Lori Sturdevant’s column purports to show the error in Rep. Emmer’s budget thinking. Instead, what it does is it exposes the flaw in the DFL’s thinking. This section is important in understanding the differences between Rep. Emmer’s thinking and Sen. Dayton’s thinking:

Add the federal money and the school IOU totals to 2010-11 general fund spending, and the sum is $34.6 billion. That’s $1.7 billion, or 5 percent, more than the expected state tax receipts in 2012-13.

So $1.7 billion is the real deficit? I asked Marx.

Not quite, he said. State budget forecasts project the cost of current state programs tomorrow. Since 2002, cost-of-living inflation has been excluded from the projections. (That bit of lawmaking legerdemain could be another chapter in my book.)

Herein lies the DFL’s flawed thinking. In their mind, anything that’s been appropriated once should be forever considered necessary to fund. There isn’t a business in the world that could survive that type of thinking.

When businesses experience a downturn in revenue, they adjust their budgeting or they’re soon bankrupt. Since businesses prefer making profits, they’re often faced with a decision: do they adjust priorities, reduce or eliminate spending on non-essential items or do they just higher prices from their customers and hope that customers are willing to pay more for their products.

The difference is that, with government, they aren’t often presented with this decision since their charging higher prices isn’t a matter of convincing ‘customers’ to pay higher prices. Theoretically, governments can pass tax increases which are passed onto We The People. These tax increases aren’t voluntary. They’re mandatory because they have the force of law behind them.

Rep. Emmer thinks that there’s too much replication in government. He often talks about the permitting process, where a farmer who wants to expand his operations could theoretically go before 5 different agencies, each in a different department of the government, each with the ability to squash the farmer’s expansion plans.

Sen. Dayton’s budget is built on the premise that the permitting process shouldn’t be changed and that no other budget line items should be changed. That’s foolish thinking because there’s too much replication within government. That’s before asking whether all the budget items are necessities. I’m willing to be that they aren’t. In fact, I’m willing to bet there’s alot of money sent to political allies that could be eliminated without Minnesota’s taxpayers never noticing the difference in quality of life or in the delivery of important services.

In Rep. Emmer’s Minnesota, each agency and each department would start their budget from scratch each 4 years. Instead of guaranteeing each department and each agency the same amount of money plus a little for inflation, departments and agencies would have to explain why their funding levels need to stay the same or be increased.

They’d have to prove that each item is a necessity and that spending that money would improve the lives of Minnesotans. Departments would have to prove that there isn’t a better, less expensive way of delivering their services. Knowing that they’d have to justify every penny of their spending alone would likely change departments’ budgeting habits.

I find it impossible to think that eliminating the replications found in the permitting processes wouldn’t dramatically change what’s needed to be spent. I refuse to think that there aren’t health care reforms that wouldn’t save hundreds of millions of dollars in the state budget.

Politically speaking, Sen. Dayton and Mr. Horner are sitting on a powderkeg. They keep criticizing Rep. Emmer for not having shown his plan to redesign government. He’s entrusted much of that assignment to Annette Meeks.

When Annette Meeks finishes the project and the plan is unveiled, there will be alot of complaining from special interests who won’t like the fact that their racket is getting eliminated. Sen. Dayton will certainly complain, partly because he’s still thinking in terms of funding a 1980s form of government.

This is the 21st century. It’s time we took better advantage of technology to make the cost of government less expensive. It’s time we did a better job of setting sensible spending priorities rather than looking at taxpayers as the politicians’ ATM’s.

Counting all of those things is what brought Minnesota Management and Budget to a $5.8 billion deficit in 2012-13, Marx said. A candidate who says otherwise is “being subjective,” he said. (Marx is a master of diplomacy as well as state finances.)

Actually, I’d describe Marx as a disciple of the status quo. I’d agree that the $5.8 billion number is accurate if you didn’t think that any of this biennium’s spending was wasteful spending. I agree that the $5.8 billion number is accurate if I was convinced that there weren’t less expensive ways of delivering services.

That’s before asking how much money would be generated by Polymet hiring 2,000 people to start their mining operation instead of tying them up for a total of 7 years in the permitting process. How much tax revenue isn’t realized when farmers in Clay County expand their hog farming operation in North Dakota instead of Minnesota because of the permitting process? How much tax revenue would be realized if 3M, Marvin Window and other companies expanded in Minnesota instead of other states?

These companies will keep moving elsewhere as long as Minnesota’s government is this cumbersome and businesses are overregulated.

I didn’t see proof that Ms. Sturdevant considered those possibilities in reaching her conclusions. It’s important that, should she venture into the world of public policy again, she should consider those variables more fully.

Streamlining government, eliminating replication and encouraging dynamic economic growth will dramatically change Minnesota’s budget landscape. We can’t afford government harassing businesses. Government should make sure that businesses aren’t polluting but then get out of their way.

Building a dynamic, fundamentally sound economy will cure most of Minnesota’s budget ails. That’s what Sen. Dayton and the DFL hasn’t figured out. They’re so focused on funding government that they aren’t focused on creating a dynamic economy. Yes, they’ll talk about jobs but that isn’t the same as creating a dynamic economy.

In Sen. Dayton’s mind and in the minds of the DFL, a bonding bill is a jobs bill. It isn’t. It’s a debt bill. It’s a stimulus bill designed to give the economy a brief shot in the arm. A dynamic economy creates jobs that are still there a decade later.

It’s time that Ms. Sturdevant, Sen. Dayton and the DFL figured out that there’s a difference between funding the DFL’s special interest allies’ wish lists and building a dynamic economy. It’s time that Ms. Sturdevant, Sen. Dayton and the DFL admitted that funding the DFL’s special interest allies’ wish lists is what’s driving the projected budget deficits. Eliminating the pork and the replications is the best way to eliminate the deficit.

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6 Responses to “Deconstructing Sturdevant’s Argument”

  • walter hanson says:

    Gary:

    The problem is that if you picked up the phone and called Lori
    she wouldn’t understand the concept that government is driving businesses and thus tax revenues to another state. They think that those businesses will want to stay in the state and go through this process.

    Maybe when the so called deficit reaches $10 billion will that wakeup the Democrats.

    Walter Hanson
    Minneapolis, MN

  • Rex Newman says:

    Lori clearly cannot separate actual spending from bookkeeping. There is nothing enforceable about those IOU’s to the school districts, for example. “Oh but we owe the school districts $1.9 billion!” No, the delayed payment schedule can be made permanent or even extended.

    Adjusting for inflation, no doubt using the inflated Government Price Deflater instead of the CPI, is also bookkeeping, not a claim check.

    Assuming what was passed before is binding on future Legislatures or Governors is more bookkeeping, not at all reality. Of course, we can always INCREASE it later, like GAMC.

    This State ran on $30.7 billion this biennium and in this (so far) period of low inflation, $32.4 billion will be enough in the next, especially if Emmer can get the DFL to help trim the branches.

  • Gary, you’ve chosen to ignore Tom Emmer’s own words. Emmer has claimed in multiple debates that we would not have a deficit if we simply held spending steady. That is not true.

    http://mnpublius.com/post/1014235402/some-much-needed-context-for-tom-emmers-budget-claims

    It’s quite likely that there ARE some savings to be found through reform — although Emmer won’t say what “reforms” he wants to consider. But Sturdevant is writing about Emmer’s claim that there is no deficit. His claim is demonstrably false.

  • Gary Gross says:

    That isn’t what Tom said. Tom said that revenues will grow by 7 percent. That means that we wouldn’t have a deficit if we told gov’t not to grow by less than 7 percent.

    I’m objecting to the fact that Sturdevant didn’t tell the total picture. She didn’t talk about how much more money was projected to come in. She didn’t talk about how much more business friendly Minnesota would become if we streamlined the permitting process. She certainly didn’t talk about how Mark Dayton’s budget numbers don’t come close to producing a balanced budget.

  • Rex Newman says:

    “Emmer has claimed in multiple debates that we would not have a deficit if we simply held spending steady. That is not true.”

    Absolutely this is true, calculated many times. Adjusting for CPI and population doesn’t even double spending every 20 years, but spending has been more than tripling every 20 years.

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