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By Phil Krinkie
At the end of this week, the State Department of Finance will release their November State Budget Forecast. This forecast projects both anticipated revenue and expenditures for the next two years. The Department of Finance issues budget forecasts twice a year, once in November and once in March. It is expected that the November forecast will indicate a slowing of the economy and therefore a smaller than expected growth in state revenue.
Each forecast is followed by a chorus of political banter. If the forecast shows revenues above current spending levels (an excess in tax collections), a cry goes out for more spending based on the supposed unmet needs of various interest groups; the cities, the schools, the transportation industrial complex and the “free” health care for all advocates, to name just a few.
If the forecast reports a less than rosy outlook for tax collections, the call goes out for increased investments (code word for tax increases), which will improve “the quality of life” here in the great Northstar state.
The forecast later this week will likely be greeted with somber faces and gnashing of teeth because legislators love to spend, and in election years, they love to spend even more.
Therefore a forecast which projects less revenue will be heralded with a call more for taxes.
Oh, I nearly forgot, this year’s Legislature already proposed over $5 billion of new taxes, even when the revenue forecast last March reported excess revenues of $2 billion.
So, what will the big spenders of the State Capitol propose for Minnesota’s hardworking taxpayers? Well, one of the biggest of the big spenders has been plotting for some time (for the children of course) and is suggesting another billion dollars a year for K-12 education.
Another group of legislators want to spend more on health care even though the state coffers are likely to be nearly empty. These individuals want to increase the MinnesotaCare tax, also known as the sick tax, the 2% tax on health care services, as a way to pay for their spending appetite.
And we certainly can’t forget about the train track, road and bridge builders, who want an increase in the state’s gasoline tax even though we are paying $3 dollars a gallon for gasoline already.
But before we start to ring in the New Year with the persistent calls for ringing up taxpayers with more state spending, let’s take a hard look at state spending growth over the last ten years.
State General Fund spending in the last 10 years has grown from $24 billion to $34.5 billion, that’s more than $10 billion or a one billion per year increase. This enormous growth in State government spending must have been caused by some dramatic events in our State such as large population increases or a significant economic calamity, right? Wrong! The population in Minnesota since the last census in 2000 has grown by about 300,000 to 5.2 million, hardly the basis for a 40% increase in state general fund spending.
And the liberals remind us all the time of the “huge cuts” in state government back in 2003, so where is the economic fallout now. The truth is…the only thing that happened to the state budget in the 2004-05 biennium was spending only grew at single digit rates instead of at double digit rates for that two year period.
But this isn’t the whole story. State General Fund spending is only about 60% of total state spending. When all funds are added together, including federal and dedicated funds, state spending jumps in 2009 to almost $28 billion per year, up from $17 billion in 1999.
That’s a 65% growth in state spending, yet by next week…many politicians and newspaper editorial writers around Minnesota will claim “it isn’t enough.”
In addition to calls for higher taxes at the state level, let’s not forget the 8% statewide average property tax increase proposed by local governments last week, all because – you guessed it, they didn’t get enough state money, so they had to raise property taxes.
Perhaps the real solution to a state budget forecast that shows less tax revenue is to simply spend less. Why should the state budget be any different than the family budget?
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