Providing a non-partisan model for generating and sharing          

    essential information on public issues and proposed solutions              

10th Anniversary :  2005- 06 to 2015-16

   
                                                                                                  About Civic Caucus   l   Interviews & Responses  l   Position Reports   l   Contact Us   l   Home  

 
 Response Page - VanWychen  Interview -      
                                                      Please take one minute to evaluate our website. Click here to take the survey.

These comments are responses to the statements listed below,
which were generated in regard to the
Jeff VanWychen Interview of 05-03-2013.
 

Modest tax increase an appropriate solution to state revenue problem

                                                                                                        OVERVIEW

Jeff Van Wychen, policy fellow and director of tax policy and analysis at Minnesota 2020, believes Minnesota has both a revenue and expenditure problem, but he focuses the discussion on the state's revenue problem. He stresses that both inflation and population growth must be taken into account when analyzing revenues and expenditures over time. If we ignore inflation and population growth, we might conclude that Minnesota doesn't have a revenue problem, he says. In nominal dollars, state general fund revenue has increased by more than a third over the last decade. But, after taking inflation and population into account, average real per capita general fund revenue from FY 2010-1017 ($3,203) will be 14 percent less than from FY 2000-2007 ($3,734). For most of the last decade, Van Wychen says Minnesota stumbled from deficit to deficit. The state used what he calls (1) budget "shifts and gimmicks" and (2) spending cuts to deal with the deficits. In inflation-adjusted dollars, per pupil state aid for K-12 education has fallen by 13 percent, state funding for higher education has fallen by 35 percent, and state funding for property tax aids and credits has fallen by 43 percent. He believes those decreases threaten Minnesota's future prosperity. He says to stay competitive, Minnesota must reinvest in education and workforce development. He concludes that the state can afford a modest, reasonable increase in taxes to address its revenue problem.  

For the complete interview summary see: http://bit.ly/12k8Mxj

Response Summary: Readers have been asked to rate, on a scale of (0) most disagreement, to (5) neutral, to (10) most agreement, the following points discussed by Jeff Van Wychen. Average response ratings shown below 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. CPI adjusted spending is inaccurate. (6.3 average response) Using only the consumer price index to adjust state and local government spending over time inaccurately results in the appearance of growth in government spending.

2. Use more appropriate adjustors. (7.2 average response) A more accurate picture of state and local government spending in Minnesota is revealed by adjusting for other factors, including (a) population growth, (b) a more appropriate state government inflation factor, and (c) the true effect of accounting shifts that create a false impression of actual spending.

3. More spending on education essential. (5.6 average response) The state urgently needs to invest more in education to stay economically competitive with other states.

4. Tax increase now is justifiable. (5.2 average response) Because the price of Minnesota's state and local government--defined as state revenue as a percent of total personal income--is less today than in the 1990s, taxes can be increased without creating an excessive burden.

Response Distribution:

Strongly disagree

Moderately disagree

Neutral

Moderately agree

Strongly agree

Total Responses

1. CPI adjusted spending is inaccurate.

11%

7%

22%

33%

26%

27

2. Use more appropriate adjustors.

11%

4%

11%

37%

37%

27

3. More spending on education essential.

22%

15%

11%

26%

26%

27

4. Tax increase now is justifiable.

30%

15%

4%

22%

30%

27

Individual Responses:

R. C. Angevine (10) (7.5) (10) (10)
3. More spending on education essential. Absolutely.

Pat Barnum (2.5) (2.5) (0) (0)
2. Use more appropriate adjustors. b) More appropriate state government inflation factor? So the government growth should be measured differently that everything else in the economy? I do not understand that reasoning.

3. More spending on education essential. Nowhere is there evidence that more money given to schools improves educational quality. In fact, I would submit just the opposite. We need a better educational system, but throwing money at it has done little to improve basic educational outcomes.

4. Tax increase now is justifiable. Taxes ,"revenues," don't come out of thin air. Every dime is taken from the private sector, which could otherwise be used to buy goods and services, save, or invest. "Without creating an excessive burden" is incredibly subjective. Should we constantly strive to grow government at the price of productivity? That is a goal? I think not.

Chris Brazelton (10) (10) (7.5) (10)
1. CPI adjusted spending is inaccurate. Van Wychen makes a strong case for using only those items that the state actually purchases in accounting for inflation.

3. More spending on education essential. Spending on what is needed, in addition to redesign of the delivery of services, with some focus on alternative education opportunities and a variety of tracks are important elements as well.

4. Tax increase now is justifiable. We've been trying to play catch-up for far too many years, falling further and further behind in meeting some very critical infrastructure needs.

Ron Kuecker (5) (10) (0) (0)
3. More spending on education essential. We are now spending over 10K per K-12 student. Colleges are truly corrupt in their management and are misleading students into worthless majors that have no jobs.

Don Anderson (2.5) (7.5) (5) (5)

Dave Broden (7.5) (7.5) (10) (2.5)
1. CPI adjusted spending is inaccurate. Any metric related to spending must include the purpose, value and outcome of the spending. Using consumer price index is not necessarily an appropriate metric but is one that does reflect the views [of] and impact on citizens. Using the consumer price index along with value/outcome metrics is recommended.

2. Use more appropriate adjustors. The other factors listed are reasonable and appropriate but until state government begins to measure outcomes the state will continue to spend to support needs not to achieve outcomes.

3. More spending on education essential. Increase in education spending in appropriate ways to keep Minnesota as a leader in education is a must-do objective. Using education as a key competitive measure is perhaps not a good measure. There are other factors to consider.

4. Tax increase now is justifiable. While I basically agree that a tax increase can be applied without a burden, the rationale of percent alone is not a reason. Once again what are the values, outcomes and impacts if we do increase. Further what is meant by an increase? Is it just increasing the rates on current tax structure or is it a complete reform to build a tax system for the 21st century economy. The increase should only be considered with consideration of the complete reform.

C. M. Denny (7.5) (10) (7.5) (10)
3. More spending on education essential. Money is not the only problem. The delivery system is in need of accountability.

4. Tax increase now is justifiable. The tax codes are in need of thoughtful revision.

Dennis L. Johnson (0) (0) (0) (0)
1. CPI adjusted spending is inaccurate. Tax revenue should increase along with inflation and with population growth. Why does the tax rate need to increase to maintain revenue growth?

2. Use more appropriate adjustors. If Minnesota is so underfunded, why is it still the fifth most highly taxed state in the union? Van Wychen clearly has a built-in progressive bias.

3. More spending on education essential. Minnesota does not need to "invest" (read "tax") more in education; it needs to make education more rigorous and return to most of the values of the past to make education more productive. History shows that spending more on education only increases the "bloat" but does not improve the outcome.

4. Tax increase now is justifiable. Tell it to the taxpayers. They have seen little increase in personal income during this recession. All the progressives who agree with this notion are welcome to voluntarily contribute to the Minnesota State treasury. How many do so? Or do they just want to "feel good" by spending other people's money?

Dane Smith (10) (10) (10) (10)
1. CPI adjusted spending is inaccurate. I would add that the Price of Government, instituted by our big business lobby in the 1990s, is absolutely the best measure and the public sector and its relatively highly educated workforce actually does need to keep up with private-sector growth.

2. Use more appropriate adjustors. Price of Government cannot be over-emphasized.

3. More spending on education essential. No-brainer; business leaders essentially agree, race/income disparities in education success will undermine our prosperity and competitiveness in the near future. High-income successful households lavish money and resources on the education and development of their children, so money clearly makes a difference to them.

4. Tax increase now is justifiable. Every living governor (including Republicans Carlson, Quie and Andersen) said so in 2003, and the no-new-taxes decade came a cropper, nationally and in Minnesota. The public sector is not less important than the private sector.

John Booth (7.5) (10) (2.5) (0)
3. More spending on education essential. There are a lot of charter schools doing more for less.

4. Tax increase now is justifiable. Homes are underwater. A majority of jobs have horrible health care benefits. Food prices are way up. E85, NLX and some of other boondoggles need to be dropped. Corn to ethanol Btu cost doesn’t justify all the subsidies that are paid.

David Dillon (0) (0) (0) (0)

Tom Spitznagle (5) (5) (5) (0)
Before raising taxes, Minnesota government operations at all levels combined need a comprehensive operational review for the purpose of identifying and eliminating duplication and inefficiencies. The state "enterprise" also needs a strategic plan with clear priorities identified. However, given our current state government structure, it's not likely that either of these initiatives will occur in a serious fashion. Until political leaders accept that managing the state "enterprise" requires more sophisticated management techniques, it looks like we'll have to keep enduring simplistic political arguments for blindly raising taxes.

Lyall Schwarzkopf (7) (6) (5) (6)

John Milton (10) (10) (10) (10)
Minnesota suffered a serious setback while Pawlenty was governor, using his "no tax increase" mantra to run for president. We are now seeing the price we paid for that ultra-conservative ideology. It will take several years to dig ourselves out of Pawlenty's hole.

Carolyn Ring (6) (8) (9) (8)
Where and how the additional funds are spent is key. Many current programs should be examined for their effectiveness, and analysis of future spending outcomes is essential.

Peter Hennessey (na) (na) (na) (na)
In the private sector, in any household budget, you don't get to say, "last year we spent $10,000 on entertainment and eating out, so after adjusting for inflation we'll budget $10,500 this year." No, you determine what you need, how much you have and have coming in, set aside a prudent amount for emergencies, etc. Population growth, inflation, share of taxes as a percentage of income [or of] GDP [or] whatever, and baseline budgeting do not justify raising taxes. I sure don't get to tell Social Security or my employer to give me a raise because I am spending more this year than last. It is up to me to make the adjustments. And… spending on education is not "investment." If it were, the education establishment would show a profit, there would be dividends to shareholders and they would never need state or local funds to operate. It's just spending, maybe for a good cause, [but] it is just spending. Similarly for any state program of job skills and employment development, it is just spending. Budgeting for both depends not on population growth, inflation, share of taxes as a percentage of income [or of] GDP [or] whatever, or baseline budgeting, but on head count -- is the number of students rising or falling? Is the number of unemployed lacking job skills rising or falling? That is even assuming that any of this is the proper function of the state to be concerned about and to pay for from monies confiscated from productive workers. The care and education of children is the responsibility of parents, not the state. As an old geezer I sure don't get any benefit from an pitifully, pathetically ignorant new generation totally lacking in preparation for successful citizenship in a representative republic, and being let out of our schools and colleges totally unprepared and lacking in job skills. … That is not why I pay the school tax. Only a depraved predator would think that the state's ROI (return on investment) on education is the taxes the new generation will pay -- the state will tax them anyway and they'll find their own pet causes to spend that money on, not return it to me as dividends on my investment. Similarly, the acquisition or updating of job skills is not the responsibility of the state, but of the individual worker. Each of us is required to fend for ourselves and our families. None of us can say, "feed me because the state has not taught me anything." The problem is that way too many of us can and do say just that, which is what happens when this nanny state entitlement mentality takes root in society.

Jack Evert (5) (10) (7) (7)
This was a very informative, dispassionate discussion of the revenue situation in Minnesota. It really helps to get beyond the rhetoric and political talking points. I am going to forward this to my Republican representative. I hope she reads it.

Mary Tambornino (10) (10) (10) (10)
Accurate pictures of finances will lead to more financially astute citizens, and better response[s] and decision makers. Wouldn’t that be a trip? It could be called "true transparency".

Chuck Lutz (10) (10) (10) (10)

Alan Miller (8) (8) (10) (10)

Fred Zimmerman (5) (5) (0) (1)
I don’t know of any business today that has the luxury of operating the same way it did in the past. Ongoing and constant cost reductions are the imposed and necessary "way of life" for business. To look at all of these inflationary factors as the sole justification for budget increases excuses the public sector from any sort of qualitative improvement in what is accomplished in this important, and largest, single sector of our economy. 3M has fewer employees than it did in the 1990s with much more revenue, many more breathtaking products, and a worldwide reputation for excellence.

In the meantime, Minnesota schools rank well below average when compared to other industrial and emerging nations. We have huge bureaucracies devoted to lotteries, stadiums, and the maintenance of sheer mediocrity in the name of "equal opportunity."

I agree that more objective information is needed to discern what public budgetary increases are appropriate. But, among these measures should be practical comparisons to what the better run private sector companies have to do to survive every day.

Among the budget changes that ought to be put in place would be to limit public pensions to the provisions comparable in the private sector. With the new changes being mandated by GASB [Governmental Accounting Standards Board] standards 67 and 68, Minnesota’s public pensions are only about 50 percent funded and the combined deficit is around $20 billion. In spite of this huge unfunded liability, benefits keep being raised and the ages qualifying for retirement remain vastly short of what non-public people find available. Meanwhile, only about 20 percent of private sector workers have pensions at all.

Wayne Jennings (7) (8) (6) (9)
Complex topic with the speaker’s additional factors.

Paul and Ruth Hauge (8) (9) (8) (8)

Marina Lyon (7) (7) (4) (4)
3. More spending on education essential. Maybe, but we also need to ensure results for education investments.

4. Tax increase now is justifiable. This statement ignores/does not account for the growth, and growing, income gap.

This was a good session, new and helpful info for me at least. I wish more had been said about federal revenues and the extent to which states, counties and cities use them and rely, perhaps too much, on them. How much of state spending is due to the need to have local people administering federal dollars beyond health care (e.g., housing, roads, education.) How much, if any, federal dollars include support for the local costs of administration?

Kevin Edberg (10) (10) (8) (8)
In addition to considering our within-state tax burden (cost of government) we would also be wise to discuss the polemics around state and local tax burden in Minnesota compared to other states, and the relative competitiveness of locating/doing business in Minnesota compared to other places. Because we link state and local tax policies, one needs to assess the combined burden when examining competitiveness, and not merely look at state tax burden.

Roger A. Wacek (5) (5) (0) (0)

William Kuisle (0) (0) (4) (0)

Bert LeMunyon (5) (7.5) (2.5) (2.5)

3. More spending on education essential. Where is the data to show that more money equals better education? The more money available for education, the more that is demanded by the unions.

4. Tax increase now is justifiable. Perhaps taxes are lower today because the taxes of the 1990s were perceived to be excessive.

    

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.

   David Broden,  Janis Clay,  Bill Frenzel,  Paul Gilje,   Jan Hively,  Dan Loritz (Chair),  Marina Lyon,  Joe Mansky, 
Tim McDonald,  John Mooty,  Jim Olson,  Wayne Popham  and Bob White


©
The Civic Caucus, 01-01-2008
2104 Girard Avenue South, Minneapolis, MN 55405.  civiccaucus@comcast.net
Dan Loritz, chair, 612-791-1919   ~   Paul A. Gilje, coordinator, 952-890-5220.

contact webmaster
 

 

 

Hit Counter