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Let’s play Fantasy Governor’s Race

Minnesota’s governor’s race is under way. Instead of attack ads and oversimplification, what if one, or more, of the candidates would talk with Minnesotans about the good news and the bad news of his proposed administration? I’d like to hear from our next governor what improvements he could make to the following good news/bad news scenario.

I. The Good News: If I’m elected governor, I’ll work with the Legislature, citizens, business and nonprofit leaders, local governments and state employees to produce the following dozen results:

1. No Minnesotan will ever again be bankrupted by a health-care crisis, we won’t need a government-run single-payer plan to accomplish that, and we’ll get started at getting health-care costs under control while improving health-care quality, making Minnesota a model to the nation on health care. The Obama administration will be very interested in creative state approaches, and Minnesota is well positioned to take advantage of that.

2. Fewer seniors will end up in nursing homes and more will stay longer in their own homes. Fewer disabled Minnesotans will be institutionalized and more will live with care-giving families. This will mean better quality of life for these vulnerable Minnesotans and lower costs for taxpayers than will occur if present practices continue.

3. No Minnesota homeowner will ever again have to pay a dime in property taxes to fund the schools, except for building projects. School districts will use a state-equalized, local income tax when they need more money for operations, which will be a lot less often than it is today because the state will cover more of school operating costs.

4. School boards won’t have to ask voters for permission to fund school operations. Like other local leaders, they’ll be accountable to voters at the next election.

5. School boards will focus on education, with back-office operations centrally administered instead of duplicated 300+ times over, saving millions of dollars.

6. Minnesota will invest more in early childhood development, research at the University of Minnesota, and lifelong learning; improve its already excellent performance in K-12 and post-secondary education; and provide for high speed Internet access in communities across the state.

7. Minnesota’s water and habitat quality will improve through taxing and regulating activities that degrade them, and encouraging future development in cities by taxing development outside cities more heavily than within them.

8. Minnesota will lead in development of the green economy by cutting the gas tax, repealing the utility personal property tax, and replacing the revenue from those sources with a carbon tax. This will encourage development of alternative fuels, help prod the federal government to develop a rational energy policy, and save scarce budget dollars by ending all ethanol subsidies, all without increasing Minnesotans’ taxes paid for energy.

9. Transportation will be funded by the gas, carbon and property taxes, and there will be no need for local or regional sales taxes. Transportation infrastructure should not be built unless it increases property values, and there will be capacity in the property tax because the state will fund education and human services costs now funded by the property tax.

10. We will hit the reset button on business taxation and economic development with this four-pronged approach. First, stop discriminating against businesses. Second, stop penalizing production in Minnesota. Third, show tough love to businesses by improving the corporate income tax and enacting a new business activities tax to enable major cuts in business property and sales taxes, shifting business tax burden from producing in Minnesota to exploiting the Minnesota market and forcing businesses selling into Minnesota from out of state to pay the same fair share of taxes for that opportunity as in- state businesses pay. Fourth, tap into the innovative genius of Minnesota’s business leaders by providing corporate income tax credits for investments in economic development in Minnesota and in nonprofit social entrepreneurship to help solve social problems and make governmental service delivery more efficient.

11. No Minnesotan will ever again pay a sales tax as high as the current state rate of 6.875 percent on anything he or she buys, except for products that are unhealthy or pollute the water or air, and all local sales taxes and the special state property tax on vacation homes, which drives many families to sell their family cabins, will be repealed.

12. The cost of administering Minnesota’s tax system will be cut by over $100 million per year through redesign to make it more fair, efficient, reliable, understandable, efficient, environment-friendly, and competitive, in structure and in operation. The largest savings will come from changing the property tax from a value base to an area base, along with largely exempting farm and undeveloped land from the property tax, and taxing farming and sales of undeveloped land in other ways better correlated with ability to pay. This would virtually end property tax disputes and greatly simplify property tax administration.

II. The Bad News: The budget problem is so big that solving it will require some tough decisions and a little bit of sacrifice.

While I will lead Minnesota governments to more efficient service delivery, that will take more time than is available to solve the budget problem. Solving the budget problem will require tough decisions and some sacrifice on three fronts.

First, we’ll have to stop funding some activities. Which ones they will be will be negotiated by me and the Legislature, after public input on what our priorities should be. We will take a serious look at how state agencies operate. We’ll find some savings by focusing on the outcomes they achieve instead of the activities they undertake. This same approach — outcome based budgeting — will make both state and local governments more efficient in the long run and help legislators and governors make better budget decisions.

Second, we’ll have to increase some state taxes. We can get more revenue from out-of-state businesses selling into Minnesota, but we’ll also need more from the income and sales taxes. I’ll ask the Legislature to require the rich to pay a greater share of Minnesota’s taxes than they now do, but everyone will have to pay a little bit more, and the increases won’t be extreme for anyone. On the sales tax, we will cut the rate to 5 percent or less, but we will tax more of the goods and services that people buy.

Tempering this bad news, I’ll ask the Legislature to write future tax cuts into law to take effect as the budget deficit disappears, Minnesota governments become more efficient and the economy grows. And, while taxes will increase a bit, they won’t go as high as they used to be — due to tax cuts and our tax system exempting from tax an ever greater share of economic activity, we are paying considerably less in taxes as a percentage of our incomes today than we did for most of the past 20 years.

Third, if local government officials and citizens choose to keep going along as they have, then property taxes will go up, because Minnesotans collectively (through our state taxes) can’t afford to keep subsidizing local governments in doing the same old things in the same old ways and keep property taxes down at the below national average levels where they long have been and still are. But I’ll make sure there are many opportunities to operate more efficiently, so property tax increases can be minimized if local citizens and governments are willing to change. With the state paying for more of school and human services costs, what property taxes pay for will be much clearer to all Minnesotans, and so will the opportunities for doing things differently to keep those taxes down.

I will enlist interested citizens and local government officials in persuading their legislators to make more efficient Minnesota government possible by making changes of two types. First, an enormous amount of money can be saved in the future by having local governments contract for services to be delivered by third parties — other governments, nonprofits, or businesses — instead of producing them with their own employees. Second, additional savings can come from local government mergers.

Some changes I’ll ask the legislature to require — like streamlining our human services delivery system so that we no longer have 84 delivery systems for our 87 counties, and no longer electing county sheriffs, so that local governments can consolidate law enforcement agencies as they deem appropriate. But most changes will be local option — Minnesotans and their local government leaders can decide.

We can keep doing things as we have been and pay higher property taxes, or we can choose to change how things are done, and save on property taxes. While this is part of the bad news in that citizens must choose either to pay higher property taxes to maintain the status quo, or take some time to help their leaders decide what to change, it is also a big opportunity for Minnesotans. Evolutions and revolutions in transportation, communications and the economy since Minnesota’s approaches to government were established have been so extreme that no person in his or her right mind would put in place the governmental structures and practices we now have.

Minnesota does not need 87 counties, 300+ school districts, 800+ cities, and 1,500+ towns all pretty much doing their own thing through their own employees, or one Metropolitan Council dealing with only seven of the 17 counties that now are economically part of the Twin Cities Metro Area. Counties, school districts, cities and towns can all survive and still minimize operating costs by operating more smartly, or citizens can choose to combine with adjoining entities to save even more money. There is no one right place to come out, but it would be wrong to just continue the status quo. So the bad news of choosing between higher property taxes to maintain the status quo or paying some attention to local governments to decide what to change comes with the potential for the latter approach to make positive long term change — a lot more value for the public spending dollar at the local level, where most of the public dollars, even those raised by the state, are spent.

***

Is this really a fantasy? It doesn’t have to be. I’m no genius, and I don’t know all that many people, but I either can myself or know people who can design every change needed to make it reality, with the exception of health-care system redesign. On that, I only know enough to have strong reason for confidence that the leaders of Minnesota’s health-care community can work with legislators, the governor and the Obama administration to ensure that no Minnesotan ever again is bankrupted by a health care crisis.

Following this course would produce a jobs and economic development bonanza for Minnesota, while better preserving our beloved waters and more efficiently meeting our public service needs than what the gubernatorial candidates have proposed to date. Moreover, it would engage all interested Minnesotans in creating a better future for us all. Messrs. Dayton, Emmer and Horner, what’s not to like about this?

John James practices law and became interested in public policy while Minnesota Commissioner of Revenue from 1987-90. He believes that none of the gubernatorial candidates has proposed a workable long term budget solution or is thinking big enough.

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Comments (2)

  1. Submitted by Aaron Pearson on 09/27/2010 - 10:06 am.

    While I could argue some of the details, I love this big thinking, thank you!

  2. Submitted by Thomas Swift on 09/27/2010 - 11:39 am.

    With all due respect, the title completely misrepresents this commentary.

    The author is playing “fantasy legislature”, no matter who wins the Governor’s race.

    He’s also playing “fantasy public school system” and “fantasy taxation” which “fantasy politicians” will not misuse for their own real life political purposes.

    He’s counting on a fantasy “green economy” which depends on a fantasy “carbon tax” which has no deleterious effect on his fantasy “capitalism” to boot.

    Other than that, it’s a great bit of whimsical writing.

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