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Bluestem Prairie on Ernie Leidiger’s spending flip-flops and the future

July 29, 2011 by seanolsen 1 Comment

Sally Jo Sorensen at Bluestem Prairie beats me to the punch and points out some telling quotes from Ernie Leidiger in the Chaska Herald/Chanhassen Villager’s recap of the legislative session.

The particular quote that raises eyebrows:

In the aftermath, Leidiger claimed in an e-mail to the newspaper that he and 15 other conservative GOP House members indeed planned to vote against the budget bills until Republican leaders promised them a conservative slant on next session’s agenda.

“The conservatives stayed together and were assured conservative policies would prevail in the future,” he said.

One wonders what Speaker Kurt Zellers and Leidiger have in mind that would be more conservative than the agenda Republicans pursued this session.

 

Legislative Watch, State Legislature
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spin

Spin and Facts: “Out of Control” State Spending Edition

July 28, 2011 by seanolsen 0 Comments

With the legislative session over until January, we will be subjected to months of politicians trying to spin their various storylines leading into what figures to be a contentious session and election year.  Let’s look at one of the primary spin lines you’ll be hearing a lot over the next few months.

SPIN:  State spending is out of control and damaging to our economy!

This is a favorite line of Republican legislators, including our own in Carver County.  For instance, you can find the graphic below on the webpage of State Senator Julianne Ortman:

But does such a claim really hold up to scrutiny?

FACTS:  The answer, of course, is no — the facts don’t back up these assertions at all.  Let’s start off at a macro level, looking at total state and local tax revenues as a percentage of income — this is referred to the by Minnesota Management and Budget as the “price of government” (POG).  In 1991, at the start of the Carlson administration, these revenues totaled 17.4% of personal income in the state.  In 2010, the price of government was 15.3%.

As you can see from the graph, there has been a noticeable downward trend in the price of government.  In fact the average POG over the last decade (15.5%) is nearly two points lower than it was in the 1990s (17.3%).  That’s resulted in a savings of $34 billion over that time — the area in red on the graph below.

So, state and local government is clearly shrunken from where it was a decade ago.  If you believe Sen. Ortman and her cohorts, this should lead to improved economic performance. Has that panned out?

Well, if you live in Minnesota, you know that isn’t true.  Since 2002, Minnesota has experienced poor economic performance compared to the rest of the country.  We’re 39th in job creation and have below national average performance in wage and wealth growth over that time.

Mark this down as more evidence that there’s more to a strong economy than merely tax rates.  There’s a lot of proof that shows that investing in critical priorities like education does far more than merely cutting taxes when it comes to creating jobs.

Economy, Legislative Watch, Schools, State Legislature, Taxes
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Greenwald: An un-American response to the Oslo attack

July 28, 2011 by seanolsen 0 Comments

What’s most striking, and ironic, is that the Norwegian response to the Oslo attack is so glaringly un-American even though its core premise — a brave refusal to sacrifice liberty and transparency in the name of fear and security — was once the political value Americans boasted of exhibiting most.  What we now have instead is the instinctive exploitation by political elites of every threat — real and imagined — as a means of eroding liberties, privacy and openness, based in part on fear and in part on an opportunistic desire for greater power.

Read more at:  Salon.com

National
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The Town, Washington Post Director’s Cut edition

July 27, 2011 by seanolsen 1 Comment

Yesterday, Speaker of the House John Boehner had a meeting with his caucus in order to rally support for his plan to resolve the debt ceiling crisis.  As part of the meeting, House Majority Whip Kevin McCarthy showed the group a clip from the movie The Town to fire up the troops.  Here’s how the Washington Post recounted the critical part of the scene:

One character asks his friend: “I need your help. I can’t tell you what it is. You can never ask me about it later.”

“Whose car are we gonna take,” the character says.

And here’s the scene itself from the movie:

Did you catch it?  The Post left out the last line of the dialogue from Ben Affleck’s character:  ”And we’re going to hurt some people.”  No ellipsis to indicate a line was left out.  Why would the Post not give the full dialogue?  Is the Post supposed to be in the business of covering up for politicians?

How did the gathered Republicans react to the clip?

After showing the clip, Rep. Allen West (R-Fla.), one of the most outspoken critics of leadership among the 87 freshmen, stood up to speak, according to GOP aides.

“I’m ready to drive the car,” West replied.

Right off the cliff, no doubt.

[h/t MNPublius]

Economy, National, U.S. House
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car-flying-off-cliff

Republicans driving the car over a cliff

July 25, 2011 by seanolsen 1 Comment

When he was White House Chief of Staff, Rahm Emanuel famously said “Never allow a crisis to go to waste.”  Republicans in Washington D.C. have certainly learned that rule, and learned it well.  So much so that they are in the process of manufacturing a crisis in order to create the opportunity to get reforms they feel are necessary.

Let’s leave aside for the purposes of this post the sheer absurdity of the notion that after having passed a budget that increases the amount of the national debt over the debt ceiling that Congress then has to re-approve spending to that level.  What Congressional Republicans are doing right now is even more reckless than how Minnesota Republicans handled budget negotiations over the last few months.

President Obama has offered significant spending cuts and pared back his tax increases to the bare minimum.  In fact, what President Obama has offered as part of these negotiations is well to the right of Alan Simpson-Erskine Bowles Bipartisan Deficit Commission, the Senate  ”Gang of Six”,  and the Alice Rivlin-Pete Domenici Deficit Commission.

President Obama has offered a plan that is almost 4:1 spending cuts to revenue increases.  The revenue increases consist of eliminating loopholes, subsidies, and deductions — many of which Republicans have supported in the past.  The tax code should not be used to pick winners and losers, but rather to ensure a level playing field and to provide the necessary resources for government to perform its functions.  They would be accompanied by a lowering of rates overall to make the changes generate far less revenue than they otherwise would.  This used to be a core Republican value.

Normal people would jump at such a deal — a chance for real entitlement reform ($650 billion in savings over the next 10 years), real cuts in discretionary spending ($1 trillion over the next 10 years, taking such spending back to pre-WWII levels), and rational tax reform that generates about 20% of the overall solution.

But today’s Republicans aren’t normal.  They are devoted to “no new tax” ideology at any cost.  They are willing to drive the car off the cliff as opposed to forcing their wealthy and corporate patrons — who have benefitted the most over the past decade while the labor market and median incomes for the rest of us have stagnated — to chip in just a little bit more.

If Congressional Republicans can’t come to an agreement on the debt ceiling and the country goes into default, they will effectively raise the taxes of every American through increased interest rates.  Our stock market will feel the impact of lost confidence of investors.  There could even be a run on the banks.  This is not a risk we should even be considering, but Republicans are still — even at this late date — still holding out for complete capitulation from the President.

We shouldn’t also fail to point the rank hypocrisy of many of the Congressional Republicans at the heart of this crisis today.  During the Bush Administration, these same leaders voted seven times to raise the debt ceiling — from $5.95 trillion to $11.315 trillion.  They also voted for policies that destroyed our financial future.  As the New York Times pointed out over the weekend, if you take out the impacts of the recession and only look at policy changes, what happened in the Bush Administration caused far more damage than anything that has happened under President Obama (even extending out the impacts of the Obama policy changes to 2017).  Note that the cost of the Bush tax cuts alone is more than all of the policy changes under President Obama combined.

It’s time to stop the false equivalency.  There is a very real difference between Democrats and Republicans — both in Washington D.C. and in St. Paul.  Democrats aren’t willing to put their partisan goals ahead of the well-being of the American people.  Republicans are seemingly content to “take hostages” — including the American economy — to fulfill their ideological goals.

Compromise isn’t a dirty word.  Compromise isn’t weakness.  Compromise is necessary in a divided government, and it’s time Republicans started getting back to doing the serious work of the people instead of being led around by their special interest groups.

Economy, National, Taxes, U.S. House, U.S. Senate
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The Republican tax increase

July 25, 2011 by seanolsen 0 Comments

Republicans, like State Senator Julianne Ortman, are trumpeting their “victory” in the state budget showdown, stopping Gov. Mark Dayton’s plans to increase taxes on the wealthiest Minnesotans.

What they don’t tell you, though, is how taxes will be increasing on practically all Minnesotans as a result of the budget that they voted for.

Let’s take a look at a couple of provisions that will touch you or your friends and neighbors.

The Market Value Homestead Credit is eliminated as a part of the Republican budget.  This credit program, instituted in 2001, as part of the larger property tax reform passed that year, gives a credit on property taxes of up to $304 on homes with values under $414,000.

Also, the renters property tax credit rate is reduced by 2% as part of the Republican budget.

Together, these two provisions of the Republican budget will result in a tax increase on 90% of Minnesotans — who will see an average increase in their property taxes of 4.5%.

So, when you see that increase hit your property tax bill, be heartened by the fact that the Republican majority stood strong and protected the wealthiest taxpayers in the state from having to pay their fair share of state and local taxes.

Legislative Watch, State Legislature, Taxes
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Chaska facing $400,000 deficit in 2012

July 22, 2011 by seanolsen 0 Comments

The Chaska Herald reported on Monday’s City Council Work Session, at which City Administrator Matt Podhradsky unveiled the updated five-year financial forecast.

The forecast projects a deficit of over $400,ooo for 2012, and higher deficits in the remaining years of the forecast.   On the good news side of the ledger, the projected 2012 deficit is smaller than the 2011 deficit of $650,000 which was closed using a tax rate increase and deferrals of equipment purchases.  Also, TIF District No. 4 closes in 2014-15, which will free up funding for the Street Reconstruction Program.

While the 2012 deficit should be relatively easy to resolve, the City is going to have to get serious about addressing the long-term structural issues in the budget, as I pointed out when the 2011 budget was finalized.  You can’t put off equipment purchases forever, and there is substantial activity ahead — whether it’s the Downtown Master Plan, renovation of Athletic Park, and the maintenance required at the Chaska Community Center (such as the planned replacement of the ice making systems). 

While the City has been quite successful in obtaining grant money to supplement critical projects, we can’t assume such funding is going to remain available — especially given the fact that the federal and state budgets are going to be crimped for the forseeable future.  And while there are signs that development activity may be beginning to come back to life, we can’t expect a building boom comparable to what we saw in the last decade.

Residents of the City would be well served if the Mayor and Council would make moves to eliminate some of the structural issues in the budget starting in 2012 instead of waiting for more severe measures down the road.

Chaska, City Administrator, City Council, Downtown Issues, Mayor, Taxes
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leidiger cropped

Ernie Leidiger votes against creating 15,000 jobs

July 21, 2011 by seanolsen 2 Comments

One of the conditions Governor Mark Dayton placed on his acceptance of the Republican budget offer was the addition of a bonding bill.  In a bonding bill, the state issues bonds (debt) that is used to build capital projects around the state. 

If you’re going to be issuing debt as a state, bonding for capital projects — infrastructure — is the best possible thing you can do with that debt.  And now, with the economic downturn, is an even better time to invest heavily in infrastructure.  It has the immediate impact of getting people back to work, and it creates lasting projects that can serve as the basis for future growth.  Additionally, you can build infrastructure more cheaply now than you can when times are good.  Why?  Because interest rates are low (so it costs you less to issue the bonds) and there’s a lot of excess capacity in the construction industry (so you can get a good deal on your bids for the projects).

Governor Dayton and the Republican majority agreed on a bonding package of $531 million.  It’s full of great projects, including:

  • $51 million for a new Physics and Nanotechnology building at the University of Minnesota
  • $48.7 million for new science facilities at St. Cloud State University, Metropolitan State University and Mesabi Range Community College
  • $16 million to renovate the Coon Rapids Dam, including construction of an invasive species barrier
  • $50 million for flood mitigation
  • $33 million in local bridge replacement
  • $22.5 million in Twin Cities and greater Minnesota transit

These are projects that are going to have beneficial long-term impacts on our state.  It’s hard to pinpoint the exact number of jobs that will be created by these investments, but using historical rates, a $531 million level of investment will result in about 15,000 new jobs.  15,000 new jobs would shave half a percent off of the state’s current unemployment rate, reducing it to 6%.

Who could be opposed to such a common-sense proposition?  Rep. Ernie Leidiger of Mayer, that’s who.  Leidiger was one of only 16 representatives to vote no on the bonding bill.  Most Republicans, including Chaska’s Rep. Joe Hoppe and Chanhassen’s Sen. Julianne Ortman, recognized the value of this bill and voted in favor of it.

Undoubtedly, Leidiger will cite the issuance of more debt as his rationale for opposing the bill.  But Leidiger — on the same day — voted for over $1.3 billion in debt that is really harmful to Minnesota’s economy.  Leidiger voted for a $700 million shift in K-12 education payments that puts the state IOU to its schools at $2 billion.  Leidiger also voted to issue bonds against future tobacco settlement revenues.  To raise $640 billion in revenue for this biennium, the state is going to have to spend between $800 and $900 million dollars.   These moves are debt of the worst kind — they hurt our schools and create holes in the state budget in future years without providing any of the long-term benefit of the infrastructure projects.

Leidiger’s “no” vote on the bonding bill is a vote against moving Minnesota forward, and is yet another demonstration of his willingness to blindly vote ideology over the real world needs of his constituents.

Economy, Legislative Watch, State Legislature, Transportation
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ernie

Ernie Leidiger learns to love the K-12 school shift

July 20, 2011 by seanolsen 3 Comments

As a candidate last fall, Rep. Ernie Leidiger took a hard stance against the $1.9 billion in K-12 education funding shifts used to balance the 2010-11 state budget:

In less than 24 hours, the House took up its third version of a omnibus K-12 education bill, sent it to conference committee, took it up again and passed it, only to have it rejected by the Senate. In the end, school funding was left virtually unchanged, except for the $1.9 billion Democrats borrowed from schools just to balance the state budget. So now they’ve delayed payments to school districts. They build up the infrastructure yet can’t fund it.

Last night, Rep. Leidiger voted to shift an additional $700 million away from K-12 education to balance the budget, raising the state’s debt to its school districts up to $2 billion dollars.  If this is the Republican notion of “fiscal responsibility”, count me out.

Leidiger voted dutifully along party lines in the special session (except for his vote on the bonding bill — more on that later), after thumping his chest earlier in the week about how he was going not convinced that the additional spending in the bills were necessary.

Legislative Watch, Schools, State Legislature
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specialsession1

Comparisons of the first five budget bills

July 19, 2011 by seanolsen 0 Comments

Details of the first five budget bills for the special session have been released.  These are the bills for Higher Education, Environment, Commerce & Energy, Jobs & Economic Development, Public Safety, and Transportation.  Combined, these areas only make up about 1/7 of the state’s General Fund spending.  What we see in these five bills is total spending levels split about halfway between Gov. Dayton’s March proposal and the bills passed by the GOP majority in May.

Higher education is still taking a pounding even with the budget compromise.  Current funding is $2.811 billion, meaning that there’s about $245 million in spending reductions — all coming directly out of the University of Minnesota ($126 million cut) and MnSCU ($129 million cut).  The only saving grace for higher ed funding is that financial aid programs for students are protected.  Other things of note include Twin Cities transit funding — the GOP had wanted that line item slashed by nearly $100 million to $20 million while Governor Mark Dayton had budgeted $129 million.  The two sides agreed to a figure of $78 million for the next biennium.

Legislative Watch, Schools, State Legislature, Transportation
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