8)

Government efforts to grow the economy will have differential impact on economic sectors and unintended consequences.

Austin Chapman  (0)  (0)  (0)  (8)  (3)  (9)  (9)

John Nowicki  (0)  (0)  (0)  (5)  (10)  (6)  (7)

The first step to budget management is for the legislature to place the budget on the top of the to-do list and not wait until the last week to fully address this. Have the intestinal fortitude to address this first. Do not allow any other legislation to come to the floor until the budget is balanced and the mechanism is in place to assure that future shortfalls are not created.  Not until then, we will face the same fiasco each year.

Roger A. Wacek  (0)  (0)  (0)  (10)  (0)  (10)  (0)

Richard Heinberg stated in Northfield recently that "oil is the economy" & he had PowerPoint charts to demonstrate this. Peak oil means peak economy; so believing that the state can "Enact strategies to grow the economy" is nonsense; bordering on denial of peak oil.

Braidy Powers  (na)  (na)  (x)  (x)  (x)  (x)  (x)

Shirley Heaton  (0)  (0)  (0)  (5)  (5)  (10)  (10)

The game will remain the same no matter how you change the rules. What is needed is a new approach to examining the problem and coming up with new solution approaches.

Peter Heegaard  (5)  (0)  (5)  (10)  (10)  (10)  (10)

Recommend federal government establish VAT tax with X % returned to the states contingent on states implementing long term structural budget restructuring like zero based approach.

 

    

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;  David Broden, Charles Clay, Marianne Curry, Bill Frenzel, Paul Gilje,  Jim Hetland,  Marina Lyon, Joe Mansky, John Mooty,  Jim Olson,  and Wayne Popham 


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The Civic Caucus, 01-01-2008
8301 Creekside Circle #920,   Bloomington, MN 55437.  civiccaucus@comcast.net
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