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Minnesota 2020 Journal: A Texas-Sized Conservative Public Policy Problem

January 14, 2011 By John R. Van Hecke, Executive Director & Fellow

Conservative “no new taxes” public policy is remarkable for its parallel obstinacies. With equal fervor, it rejects revenue increases and demands budget cuts, insisting that the same solution applies uniformly to all problems. The past eight years have taught us the consequences of this approach: blossoming state budget deficits, skyrocketing local property tax increases and service cost-shifting to families and communities.

Minnesota faces a projected $7 billion budget deficit for the coming biennium, securing a pattern established with Governor Tim Pawlenty’s arrival into office. But, Minnesota is not alone. Our experience can be observed across the country. In fact, some of the most conservative states’ embrace of conservative policy dictates have created even greater, deeper problems. For just one example, travel south on Interstate 35 for 19 hours and 1200 miles.

In Texas, everything is bigger. Cars. Egos. Sunsets. State budget deficits. Texas, long a hot-bed of conservative public policy initiatives, faces a projected $28 billion state budget deficit. The biennial budget for Texas is $182 billion. Minnesota’s Office of Management and Budget projects, by comparison, $32 billion in revenue and $38.6 billion in expenditures for Minnesota’s next biennium.

As I said, everything in Texas is bigger. And, by extension, everything in Texas is supposed to work better. Until, it doesn’t.

Texas is a conservative, low-cost, low-wage, pro-business, anti-tax, anti-union, can-do state. It’s the shining example –Texans would say the shining lone star- guiding a growth path for the nation. Whatever the conservative business community wants, in Texas, it pretty much gets it.

Texas loves this story. Governor George W. Bush told that tale, selling it all the way to White House in 2000. Since then, Texas has doubled-down on its rootin’, tootin’, lean, mean vision of its self as a state model for growth and prosperity. Which works until the bill comes due and conservative policy has hamstrung revenue generating options.

Like now.

Here’s the problem. The persistent economic recession is hammering everyone. As the economy slows, business transactional volume declines and, with it, tax receipts. Government, charged with enforcing property protections and a regulatory structure, not to mention schools, roads, police, fire fighting services, prisons, courts and the thousands of activities that people expect to keep themselves, their families and their communities safe, has to reduce budgets, cut programs and raise revenue. Traditionally, government, at all levels, enacts a combination of all three.

The Texas state legislature, facing a projected $28 billion budget deficit, is composed of a deeply conservative majority. They’re highly unlikely to consider revenue increases, in any form, because they believe that government –their government; the government they budgeted at $182 billion per biennium- is bloated and out of control. Consequently, Texas policymakers plan to cut their way to a balanced state budget.

Texas’s state government doesn’t pay for much from its own revenue beyond education and health & human services. Cutting the budget means cutting school and HHS funding. Last fall, the Governor’s Office projected that a five percent across the board cut in state agency budgets would yield $1.7 billion in savings.

Whew, just $26 billion more to go.

Have I mentioned that Texas is already ranked 50th in per capita state spending? No other state spends less, per capita, on state government than Texas. That’s the conundrum revealed by Texas’ state budget deficit crisis. Insisting on something –in this case, an unyielding “no new taxes” policy embrace- doesn’t actually make it so.

I suppose Texas could balance its budget by directing the state’s public schools to simply shut down for a year, saving that budget line item but, somehow, that seems unlikely. The obvious solution –raising revenue- is more abhorrent than gutting schools and healthcare spending. So, as we say in Minnesota, that’s a pickle.

Texas blowing up is bad for America and, even though we’re separated by 1200 miles, bad for Minnesota. It’s bad in exactly the same way that Ireland’s and Greece’s financial collapse is bad for the European Union. A financial crisis shouldn’t be required to further highlight conservative “no new taxes” policy failings.

I raise all of this to both commend and guide Minnesota’s policymakers as they address Minnesota’s projected $7 billion budget deficit. Legislators are to be commended for not buying the whole Texas conservative-blindered package. Minnesota’s structural problems could be much worse. My suggested direction is to embrace a balanced approach: raise state revenue and cut programs.

There are a lot of Texas things that I like: Buddy Holly, Joe Ely, Molly Ivins and Bob Wills, just to name a few. I don’t like conservative Texas-style public policy initiatives apart from the fact that they demonstrate the high cost of ideologically-driven public policy. Let’s learn from Texas, avoid its excess and focus on moving Minnesota forward.

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  • Alec says:

    January 14, 2011 at 9:15 am

    I hope you also noticed that, despite all the things that conservatives say matter in job creation, Texas has unemployment a full percentage point more than Minnesota.

    Texas should be the poster child for Republican job creation. I hope this is a warning to Minnesota not to cut the things that really create jobs.

    The costs of the Republican utopia are too high and the rewards non-existent.

  • Everett Flynn says:

    January 14, 2011 at 11:07 am

    Great article.  And you know, I actually don’t agree that the budget problem in Texas is so much worse than ours is here in Minnesota.  Their deficit is about one-sixth of their projected obligations.  Our deficit is very nearly one-sixth of our obligations (and it might end up being slightly larger than that).

    It’s bad news all around, but there’s reason to believe that we’re going to have to start behaving like responsible adults in our financing of government very soon.  I’m interested to see how it plays out here, in Texas, in California.  2011 is really going to be interesting.  Will constituents demand responsible conduct from their representatives?  Or will they continue to drool like Pavlov’s dogs when conservatives irresponsibly, and with deliberate deception, claim that it’s reasonable and possible to resolve our problem without any new revenue?  Will constituents stand for the kind of brutal slashing of programs and divestment necessary to make such ridiculous proposals a reality?

    Is a tax cut REALLY the solution to every problem under the sun?

  • Bruce Kittilson says:

    January 18, 2011 at 12:43 pm

    Excellent article by John, great additions by Alec and Everett.