When I was a 6-year old kid back in New York, one of my favorite games was kick the can; and my favorite place to play was in the alley across the street. As the alley was actually the back of the retail storefronts and restaurants facing the street, there were plenty of dumpsters back there and consequently, an endless supply of cans. But equally important, the alley was actually several blocks long and ended at a dead end; so there was never a question when the game was over. When you hit the dead end, the game was done.
Kick the can is also a rather useful metaphor for what many believe our Governor and state legislators have been doing with the state budget for a majority of this just-ended decade. Beginning with a large budget deficit after the dot-com bubble and the 9-11 attacks, our public officials have been regularly kicking our budget woes from biennium to biennium, patching it together with one-time funding fixes (remember the tobacco endowment or our budget reserves?); selected budget cuts to local governments; accounting shifts and most recently, federal stimulus funding. I suppose the rationale for continually pushing our budgetary troubles further into the future was the hope that by the time the bills actually came due, that the Minnesota economy would be out of the doldrums and once again humming along. But like the alley’s dead end back in New York, as the Legislature re-convenes this month it’s clear that this game is over.
The dead end actually came into view back in December when the state budget forecast documenting a $1.2 billion shortfall for the remainder of the current biennium. In essence we learned of a $240 million deficit for the remainder of FY 2010 and a whopping $916 million deficit in FY2011; thereby erasing any rational hope that the Minnesota economy is on the verge of roaring back. Further, what was most disturbing about this forecast was that 72 percent of the projected deficit is from the loss in personal income tax revenues; further suggesting that the employment picture will remain tepid for some time to come. As it is often said about income taxes, you don’t have to pay them if you don’t earn the wages.
But what about the FY 2012-13 biennium, surely by then the economy will bounce back; right? Well to be honest, because we have been continually shifting significant expenses from biennium to biennium, we have been starting each biennium with the debt of the past biennium. In addition, the federal stimulus dollars dry up at the end of FY 2011. Accordingly, the budget picture actually worsens for the 2012-13 biennium, with the current forecast of a $5.4 billion deficit.
And just in case you may think that we didn’t see this trouble coming, let me assure you that you are wrong. In fact, our state economist Tom Stinson and our state demographer Tom Gillaspy have been preaching how Minnesota’s shorter-term economic cycles have merged with our longer-term demographic cycles for so long that many of us have come to name their regular presentations as the “Tom & Tom” show. And what is most ironic is their presentation has been a regular feature of the Legislature’s annual policy conference at the beginning of each legislative session. Yes, that’s right. At the beginning of each session, legislators come together for a day to learn about the economic trends, demographic trends and the overall outlook for the state. But given the way this budget situation has been handled, you’d never know that the Tom & Tom show has been a staple of this legislative event every year for the past 3 years.
So now as the legislature convenes to address this budget dilemma, let’s vow to stop playing kick the can with the state budget. As there are no more one-time fixes to be found, no more accounting shifts to be made, and no more stimulus funds, let’s finally have a serious discussion about how we Minnesotans collect our taxes and spend our revenues. Through such discussions legislators may find that they might consider taxing some items or services that are currently exempt. And even more likely, as they prioritize our state programs and expenditures, they may find that there are some programs that just can’t be prioritized as high as they used to be given the current fiscal realities.
But most importantly, if the discussion is truly going to be serious, Republican members can’t label every proposed tax enhancement a “job killer” nor can Democrats label every proposed spending cut a confirmation that Republicans are only looking out for the wealthy. As we begin this new decade, we Minnesotans deserve a more serious discussion than that.
