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Disappointing

June 30, 2011 by seanolsen 0 Comments

Barring something unforseen at this point, Minnesota’s state government is heading for a shutdown tomorrow.  While politicians in St. Paul point fingers, Minnesotans are going to pay the price.  Let’s talk about three reasons we are in this position.

1.  Politics ain’t beanbag.  But it shouldn’t be a game of chicken, either.  Let’s fact it:  both Governor Dayton and the Republican legislative majorities started with budget proposals that they knew were completely unacceptable to the other side.  There’s nothing wrong with that, in and of itself.  That’s all part of the political dance that is ultimately required to get to a conclusion here.  The problem has been the lack of movement (more so on one side than the other) since then. 

The Republican legislative majorities — despite their claims of compromise — haven’t moved their spending targets in total since their first budget proposal in March.  Yes, they’ve shuffled dollars from one department to another, but haven’t offered any sort of compromise on the revenue issue. After passing their first round of budget bills in April, they dithered for over a month reconciling minor differences in conference committee before passing their final budget in the last week of the session.  What did they use that month for?  Distractions like voter ID and the gay marriage amendment.

Gov. Dayton has substantially altered his plan — tilting his fix from two-thirds tax increases to two-thirds spending cuts — but did not detail the spending side of his most recent $35.8 billion proposal.  Additionally, although he has signalled openness to other revenue options other than his income tax increase on the top 2% of earners, he has not publically specified the sorts of proposals he would be willing to entertain as alternatives.

Collectively, we’ve seen the positions of the two sides publicly harden the closer we’ve gotten to the shutdown when it should be moving the other way (although, privately, there are some signs of progress). 

2.  Newbie alert.  Gov. Dayton and legislative leaders Sen. Amy Koch and Rep. Kurt Zellers are all new in their positions.  The Republican legislative majorities are filled with freshmen who ran on their version of “fiscal responsibility”.  All want to put a “win” on the board early in their terms, and that limits their willingness to come to a reasonable compromise.

3.  Somebody doesn’t know how to count.  Compounding the problems the two sides have had from a purely ideological basis has been the inability of the two sides to agree on the base numbers.  From the Republican insistence early on to use their own numbers instead of the usual fiscal notes to the continual usage of incorrect base spending numbers for the 2010-11 biennium, it’s been a remarkable display of trying to force facts to fit into a political box.  If you can’t agree on basic underlying data, it’s going to be hard to agree on the decisions you make based on that data.

Let’s hope that both sides can finally begin to work together and give Minnesota the moderate compromise that voters demand and deserve.  GOP leaders need to accept some forms of new revenue, and Gov. Dayton will likely have to take on some additional budget cuts.  A budget in the $35 billion range is achieveable and would represent a good-faith compromise.

The collateral damage of a shutdown — from laid-off employees to closed state parks — shouldn’t be inflicted on the people because the political class has failed us.

Economy, Legislative Watch, State Legislature, Taxes
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764_Top_5_Things_Shutdown

The Top 5 Things You Need to Know About What the GOP Thinks You Need to Know About a Possible Government Shutdown

June 24, 2011 by seanolsen 1 Comment

Sen. Julianne Ortman has posted some GOP talking points on her website – the GOP’s “Top 5 Things You Deserve To Know About a Possible Government Shutdown” .  We’ve discussed many of these  before, but it’s worth talking about them briefly again, point-by-point (paraphrased for space purposes).

GOP Point #1:  Only Governor Dayton can prevent a shutdown.  Why hasn’t he called the Legislature into special session?

FACTS:  Gov. Dayton’s refusal to call the Legislature back into special session is not preventing any work from getting done, and is consistent with how most special sessions have gone in the past (including the last three)– where the content of the bills and the specific topics that will be addressed are defined and agreed to in advance.  The GOP and Ortman’s demands to call the Legislature back into session when there is no budget deal would be a colossal waste of time and taxpayer money.  We don’t need to pay Joe Hoppe any more per diem for time when nothing is getting done.

GOP Point #2:  Gov. Dayton says his tax increase will only impact the top 2%, but analysis shows all taxpayers will be impacted.

FACTS:  The Tax Incidence Study of the Governor’s proposal shows that in fact, all taxpayers will see some increase in their taxes (except for the top 10%, the impact is less than one-tenth of one percent on average).  What the GOP fails to mention is the impact of their proposals.  The Tax Incidence Study for the omnibus tax bill shows that their proposal also increases the tax burden on all taxpayers.  The difference:  the people taking the worst hit in the Republican proposal are the poorest people, while the wealthy see the least impact.

GOP Point #3:  The most recent poll shows 87% of Minnesotans favor state spending to decrease or stay the same while 8% support an increase in state spending.

FACTS:   The poll offers a false choice.  The choice isn’t whether we’re going to cut spending or increase spending — it’s how much are we going to cut spending.  If we applied current law to the next budget period, the state would spend $39 billion dollars.  Gov. Dayton has proposed a budget of $35.8 billion, the GOP a budget of $34 billion — so the real question is:  do you want to cut $3 or $5 billion from the budget?

When you frame the question to accurately reflect the choice that is out there, you get completely different results.

GOP Point #4:  The Legislature completed their work and passed a balanced budget six weeks early.

FACTS:  Yes, they passed a budget six weeks before June 30.  Big deal.  Legislatures — one way or the other — always pass a budget at the end of the session.    Everyone knew that the GOP budget was dead on arrival — even the GOP.  But instead of using the time during the session to work towards the compromise agreement that’s inevitable at some point, Republicans in the legislature wasted our time with gay marriage amendments and other sideshows.

GOP Point #5:  Republicans have made serious and honest compromises to Governor Dayton on the budget.

FACTS:  Republicans cite two compromises.  First, they have agreed to Gov. Dayton’s total funding level for K-12 education.  While this is true, it reflects only about $100 million in spending, and — more significantly — there are huge differences in how that K-12 amount would be spent in the Republican budget versus the Governor’s budget.  Second, they offered to take their $200 million in tax cuts off the table.  This could qualify as a “serious and honest compromise”, except that what the GOP wanted in return was the Governor to take $1.8 billion in new spending off of the table.  If that qualifies as “serious and honest compromise” to you, then I openly offer that deal to anyone out there — I will give you $20 as long as you give me $180 in return.

Economy, Legislative Watch, State Legislature, Taxes
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ernie

Leidiger’s E-Mail Torpedo of Not Really the Truth #2

June 23, 2011 by seanolsen 1 Comment

There he goes again. 

Earlier in the week, Rep. Ernie Leidiger released another e-mail detailing his views on the possible state government shutdown.  As has regrettably become the pattern, Leidiger’s e-mail is filled with a number of misstatements and distortions.  Let’s review two of them.

And if that was not enough, he has now rejected one complete budget passed before the end of the regular session and two compromise offers–all three of which fund Minnesota priorities within the existing revenue growth our economy has provided.

Let’s talk about the two “compromise” offers that the GOP has given Gov. Dayton. 

GOP “Compromise” Offer #1:  The GOP would adopt the Governor’s spending targets for K-12 education and public safety, reducing spending in other areas of the budget to make up the $200 million difference.  Dayton would have to give up his $1.8 billion in tax increases and $1.6 billion in additional spending.  Total amount compromised:  GOP $0, Gov. Dayton $1.8 billion.

GOP “Compromise” Offer #2:  The GOP would adopt the Governor’s spending targets for K-12 education and public safety, eliminating tax cuts on corporations to make up the $200 million difference.  Dayton would have to give up his $1.8 billion in tax increases and $1.6 billion in additional spending.  Total amount compromised:  GOP $200 million, Gov. Dayton $1.8 billion.

I’m not sure how anyone would reasonably think that qualifies as a fair compromise.  Would you trade $180 for $20?  Republicans aren’t looking for compromise, they’re demanding capitulation.

Or, in another way to view the level of compromises offered so far:

Both parties have missed the point when talking about who has the “mandate”.  Nobody has a mandate!  The voters have made it very clear what they want for the last 20 years.  No party has controlled the governorship and both houses of the Legislature since 1990.  Voters want the two parties to work together and come to a moderate solution that reflects the best of what they have to offer.

Our proposal totals roughly $34 billion, up from $30 billion in general fund spending. When comparing the spending of general funds only, there is a $4 billion increase from $30 billion in FY 10-11 to $34 billion in FY 12-13. That’s a 12% increase in general fund spending.

No, it isn’t.  Leidiger’s $30 billion spending figure doesn’t take into account the K-12 education shift and federal stimulus dollars that were spent.  In fact, the actual apples-to-apples budget number for FY 10-11 is over $34 billion – meaning that the GOP budget proposal is actually a decrease in state spending, not an increase.  Don’t believe me?  The independent folks at PoliGraph have been calling this GOP talking point “misleading” for two months now.

We’re never going to get to a budget solution when folks can’t even talk about the numbers in a straightforward fashion.  We deserve better from Rep. Leidiger and everyone else in St. Paul.  Get to work, do your jobs, and give us that real world, moderate solution that reflects our Minnesota values.

Economy, Legislative Watch, State Legislature, Taxes
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34Ortman

Ortman and conservatives: hopelessly devoted to protecting corporations, not people

June 22, 2011 by seanolsen 2 Comments

We’ve talked a lot over recent months about how conservative politicians have worked hard to tip the economic scales in favor of the wealthy and corporations through the budget process. 

What we haven’t focused on as much are the myriad of efforts conservatives are taking to make it practically impossible for individuals to hold corporations accountable via the legal system from product liability, fraud, employment discrimination, and any number of other issues.

Earlier this week, the U.S. Supreme Court handed down its decision in Walmart v. Dukes, what could well prove to be a landmark class action sexual discrimination case.  Filed in 2000, the case had yet to be heard on its merits, as a fierce legal battle had ensued over whether or not it was a valid class action lawsuit.

Here’s some quick background on the case:  The plaintiffs allege that there has been a history of sexual discrimination at Walmart stores going back over decades, impacting as much as 1.5 million women.  Some of the evidence amassed by the plaintiffs (and uncontested by Walmart) shows that while 72% of Walmart’s employees are women, only 33% of the managers are.  Walmart’s top 20 competitors, on the other hand, have a management workforce that is 56% women.  There are also allegations of lower pay for women in the same job with the same experience.  In legal terms, the plaintiffs were pursuing what is known as a “pattern and practice” case — that is to say, while it is difficult to prove individual cases of discrimination, the fact that the results Walmart achieved were significantly different from their overall workforce and the workforce at their competitors could only be explained by discrimination (even if unintentional).

Walmart, on the other hand, argued that the lawsuit could not be pursued as a class action lawsuit.  This was based on the fact that the company has an anti-discrimination policy and gives significant discretion to individual store managers to make hiring decisions.  Any instances of discrimination, the company argued, therefore had to be pursued on an individual employee versus individual store basis.

The thorny legal question in the case, which was decided on a 5-4 basis, dealt with whether or not the plaintiffs should be allowed to pursue their “pattern and practice” case.  The majority ruled in Walmart’s favor, ruling that the company’s argument about the decentralized hiring practices and anti-discrimination policy was persuasive and that women would either need to sue as individuals or in a smaller class-action lawsuit.  The Court’s decision overturns the finding of every lower federal court that heard the case.

This follows an earlier decision in the term, AT&T v Conception, where again the court ruled on a 5-4 basis that customers of AT&T had to pursue individual claims against the company over an erroneous $30 charge. 

The reason we allow class-action lawsuits is to make the legal process work more smoothly — if all 1.5 million (or even a substantial portion of them) were to pursue their claims individually, we would have courts tied up from coast to coast litigating these claims. 

It also prevents companies from engaging in the sort of large-scale but small dollar fraud accused in the AT&T case.  Few people are going to retain a lawyer and go to court to get their $30 back, but few would argue that any company should be able to get away scot-free from collecting $30 each from thousands of their customers that they aren’t entitled to.

Yet, it’s exactly these sorts of protections that conservatives — both in the Supreme Court and in legislatures across the country — are trying to destroy.  Here in Minnesota, State Senator Julianne Ortman (R-Chanhassen) has been at the forefront of the conservative judicial “reform” process.  This legislative session, Ortman introduced four bills designed to rectify problems perceived in the state’s legal system.

Three of the bills are relatively innocuous.  Two of them,  S.F. 506 (increasing the dollar limit on conciliation court) and S.F. 530 (changing how the interest rate on awards and judgments is calculated) are generally good reforms.  The third bill, S.F. 373, decreases the statute of limitations on several classes of legal action from six years to four years.  While I oppose such a move, it can at least be somewhat justified by pointing out that Minnesota tends to have longer statute of limitations than the national average.

The fourth bill, however, attempts to enshrine the sort of legal doctrine regarding lawsuits espoused by the Supreme Court into Minnesota law.  S.F. 149 would require anyone involved in certain types of lawsuits  to prove on an individual basis that they were harmed by the alleged behavior of the company being sued.  It’s going to significantly raise the bar for any plaintiff who is impacted — effectively reducing any class action to a series of individual claims.

Notable about all four of these bills is that they are all designed to make it more difficult to bring legal actions against corporations.  Ortman and other conservative groups claim that there is a problem with litigious individuals pursuing many frivolous lawsuits.  But is there really a problem that’s being solved here?  The data says no.

The number of civil lawsuits nationwide has been declining sharply over recent years.  In their last study, the U.S. Bureau of Justice Statistics found that the number of civil lawsuits had declined by 50% from 1992 to 2005.

There aren’t many comprehensive state records available to analyze lawsuit trends in the state, but we can reasonably rely on national studies that have looked at this issue.  A national study in 2004 showed that the total number of lawsuits filed by corporations outnumber lawsuits filed by individuals by a ratio of 4:1.  When you consider the fact that individuals out number corporations by about a 40:1 ratio, it means that a corporation is about 160 times more likely to initiate a lawsuit than an individual.

And just because a corporation initiates the lawsuit doesn’t mean that it’s any less frivolous or wasteful of the court’s time.  The same study found that corporations were sanctioned by the court 70% more often than plaintiffs in tort cases for bringing frivolous suits or motions.

So what is really being accomplished here?  It’s clear that these efforts aren’t about making common-sense reforms to fight frivolous lawsuits — rather, this is an extension of corporation-first, people-last policies that the GOP has committed itself to in recent years.  When it comes to corporations, the GOP wants to cut their taxes, remove their regulations, and make them immune from lawsuits.  It’s a love affair that seemingly knows no bounds.  If only someone was looking out for you or me with that kind of devotion…

(A summarized version of this post will be appearing at mn2020hindsight.org)

Legislative Watch, MN2020, National
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GOP Spin and Facts, Top Marginal Tax Rates edition

June 21, 2011 by seanolsen 1 Comment

GOP SPIN:  Cutting the top marginal tax rate always leads to improved economic conditions for everyone!

FACTS:  That spin isn’t remotely close to being true.  If you haven’t been convinced by other articles on this topic, take a look at this historical analysis from the Center for American Progress.

 

Our current top federal individual tax rate (35%) has actually produced the worst economic growth since 1950.  Every time the tax rate has been higher than it is today, economic growth has been more robust.  Republican rhetoric on this issue is not backed by the facts.

Building a strong economy is about much, much more than just tax rates.  It’s also about making sure that we’re investing in critical priorities that serve as the foundation for private sector success.

Economy, National, Taxes
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La Quebrada closed

June 17, 2011 by seanolsen 1 Comment

Commenter Kristine alerted me to the fact that La Quebrada appears to be closed.  Calls to their phone number come back as disconnected.

Looks like the restaurant wasn’t able to overcome its rough start.  Let’s hope we can get something new in its place soon.

What would you like to see take the place of La Quebrada?  Leave your comments and let’s have some discussion!

Chaska, Downtown Issues, Restaurants
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Updated Budget Compromise Meter

June 16, 2011 by seanolsen 1 Comment

GOP legislative leaders unveiled a new budget proposal today.  The budget proposal is a slight update from what they had offered a couple of weeks ago, when they agreed to increased spending targets in K-12 education and public safety in exchange for offsetting cuts in other areas of the budget.  Now, the GOP would pay for the increased spending by eliminating some of the tax cuts in their proposal.  The GOP spending target of $34 billion is unchanged by their proposal.

Based on this new proposal, let’s look at the Budget Compromise Meter.

You’ll notice, of course, that the line is unchanged.  The GOP proposal –once again — reflects no compromise.  It’s just a continuation of their ongoing shell game.

Schools, State Legislature, Taxes
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Summer Bash at McKnight Park tonight

June 16, 2011 by seanolsen 0 Comments

Senate District 34 DFL is holding its annual Summer Bash fundraiser tonight.

The event is from 5-8 p.m. at McKnight Park in Chaska (on Pioneer Trail just west of MN-41, near Jonathan Elementary School).

Burritos and all the fixins, dessert, and beverages will be available.  There will be live music and a silent auction, too.

$10 per person, $25 for a family — bring your union card and receive a $2 discount.

Carver County, Chaska
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k12 funding

One graph that explains it all

June 16, 2011 by seanolsen 0 Comments

It’s not always easy to explain the trends in the state budget and make it easily understandable.  As an absolute number, spending has been increasing in the state over the last decade.  Republicans play up that number — spending is out of control! — without providing the context.

What they don’t tell you is that the rate of spending hasn’t been increasing as fast as inflation and population growth — meaning that in fact, areas of state government are truly spending less today than they did before.  Overall, in fact, state government is spending nearly $900 per person less today than it did in 2002.  That’s why you’re seeing fewer government services AND higher property tax bills.

A graph of the trends in K-12 funding since 2003 (from Minnesota 2020) shows this rather clearly.

Inflation-adjusted per-pupil state spending on K-12 education has dropped 13.9% over the last eight years (the blue line on the graph).

The green line on the graph shows how local school districts have responded to the problem — by raising property tax levies to try to cover the shortfall.  In fact, local school district levies have increased 56.3% over that same time period.

The red line shows the net impact — in total, despite the local property tax increases, we’re spending 4% less per pupil today than we did in 2003.

This trend, sadly, is repeated all across our state government.  Cuts to higher education have led to tuition at our public colleges and universities that has doubled over the last decade (in absolute terms and increased by over 60% when adjusted for inflation).  Failure to fund transportation has caused our roads to decay and we’ve lagged the country in job growth, wage growth, and many other metrics.

Minnesota’s strong economic performance over the last three decades didn’t happen by accident.  We’re not guaranteed to stay there going forward.  We can’t assume that we can blithely cut away at the cornerstones of our success — education and infrastructure — and pretend that we’re not going feel the pain.  Republicans want us to abandon the principles that have made our state successful. 

We’ve spent the last decade playing the no new taxes/disinvestment game and the results are clear:  it hasn’t worked.

Let’s restore the principles that made our state so successful for so long.  That starts with a balanced solution to our current budget stalemate, including some new revenues to protect critical priorities.

Economy, Schools, State Legislature, Taxes, Transportation
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Photo courtesy Shutterstock

How do we get to a deal?

June 15, 2011 by seanolsen 3 Comments

The regular session of the Minnesota Legislature has been over for three weeks, and we’re no closer to a budget deal today than we were then.  Neither side has made any significant move over that time, and the state government shutdown looms two and one-half weeks away. (Keep in mind, though, that Governor Mark Dayton has already made significant compromise up to this point.)

Republican legislative leaders are holding fast to their strategy of making one budget offer and then hoping that Governor Dayton will blink at the last second to avert the shutdown.  Given the polling that shows strong public support for the Governor’s position and the sharp differences in values expressed in the two parties’ respective budget proposals, that’s a strategy that seems doomed for failure.

So, how do we get to a negotiated settlement that doesn’t gore anyone’s ox too badly?  Governor Dayton isn’t going to sign a bill that lacks new revenue, while Republicans ardently seek to avoid tax increases. 

Irreconcilable?  Maybe. 

There are some possibilities that could thread the needle and be politically palatable in this environment.  Let’s look at them (in declining order of probability — and please note that inclusion in the list does not imply my endorsement of these measures):

Gambling:  Various proposals have been floated over the years — the racino (slot machines at Canterbury Park and Running Aces), casinos at Block E or the Mall of America, and allowing slot machines in bars.  Public support is strong for such proposals, but legislative support is lukewarm.  Many legislators have moral issues with an expansion of gambling, while other legislators are concerned with potential damage to American Indian communities.  Potential revenue:  $300 million to $1.2 billion for the biennium, depending on the proposal.

Liquor/Cigarette Taxes:  Always a convenient option for governments looking to bring in additional revenue, some have advocated increasing the taxes on these items (again).  You may have to come up with some clever Pawlentyeque nomenclature for it (like the last cigarette tax increase was called a “health impact fee”) to help make it fly, though.  Let’s say a two-cent per drink tax increase on alcohol and an additional 25 cents per pack on cigarettes to keep it somewhat modest.  Potential revenue:  $190 million for the biennium.

Temporary Tax Surcharges:  Instead of making the income tax portion of Governor Dayton’s budget proposal permanent, make it temporary — applying to the next biennium only.  The main portion of the Dayton tax plan includes an increased income tax rate for single filers with adjusted gross incomes of $150,000 or higher and couples with AGIs of $250,000 or higher, or the top 2% of Minnesota taxpayers.  Potential revenue:  $1.8 billion for the next biennium.

Sales Tax Expansion/Reform:  Sales tax expansion and reform is one of those things that is frequently talked about, but nothing ever seems to happen.  Including such a proposal in the current budget would be problematic given the lack of legislative hearings for such a significant change, but let’s check out a possible scenario.  Currently, all services and many classes of goods are exempted from the state sales tax.  We could begin taxing services and remove many of the exemptions, lower the overall rate and still raise more revenue for the state.  For instance, expanding the sales tax to business and consumer-purchased services (excluding legal and medical services) and removing exceptions for all goods except food, clothing, medical products including prescriptions and eyeglasses, and fuel while lowering the base sales tax rate from 6.5% to 4.5% would raise about $1.1 billion over the next biennium (based on numbers from the Coalition of Greater Minnesota Cities).  Since the sales tax is highly regressive, let’s give half of that amount back in income tax reductions, primarily to the bottom half of the income distribution.  Potential revenue:  $550 million for the biennium.

How does it end?  My guess is that we’ll see a form of gambling passed (racino seems like the most likely) along with a pared-down temporary income tax surcharge (top 1% or millionaires) designed to get us to a total budget of about $35 billion.  Unfortunately, it doesn’t seem like that will happen until we’ve gone through the pain of a government shutdown.  And, we’ll get to fight the budget battle all over again in two years because our leaders will have (again) done nothing to put this state on a more stable financial course.

 (photo courtesy Shutterstock)

Economy, Legislative Watch, State Legislature, Taxes
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