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Minnesota 2020 Journal: Long Winter Focuses Policymaking

April 19, 2013 By John R. Van Hecke, Executive Director & Fellow

It’s been a tough week. The Boston Marathon bombing cast a discomfiting pall. Winter’s persistent grip further shaded this bleak week, requiring more than a little effort to find a silver lining. Moving forward means digging deeper for hope, assurance and promise.

That’s the bad news. The good news? The answer lies before us. If we focus on what really matters to Minnesota—family, community, security—we find both the path and the strength to move forward. It’s right under our noses. Most importantly, it’s found in indisputable economic data.

Minnesota is a great place to live, work and raise a family. We value community. We pull together. We regularly turn barriers into starting blocks. We do it by working the problem. We don’t just work hard, we work smart. We study challenges. In part, it’s a function of seasonality. In other words, winter may keep us cooped up indoors but we use the time well. Long winters help to us focus on what really matters.

Earlier this week, Minnesota 2020 issued a new report, “Crumbling Fiscal Foundations: A Decade of Decline in State Investment.” The report finds that Minnesota is spending substantially less than it was a decade ago. Conservatives would have us believe otherwise, that state government spending is crazy out of control. It’s not. Adjusting for inflation and other factors, Minnesota spends $5.2 billion less than it did ten years ago.

Now, if Minnesota had a trillion dollar budget, $5.2 billion would be a computational error but Minnesota’s current biennial budget is $35.388 billion. The inflation adjusted 2002-2003 budget was $40.561 billion. The inflation adjustment calculates past budget totals using 2012 dollar values giving an apples-to-apples comparison. It’s the same reason that “Gone with the Wind” crushes “Avatar” as the highest-grossing movie of all-time once inflation is calculated. 1939’s GWTW earned $3.3 billion in 2010 dollars while Avatar earned $2.8 billion in 2009 dollars.

It’s fair to observe that America became a very different place between 1939 and 2009. That doesn’t change the fact that more Americans directed their purchasing power to Gone with the Wind than for Avatar. In a similar fashion, Minnesota in 2013 is not the Minnesota of 2000. First of all, we’re more populous. Minnesota grew by nearly 500,000 people in this time period.

In 2000, the US Census found that 4.9 million people lived here. Ten years later, in the 2010 census, that number jumped to 5.3 million. The 2012 US Census estimate for Minnesota is 5.4 million. We’re growing. However, the growth is accompanied by declining state investment during the same period. We’re doing less, using less money for more people.

Communities, counties and schools understand this phenomenon all too well. They’ve been on the receiving end of declining state investment. Schools have to provide more schooling with more regulatory strings attached but with fewer state dollars. Cities and counties provide the overwhelming bulk of Minnesota’s direct citizen services. They’re now doing it with many fewer state dollars, translating into fewer services but greater instability risk.

On a per capita basis—that means dividing the money spent by the population—Minnesota spends 18 percent less than it did ten years ago. That’s a drop by almost one-fifth. It’s real money with real impact, leaving Minnesota increasingly between a rock and a hard place.

Belt-tightening is a short-term, fiscal crisis strategy, not a long-term policy. Tighten the belt long enough and fiscal discipline becomes economic strangulation. The result, given another decade at this pace, means that Minnesota no longer looks or feels like Minnesota. Instead, we become another Missouri or with a greater, longer slide, South Dakota.

Those states are terrific places with many enticing features; schools, roads and healthcare just aren’t among them. Minnesota’s average 2009 wage was $45,319. Missouri, in the same year was $40,022 and South Dakota was $33,352. Wage difference translates directly into quality of life and growth opportunity.

You could believe conservative rhetoric, that government is too big, too much, and too too. Or, you could believe the hard numbers. Minnesota 2020’s fiscal report not only reveals the real trend, it offers two futures. The first, staying the no-new-taxes/anti-government policy course, creates retreat and decline. The second, investment, builds on Minnesota’s strengths and moves us forward and upward. If we focus on what really matters to Minnesotans, schools, jobs and healthcare, Minnesota prospers. And, if an unusually long, bleak winter is required for policymakers to understand and act on this choice, I’m willing to bear another few weeks of snow.

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