Here’s why Dayton and GOP start out $4 billion apart on how big Minnesota’s budget should be

It’s not just an end game, but a start-and-end game for the governor and Republican legislators, sparring over the merits and demerits of Mark Dayton’s budget proposal.

Gov. Mark Dayton
MinnPost/James Nord
Gov. Mark Dayton

The governor and Republican legislators are spending a lot of time trying to make what would seem to be an arcane point — the starting point for the Minnesota budget.

Dayton begins with a budget base of $34 billion for fiscal years 2010 and 2011 and ends up with a 2012-2013 budget of $37 billion, a two-year increase of 7.5 percent. The governor claims that the current budget base should include the $4 billion in federal stimulus funding and the savings from shifting K-12 education payments that were used to balance the current budget.

In criticizing the governor’s budget, GOP legislators start with a budget base of $30 billion and claim the governor’s budget proposals add up to a 22 percent spending increase. They argue that the stimulus money and K-12 savings were a one-time-only fix and the base should remain at $30 billion.

The differences are not only in arithmetic but philosophy.

The governor and his supporters maintain that Gov. Tim Pawlenty and legislators decided to pay for permanent programs (i.e., ongoing spending) through federal money and accounting shifts. They argue that just because that revenue drops out of the budget, the funding obligation continues. In their view, making up the shortfall in funding current programs should not be considered new spending.

Former House Speaker Margaret Anderson Kelliher, who negotiated the last budget, can support that argument.

Margaret Anderson Kelliher
MinnPost/Terry Gydesen
Margaret Anderson Kelliher

“The theory from the federal government was this — we’re going to help states with the expectation that their budgets are in recovery mode two years ago,” she said. “Good idea, but most states have not really rebounded and states can’t deficit spend.”

Furthermore, Eliot Seide, executive director of AFSCME, the state employees union, describes rolling back the spending base as “barbaric” and says such a move will result in “risky cuts in public safety, education, and help for the vulnerable.”

Republican legislators, however, maintain that because this was one-time-only money, the state needs to return to working with the resources it has and not pick up the difference with tax increases.

The Minnesota Chamber of Commerce characterizes the Dayton budget as “more taxes, more spending, minimal reform.”

According to Tom Hesse, the Chamber’s chief fiscal lobbyist: “Our viewpoint is there was $30 billion in fiscal years 2010-2011. There will be $37 billion [in the governor’s budget] and that is a significant increase. Furthermore, Health and Human Services is projected to grow 37 percent, which the governor’s budget really doesn’t address at all.”

Hesse predicts that if the real cost-drivers of the state budget aren’t fixed, the taxes that are raised to cover spending increases will have to be raised again two years from now.

Kelliher describes the contrasting positions as dramatic story-telling: “One side says it’s a dark and stormy night; the other says the horses have broken free and are running wild.”

It’s also a reflection of both the governor’s and Republic legislators’ awareness of the public sensitivities to government spending.

Where each side starts on those bottom-line budget numbers will be a key factor as they make their cases to the public. And they will go a long toward determining total government spending when they end with a new budget in May.

Comments (18)

  1. Submitted by Hiram Foster on 02/21/2011 - 06:03 am.

    This is an argument about the argument, and a particularly unenlightening one. It did have it’s uses during the campaign, when the priority was diverting us all from the tough choices Minnesota would have to make, but the campaign is over, and the time to make those tough choices is here.

    Minnesota has a 6.2 billion dollar budget deficit. Strong DFL partisan though I may be, that’s not a partisan number, or at least it doesn’t come from my party. That’s the number put on the deficit by former Republican speaker of the house Steve Sviggum, an appointee of Republican Governor Tim Pawlenty, and I accept their figures.

    We can quibble endlessly about the semantics of what constitutes a “cut”. But the effect of the decisions that are going to be made in St. Paul in the next few months go way beyond semantics. They will have a real impact on our elderly, on our children, on all of us. We have to start coming to grips with those issues, later if not sooner.

  2. Submitted by Dave Kopesky on 02/21/2011 - 07:48 am.

    Oh how some of us older folks long for a return to the bi-partisanship that began with the Eisenhower years with a Democratic Congress and off and on after that. It all seems like a distant memory. Democratic leaders act like they can tax and borrow their way out of a systemic long-term problem and the GOP wants to shred the safety net for the poor and seniors and give wheelbarrow loads of tax breaks to the rich. There has to be give and take on all sides but sadly we are seeing none of that in St. Paul, Madison or Washington. It’s all “my way or the highway” on both sides.

  3. Submitted by Hiram Foster on 02/21/2011 - 08:29 am.

    Lots of folks wax nostalgic for good old days. Lori Sturdevant pines for 1973, the Tea Party pines for 1773. Republicans in the legislature seem to think 2008 was a really good year, except for the last part when the economy nearly collapsed. However, it is impossible to return to either of those status quo antes. We live in 2011 and the problems we must address are today’s problems and tomorrow’s.

    We have a 6.2 billion dollar budget deficit that has to be dealt with now. We can tax our way out of the problem or we can spend our way out of the problem.

    The long term systemic problem is the aging of the population with it’s attendant costs, particularly in the area of health care. The Democrats tried to do something about that on a national level. We succeeded but at a political cost, one in my view, was well worth paying. In Minnesota, it’s now the Republicans turn. To get control of Minnesota’s currently out of control budget, a way must be found to rein in these costs. I am looking forward to hearing the Republican solutions to the these problems.

  4. Submitted by Hiram Foster on 02/21/2011 - 08:31 am.

    “It’s all “my way or the highway” on both sides.”

    Believe me, I am looking for, and preaching the need for compromise. I am willing to close nursing homes, and hospitals. I am willing to heartlessly throw some old people out on the street. Just not all of them.

  5. Submitted by Neal Rovick on 02/21/2011 - 09:00 am.

    You know what?

    The Republicans need to produce a budget or a set of spending targets. However, they do not propose to produce a budget before the end of March.

    Why?

    Is to prolong this time of magical thinking in which it is pretended there is a way to balance the budget without significant pain or taxes?

    However, the effect of this delay is to make the curve of compromise even steeper.

    Or is that the real purpose?

  6. Submitted by Alec Timmerman on 02/21/2011 - 09:13 am.

    Dave,
    You make a rather large false equivalency between the parties partisanship. Dayton’s budget contains both cuts, and revenue (tax) increases. Somewhere between the $0 revenue increase and $4 billion revenue increase there is a compromise. I guarantee that Democrats would move from their proposal. Republicans will not. Republicans will claim we all have to sacrifice, while asking some to sacrifice even less, putting more burden on the rest of us. The partisan stalemate is pretty one sided. Even the workers in Wisconsin have agreed to accept Walkers demands on pension and health care.

  7. Submitted by Hiram Foster on 02/21/2011 - 09:26 am.

    “The Republicans need to produce a budget or a set of spending targets. However, they do not propose to produce a budget before the end of March.

    “Why?”

    The timing isn’t a big issue for me. It makes a fair amount of sense to wait for the March forecast before proposing a budget. That’s what the DFL did when they were in power.

    The trick for Republicans is to cut the budget as a whole without assuming responsibility for specific cuts, which are going to be unpopular, and have the potential at least, of falling heavily on Republican districts. We see the outlines of how they are going to do this already. Cutting local government will be their first priority. By just cutting the money local municipalities, they can and do argue, that they aren’t responsible for the specific cuts in services those cuts necessitate.

    I think of this as the Pawlenty doctrine which holds that state officials who delegate responsibilities to local officials, are not to blame for how those local officials discharge those responsibilities no matter how foreseeable the consequences are.

  8. Submitted by Lora Jones on 02/21/2011 - 09:28 am.

    Cyndy’s valiant attempts to make Republicans appear to have some level of reasoning ability, or rationalizing ability, aside — we all know that they’re just doing their best to change the conversation anyway they can — by arguing about what the starting number is, or taking pot shots at Dayton, or passing a whole bunch of irrelevant legislation. They have to. Because they know, like we all know, that there is no way on God’s green earth that they can cut 6.2 Billion out of the budget and get re-elected in a year and a half. If they weren’t all so fond of demagoguery, I’d almost feel sorry for them. They’ve been well and truly caught in a trap of their own making.

  9. Submitted by Neal Rovick on 02/21/2011 - 11:20 am.

    Hiram (#7)says:

    …The timing isn’t a big issue for me. It makes a fair amount of sense to wait for the March forecast before proposing a budget. That’s what the DFL did when they were in power….

    The problem is the gap is bigger than ever before in history and the March forecast will, at best, knock $0.2 off of the $6.2 billion, still leaving a massive difference.

    Just as the Republicans were unlikely to collapse and accept the Dayton budget whole, it is unlikely that Dayton will collapse and accept the Republican budget whole.

    And, didn’t the Republicans campaign on all-cuts budget? Surely they had some sort of spending targets in mind when they repeatedly said they could balance the budget without increasing taxes. They wouldn’t have been pulling the typical politician BS of promising what they couldn’t deliver, would they?

  10. Submitted by Tony George on 02/21/2011 - 11:52 am.

    Throughout the US, the Repunlicans are working for union-busting, middle class busting, Social Security busting. It would be sickening if all of us were to lose the money we’ve paid into Social Security for years and years, because of the promises Republicans made to their Big Money financiers. Scott Walker and the Koch brothers are only the tip of the iceberg. Why won’t one Republican speak out against Scott Walker?

  11. Submitted by Bill Coleman on 02/21/2011 - 12:19 pm.

    The last biennial budget totaled $34 billion from a variety of income sources. PERIOD!

    Last week of MidDay, Matt Dean and Amy Koch kept repeating the $30 billion, 22% number in spite of the moderator’s attempt to keep them honest.

    My email inquiry to Matt Dean on this topic went unanswered. You have to give them credit for keeping their lies straight or what they would call staying on message!

  12. Submitted by Bernice Vetsch on 02/21/2011 - 12:20 pm.

    The Republicans seem to be counting beans and have determined the upper limit of beans necessary to keep the state from completely falling apart, but with no consideration for those with nothing between themselves and starvation or death from an uninsured illness except the help that government can provide.

    Dayton is looking at needs — real needs of real people — and at what must be done to meet those needs insofar as is possible. Increasing taxes on the wealthy must be part of an effective plan of revenue-railing and program cuts. Anything less is an abdication of our common duty to the common good.

  13. Submitted by Ray Schoch on 02/21/2011 - 12:42 pm.

    Whether we start at $30 billion or $34 billion may not make much difference in the end. Even if we started the conversation at $34 billion on both sides of the aisle, the rhetoric from Republicans would be essentially the same. It would be essentially the same if there were no deficit at all, because fiscal sanity, even a balanced budget, is not the goal. The goal is to shrink government, no matter what the needs, circumstances, and situations call for.

    While I’m not entirely convinced, I fervently hope that Lora (#8) is correct about Republicans being caught in a trap of their own making. The current version of the party deserves to be consigned to history’s dustbin sooner rather than later. Former Senator Gary Hart is on that same wavelength as Lora, saying on his blog this morning that “When the tea party gets the kind of government is claims to want, few Americans are going to like it.”

    I think the operative, most relevant point may well be as Lora stated: “There is no way on God’s green earth that they can cut 6.2 Billion out of the budget and get re-elected in a year and a half.” Rhetoric from both sides being what it is, that point may be obscured for the moment, but when cities go belly-up because Republicans have done away with LGA while cutting every other program in sight, the political consequences are likely to fall most heavily on the people who were running the show, and while the Governor certainly has influence and a veto pen, it’s the legislature that has the purse strings. Especially when the campaign was ostensibly about “jobs, jobs, jobs,” a Republican legislature that spends much of its time focused on social issues and wrangling with the Governor over how much to cut from the budget isn’t going to appear very businesslike in 2012.

    In the meantime, however, the mean-spirited selfishness of tea partiers will likely inflict real pain on a lot of people who don’t have many resources to fall back on. Frankly, since Cyndy was focusing on budgetary arguments, I’d like to see a LOT more publicity for Steve Berg’s idea this morning. If there’s serious discussion of “performance bonds” for programs that benefit the poor, why shouldn’t the same logic be applied to programs – tax breaks, especially – for the corporate and the wealthy? “The idea is that public money would only be spent on the condition that programs produce results of quantifiable economic value.” If that’s acceptable for programs that benefit the poor, it ought to be equally acceptable for programs like corporate tax breaks and tax exemptions for “jumbo” mortgages on McMansions in exurbia that benefit the well-to-do. Many a “conservative” comment to MinnPost has insisted that the wealthy deserve tax breaks “because they create jobs.” If that’s the argument, let’s see the proof.

  14. Submitted by Hiram Foster on 02/21/2011 - 12:42 pm.

    “They wouldn’t have been pulling the typical politician BS of promising what they couldn’t deliver, would they?”

    I don’t think they understood the implications of what they promise, and they may have made the mistake of believing their own campaign rhetoric. The agility with which their numbers flash on and off the table according to political convenience is the envy of any three card monte dealer.

    It’s interesting that the Republicans are still putting in so much effort making the argument they won during the last election. It’s almost as if, having convinced the public of the correctness of the arguments, they still have to convince themselves.

  15. Submitted by Paul Udstrand on 02/21/2011 - 05:04 pm.

    Yes, the starting point is irrelevant. We all know that even if there weren’t a deficit, the Republicans would create one and then use it to complain about big government. This is what they’ve been doing for 40 years. Of course they’re not interested in balance budgets, perpetual deficits are they’re only economic and political strategy.

  16. Submitted by Andrea Schaerf on 02/21/2011 - 06:42 pm.

    I remember when the problem was presented,i.e. increase in percentage of elderly, and solutions were sought. Now it all one sided. I dont know what the Republicans will offer besides cuts. Cuts arer useful tools but few households can balance soley on cuts. They seek additional resources for instance. So maybe everyone with a home over a milliopn dollars can take in a few dozens of seniors kicked out of their care. A tax break for doing this makes sense, right?

  17. Submitted by Dave Kopesky on 02/21/2011 - 07:23 pm.

    Just think – we are 9,000 votes from unilateral “simple” solutions to complex problems like Walker and his cohorts are implementing in Madison. Like some earlier posters have said – the 6.2 Billion in cuts the T-Party wants to impose will not be very popular with the majority of the electorate once they are spelled out in detail. Of course they can just keep rolling over part of the problem with gimmicks like Pawlenty did. I can’t wait to see where they come up with the 6 BILLION in cuts.

  18. Submitted by Hiram Foster on 02/22/2011 - 04:34 pm.

    Elections are important, and there is a difference between the parties.

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