Making tradeoffs: Plan C versus Plan D


Since I rolled out my “Plan C” budget yesterday, one of the main threads I’ve gotten in terms of comments (from John Brunette in the comments and from others via e-mail) has been from folks asking about the spending, and is it necessary to increase spending by that much?

So I went back to the numbers and came up with a budget that was tighter on spending, while still paying back a sizable chunk of the remaining K-12 school shift — as that has been a key Republican criticism of the Dayton budget.  Below is a chart detailing what I came up with — “Plan D”, if you will.  Included is a $275 million payback of the shift (1/4 of the remaining amount, what I would consider the minimum level to be considered “sizable”), and basically holding every other area of the budget flat.  Holding those departments flat essentially functions as about a 2% budget cut, since inflation is not factored into baseline spending forecasts by state law.

Plan D Spending

Adding that spending means there’s a $1.372 billion deficit to make up.  From a revenue perspective, then, I removed all B2B sales taxes and reduced the amount of income tax relief by $80 million.

Plan D Taxes

In some respects, Plan D is preferable to Plan C.  Removing the business sales taxes while maintaining 87% of the income tax cut makes the overall tax package in Plan D more progressive.

Here are some of the things that may well be lost by making these choices, though.

  • Optional all-day kindergarten
  • Additional funding for special education and early childhood programs
  • Wider availability of state college tuition grants, at a time when public university tuition has doubled in the last decade
  • Programs to expand apprenticeships and internships for MnSCU students
  • Improved aquatic invasive species management
  • Up to 270 employees in the Department of Corrections
  • Expanded care options for high-needs children on state health care plans
  • Increased funding for investment and job creation funds

And there are other things that just go unaddressed, like the basic K-12 education formula lagging inflation or funding MnSCU and the University of Minnesota at late-1990s levels despite the fact that those two systems serve over 50,000 more students than they did 15 years ago.

It’s easy to just wave one’s hand away at these issues and criticize proposals that make the hard choices.  Nothing is easier than saying you’re opposed to new taxes.  Those who feel that taxes should not be raised, then, have a duty to tell us what they would do instead.  Minnesota Republicans say that taxes shouldn’t be raised and the school shift repaid.  That means they favor making at least $1.372 billion in cuts from the current forecasted spending.  It’s time for them to avoid the easy way out, step to the plate, and name those cuts.


3 Responses to “Making tradeoffs: Plan C versus Plan D”

  1. Cut 5% of spending across the board for each department. Squeeze every agency and make them do their jobs more efficiently. No need for tax increases. No deficit. School shift repaid. There is easily 5% waste through inefficiency. Every company I’ve worked has gone through this at one point or another. Our time is now. We’ve been through four of the lousiest economic years, and came out with a surplus by descreasing spending increases. Now it’s time to go a little further. Last sessions “cuts” were called draconian, and yet look where we are today. Government services are still getting the job done. Only now we have a surplus. Cut it some more. The state needs to be more frugal with our money. Squeeze. If you give an agency less money, they won’t find ways to spend it. The current model finds them spending every dime so they can justify more next year. That’s a terrible model for tax payers. Don’t waste our money so you can have a bigger budget for your department. Provide incentives for managers who reduce costs, and punish those who can’t come up with 5% cost reductions. Make them want to make it happen, and it will. It works everytime it’s tried in the real world.

  2. Look at it this way: The deficit is about $1.1 billion and the 4th tier income tax raises you about $1.1 billion, so as long as you have that there you’ve covered the forecast deficit (which is technically all the Legislature needs to do to satisfy the constitution). Any spending you want beyond that has to equal out with spending cuts and/or higher taxes. Simple as that.

    • But you don’t even need the 4th bracket. We already pay more than enough in taxes. We had a 6 billion dollar projected deficit last time, and we closed that by being fiscally responsible. When you stop looking to government as the answer to everything under the sun, it’s rather easy to find a way for it to be efficient and provide the services we need. It’s our money. Stop wasting it.

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