Budget fallout: Moody’s drops Minnesota rating to ‘negative’


The budget fix applied here in Minnesota is already starting to look like a patch on an old inner tube. The Wall Street Journal reports: “Moody’s Investors Service revised its outlook on Minnesota to negative from stable, citing strained state finances and the significant use of nonrecurring measures to help balance the state’s budget. … Moody’s noted the enacted budget, which assumes spending of $35.9 billion over the next two-year period, doesn’t implement any new permanent revenue-raising measures. Instead, it relies largely on nonrecurring measures to solve the budget gap for 54% of the budget solution, while spending reductions make up for the remaining 46%. Minnesota has incorporated nonrecurring measures to fix budget shortfalls since fiscal 2009, when the economic downturn reached the state. Each subsequent year, the state continued to increase the use of one-time measures for a quick fix, creating a structural budget imbalance in future years. Moody’s warned the state will face ‘significant obstacles’ in achieving a structurally balanced budget in the next cycle as a result of those actions.” Yes, and we have names and addresses for the most significant obstacles.

It’s ‘hunter choice’ this fall. Sam Cook of the Duluth News Tribune writes: “The new hunter choice deer management designation in some permit areas will function like lottery areas, with the difference being that hunters do not need to make a lottery application or possess an either-sex permit to take an antlerless deer. In hunter choice areas, the license is automatically valid for an either-sex deer. In those units, bonus permits are not allowed. If a deer is taken in one hunter choice area, a hunter cannot take another deer in another hunter choice or lottery deer area. The designation was created because the majority of deer permit areas are within their established goal ranges.” I’m sorry, but the only thing less understandable than that is a cell phone contract.

There’s a new sub-caucus in the Minnesota congressional delegation — Michele Bachmann, Keith Ellison, Betty McCollum and Chip Cravaack. Says Martiga Lohn of the AP: “Democrats Keith Ellison and Betty McCollum joined Republicans Chip Cravaack and Michele Bachmann in voting no. The measure passed the House by a 269-161 vote Monday night. McCollum had voted twice to increase the debt ceiling. But she says tying ‘massive cuts’ to a debt ceiling increase is ‘completely unnecessary, totally counterproductive, and it will make America’s job crisis even worse.’ Minnesota Democrats Collin Peterson and Tim Walz joined Republicans John Kline and Erik Paulsen in voting yes. Walz says the compromise ‘is not perfect,’ but he believes it will help stabilize the economy. Kline says he’s glad the proposal is free of tax increases.” And fiscal coherence …

The identities of the half-dozen people who drowned in the state in the past few days are being released. The Strib story says: “On Monday, the Hennepin County medical examiner’s office identified a man who drowned Saturday night at the Elm Creek Park Reserve beach in Maple Grove as Vishwanathan Shankar, 30, of Rockville, Md. And the woman whose body fishermen found floating near the Crystal Lake boat landing in Burnsville early Sunday was identified as that of Jocelyn Renee Brengman, 24. Foul play is not suspected, but the circumstances surrounding Brengman’s death are under investigation, according to Dakota County Sheriff Dave Bellows. The man whose body was recovered about 6:25 p.m. Sunday from the St. Croix River after he jumped off a cliff and drowned was Nicholas Paul Johns, 26, according to the Chisago County Sheriff’s Office. His city of residence was not released.”

It’s a good thing D.C. has done something about all that reckless spending. The Business Journal says:Economic growth in the Midwest will slow for the next three to six months, according to a survey of supply managers released Monday. The Business Conditions Index fell for the fourth time in five months for nine Midwest states, including Minnesota, according to a news release from the Economic Forecasting Group at Creighton University in Omaha, Neb. ‘Higher energy prices, uncertainty surrounding the national economy and a weak housing sector are restraining business expansion in the Mid-America region,’ the survey’s director, Creighton University Economics Professor Ernie Goss, said in the statement.”

Dan Gunderson of MPR files on the lockout of workers at the American Crystal Sugar plant in Moorhead: “About 1,300 union workers at American Crystal Sugar were locked out when they showed up for work Monday morning after voting to reject the company’s final contract offer over the weekend. Union members say this is their first serious labor dispute with American Crystal Sugar in 30 years. But it’s also the first time the company has dramatically changed its offer on health care and union job security. … The company offered a 17 percent pay increase over five years, but Nelson says changes to the health insurance plan could cost him as much as $6,000 a year.The old plan’s maximum out-of-pocket annual expense was about $2,000 for a family. American Crystal wanted to replace the union health plan with the plan provided to non union workers.”

There may be better ways to read those persistently downer real estate numbers. Jim Buchta of the Strib writes: “Herb Tousley at the University of St. Thomas has created a monthly housing market index that he hopes will offset some of the “issues” he sees with the closely watched Case-Shiller report. His new Residential Real Estate Market Index is based on recent data from the Regional Multiple Listing Service, including sale price, number of sales, proportion of distressed sales to traditional sales, market time, months’ supply, pending sales and new listings. Those numbers and a few others are used to create a numerical index, which has a baseline value of 1,000 for January 2005, the apex of the residential housing bubble. … The Case-Shiller report is based on an index of 20 cities throughout the country, which is computed by calculating the percent change between prices of matched sales pairs of individual properties. Tousley’s complaint about the methodology is that those sales pairs can include foreclosure and short-sale transactions. So in a market in which nearly 50 percent of all sales are distressed sales, you’re going to see unusually large declines in sale prices. Tousley contends that while distressed sales do impact the market, allowing them to be included in the sale pairs unfairly skews the number because the seller —usually a bank — isn’t a typical seller.”

Former ad man Myles Spicer writes a commentary for the Strib on how the debt ceiling got used for budget-shaping: “The debt-ceiling crisis that has been roiling the nation is an absurdity that has no rational basis. It should never have happened, and steps must be taken to prevent it from occurring ever again. For those who think the debt-ceiling mandate is some kind of constitutional or traditional phenomenon … it is not. For those who think it is a sacrosanct part of American history … they are wrong. In fact, it dates from 1917, has no basis as a constitutional component and is a bit of an anachronism in terms of other industrialized nations. Few, if any, have such an arbitrary limit on debt, and most have systems that are far more effective and less dangerous. And why is our debt-ceiling law dangerous? Precisely because of what has just happened (and why). It was not used to initiate rational fiscal policy, but to hold hostage the nation’s legitimate debts to a far-right agenda, mostly regarding taxation policy. And as long as it is on the books, it is a continuing potential threat to the full faith and credit of the United States.”

They’re asking for a special prosecutor in the case of the brawling Wisconsin Supremes. Ed Treleven of The Wisconsin Journal writes: “Dane County District Attorney Ismael Ozanne is asking that a special prosecutor be appointed to decide whether any criminal charges should be filed involving an alleged fracas in June between state Supreme Court justices David Prosser and Ann Walsh Bradley. In a news release issued Monday morning, Ozanne said he has received reports from the Dane County Sheriff’s Office regarding the alleged June 13 incident, in which Prosser is alleged to have choked Bradley in her office after Bradley told him to leave.”

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Comments (2)

  1. Submitted by Jon Kingstad on 08/02/2011 - 09:27 am.

    According to an article in yesterday’s “Economist”, Minnesota made the second largest contribution in taxes to the federal government relative to its size (Federal taxes contributed less federal spending). Maybe Minnesota needs to find a way to convert those federal tax dollars into Minnesota tax dollars for Minnesota.

  2. Submitted by Rich Crose on 08/02/2011 - 01:42 pm.

    Good point, Jon. Minneapolis is also a greater contributor than user of State taxes.

    If the out-state representatives keep cutting the state aid to the cities, I think they should charge admission. Increase user fees for people who don’t live in the city limits. A commuter tax of 12% of ridership for buses from the outer suburbs. A parking fee in the city lots for people without a local address.

    They do it now with residency requirements for using the softball diamonds. If 50% of your team doesn’t reside in the city, you pay a larger fee.

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