No More Business as Usual

It’s not exactly breaking news that Minnesota’s state budget is facing some unprecedented difficulties; but this time I believe that the change needed will likely be transformational in its consequence. By that I mean that with a current billion dollar budget deficit and a lurking multi-billion dollar deficit through 2013, it’s fair to say that our public officials simply will be unable to successfully meet this challenge using “business as usual” tactics; a tweak here and a tweak there, just won’t do it.

As I noted last month, if we are going to successfully meet this current budget challenge, we need to stop thinking about the solutions in terms of tax increases or tax cuts. Rather, we need to serious talk about tax and expenditure reform. We simply need to rethink how we choose to collect our tax revenues and how and where we choose to spend it. Sooner or later our public officials will have to have that conversation, and when they do there are some issues important to rural Minnesota that they will have to address:

The Fate of Local Government Aid – Local Government Aid or LGA has been a tremendous help to small rural communities (and some large ones too), and was intended to serve as a statewide equalizer to assist local governments in meeting their essential service needs without completely overburdening their local taxpayers. This is especially true in rural communities where the property tax valuations are quite modest and there is a disproportionate percentage of lower-income and fixed income residents.

But LGA has grown over the years into a program that is ripe for reform. In fact, LGA today provides well over half of the funds of many community budgets. So the question is, does LGA simply help these communities or are metro and suburban taxpayers actually paying more than their fair share? It’s a question that legislators have debated for quite some time, with rural legislators strongly supporting the current system. But how safe can LGA be when Minnesota’s most recently elected Senator from rural Waseca unabashedly states that LGA is an unfair transfer of wealth and that it undermines accountability by allowing rural city councils to spend money they don’t have to tax for. As Senator Parry was quoted as saying “LGA to me is nothing but a credit card.” (Mankato Free Press, Jan. 22, 2010).

So as the legislature prioritizes and discusses its future spending, look for LGA to occupy a place in the discussions.

Prioritizing Capital Bonding Projects – During “even numbered” years communities from across the state regularly compete in hopes of getting a capital improvement project placed in the state’s capital bonding bill. From small community ice arenas to the new Guthrie Theater, legislators carry these local requests to the State Capitol where there are typically 3-5 dollars in requests for every one dollar available. But in more recent years it has been increasing difficult to secure a place in the bonding bill as local projects are out of favor, replaced by projects with “regional or statewide significance.”

To be fair, there is certainly logic to this prioritization scheme, and I envision such logic being used more in the future – not less. But we also need to ask, outside of a flood control project, or the development/ improvement of a statewide facility such as the sex offender treatment facility in Moose Lake, what type of project originating from a small rural community can actually meet this test? We simply need to revisit the goals of a state capital bonding bill and the role of local projects in it.

Consolidation, Consolidation, Consolidation – When I first arrived in Minnesota I was often asked why there are 87 counties and shouldn’t we consider county consolidations; we’ve all heard similar concerns. But like the school consolidations throughout the Midwest in the 70’s and 80’s look for a serious and broader consolidation effort over the next few years. Sure … the 87-county question will return, but also look for a much broader set of consolidation efforts. City-county service consolidation and the regionalization of our human service infrastructure will be hotly pursued. But don’t be surprised to also see further consolidation of statewide offices, schools and school districts; college campuses and state-owned infrastructure.

Change is never easy; and that is especially true for large-scale transformational changes. The temptation for elected officials to avoid such discussions and make every effort to try to constructively “tweak” the status quo is great. But at some point it will become obvious that we have no other viable alternatives. It reminds of the words of Winston Churchill, who toward the end of World War II was quoted as saying, “You can always trust the Americans to do the right thing … after all other alternatives have been exhausted.”