Latest legislative battlefront: claims and counter-claims about ‘phony money’

Sen. Scott Dibble
Sen. Scott Dibble

As if Republicans and DFLers didn’t have enough to fight about, new charges and counter-charges have emerged this week at the Capitol.

The new disagreement revolves around “phony money.”

“Pixie dust” is how Sen. Scott Dibble, DFL-Minneapolis, describes the funds that Republicans are claiming in arriving at their no-new-taxes budget.

Speaker Kurt Zellers
MinnPost/Jay Weiner
Speaker Kurt Zellers

Republicans, not surprisingly, are denying they’re just making stuff up.

But, in something of a stunner, Republican legislative leadership said this morning that when they’re putting together their budget bills, they’re not necessarily relying on financial analyses from the Minnesota Management and Budget office, which traditionally has been seen as a nonpartisan body.

Instead of relying on Management and Budget numbers, House Speaker Kurt Zellers said today that in some cases Republicans are turning to private financial consultants for advice.  

GOP questions ‘fiscal notes’
Understand, number-crunchers from Management and Budget and the Department of Revenue traditionally have told governors and legislators how much it would cost to implement policies that they propose. The numbers supplied by these two bodies are known as “fiscal notes.”

Zellers offered an example of why Republicans are not necessarily trusting those numbers.

He said that Rep. Keith Downey, the Republican point man on reform, offered a plan to consolidate some “back office” work currently done by government.

Zellers said that the Management and Budget fiscal note claimed that the Downey consolidation plan would cost $10 million in each of the next three years and require the hiring of 92 employees.

“That’s counter-intuitive,” Zellers said, adding that he wasn’t surprised that people who might be affected by reform might not be enthusiastic about supporting it with positive fiscal notes.

Therefore, Zellers said, instead of believing Management and Budget, Republican legislators have turned to consultants who have made similar reforms in the private sector or in other states for their estimates on the costs of the overhaul.

House Minority Leader Paul Thissen expressed surprise at the Republican approach.

“We’ve always trusted Management and Budget,” Thissen said. “Why would you trust private consultants more?”

Thissen and Dibble both say that this is just another example of how Republicans are struggling to come up with ways to overcome the state’s $5 billion deficit and balance the budget with no new revenue.

DFL expects $1 billion in ‘phony money’ from GOP
They said they believe there’s as much as $1 billion in “phony money” in the Republican budget bills that will start appearing on the floor for debate beginning Monday.

One of the big piles of make-believe cash, they say, is a $300 million “waiver” from the federal government that Republicans are using to attempt to put together a Human Services bill. They say there’s no way that the Republicans can assume the $300 million in savings will be available.

Republican leaders counter that view, saying that in conversations they had with Gov. Mark Dayton three weeks ago, he showed interest in helping them seek money-saving waivers.

As for “phony money,” they say, nothing is so phony as the budget proposed by Dayton, which includes tax increases on Minnesota’s wealthiest.

“The governor’s budget is predicated on $2.67 billion [in tax increases] for which there is no support,” said Senate Majority Leader Amy Koch.

At their weekly media session, the Republican leaders also defended their fast-paced budget process, which Dayton lambasted Thursday at a speech.

Besides calling some of the Republican-proposed cuts “draconian and barbaric,” Dayton said that the Republican process was being disrespectful to his commissioners, who weren’t being given adequate time to testify. He also said that the public was being cut out of the process.

Republican leaders were armed with stats about the time turned over to testimony from commissioners and the public. They said in the last week alone, Republican-led finance committees heard more than 60 hours of testimony. They said that since the beginning of the session, legislators have held more than 300 hearings.

Sen. Geoff Michel, R-Edina, said he thinks he understands the governor’s anger.

“When you’re not pleased with substance or policy you argue about the process,” Michel said. “We’ll keep connecting with the governor.”

 Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

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Comments (14)

  1. Submitted by L.A. Krahn on 03/25/2011 - 12:42 pm.

    At what point does faith-based budgeting cross the line into malfeasance?

    Sharpen your petition-for-recall pencil while Minnesotans await an answer.

  2. Submitted by Paul Udstrand on 03/25/2011 - 12:52 pm.

    And I suppose in the interest of transparency we have been given the names of these private consultants so we can check their track records, and access to their work product so we can analyze and verify it?

  3. Submitted by Ray Schoch on 03/25/2011 - 02:01 pm.

    From a practical standpoint, given right-wing control of the legislature, Amy Koch is correct. From a fiscal standpoint, however, the issue is not whether or not there is “support” for Dayton’s proposed budget. The fiscal issue is whether his proposed budget will fill the deficit hole created by his predecessor.

    While Koch is correct from the standpoint of legislative votes, Republicans have adopted the Emmer view that there’s no deficit, only inefficient government and wasteful programs. They’re in a mood to rule, not govern.

    Fiscally, Republican proposals, such as they are at this point, have done little to provide an alternate vision. It’s not enough to say the Governor’s proposal doesn’t have any support. Even those of us not in the legislature can figure that part out. What’s necessary is for the GOP’s representatives to present a budget that fills the deficit hole at least as effectively (fiscally speaking) as Dayton’s proposal. At this point, I’ve seen nothing here or in the ‘Strib to indicate that that’s the case.

    Tearing the couch apart to look for change isn’t an effective strategy for paying big bills.

    Relying on their own hired consultants to produce “fiscal notes” is very much akin to the pious relying on their own theology to explain math and science. Just because you get different answers doesn’t mean the facts have changed. Since MMB employees have a professional (and perhaps legal) obligation to provide reliable numbers to state government, Republicans have produced a costly solution in search of a problem, while ignoring numerous other issues that don’t happen to fit their flat-earth economic theory.

    And a relevant question might be: “Who’s paying these financial consultants?” If it’s taxpayers, why is the work being contracted out? What’s fiscally responsible about duplicating the efforts of an office that already exists, and for which there’s zero evidence presented of either error or malfeasance?

  4. Submitted by Tony Wagner on 03/25/2011 - 02:20 pm.

    “The governor’s budget is predicated on $2.67 billion [in tax increases] for which there is no support,” said Senate Majority Leader Amy Koch.

    No support among Republican legislators, I’m sure, but Dayton did win a statewide vote of Minnesota voters, campaigning on a clear promise to raise a significant amount of new revenue through taxes.

    It was a close election, granted, with a lower but comparable number of voters preferring the “zero new taxes” Republican candidate. But there has been plenty of public support for statewide Democratic candidates recently. Any reasonable observer has to conclude the most logical outcome should be tax increases greater than zero, but less than the $2.67 billion or whatever desired by Dayton. I really wish Republican legislators would finally accept that, so we can move towards an actual solution here.

  5. Submitted by Cecil North on 03/25/2011 - 02:52 pm.

    … and the first thing we’ll do to lower spending is hire lots of expensive, private consultants!

  6. Submitted by Bill Coleman on 03/25/2011 - 05:17 pm.

    It should be remembered that Dayton appointed the head of the Management and Budget and that he is a holdover from the Pawlenty administration. That was a great move!

    This is no different that Pawlenty attacking the credibility of Tom Stinson – state economist- and Tom Gillaspy – state demographer.

    Let’s take a guess – their health care savings came from estimates from United Health Group; their prison savings came from the company that owns the closed prison in Appleton, and their outsourcing savings numbers came from a call center company in India.

    I have not heard of these number disputes being discussed in public. Saying government should be more efficient is not a strategy.

  7. Submitted by scott cantor on 03/25/2011 - 06:04 pm.

    So… the GOP isn’t going to trust the numbers from the same agency that will be certifying a budget shortfall to Dayton the week after their budget is signed (if it is signed), thereby triggering the governor’s unallotment powers. Gosh, what could possibly happen when Dayton gets out his pen then? Can’t cut schools more. Can’t cut DHS more. How about X out MNDOT projects in the suburbs and Rochester? Or unallot ALL non-Minneapolis, St Paul, and Duluth LGA. This could get really ugly really fast for GOP districts.

  8. Submitted by Harris Goldstein on 03/25/2011 - 07:31 pm.

    If Management and Budget has a track record of inaccurate estimates, or aren’t being creative enough, we certainly should get another opinion.

    But without knowing what they were asked to do, who they are, what their qualifications are, what data they’re using, what methodology they’re employing, and (most important) what assumptions are made there is no credibility.

    If these consultants have accomplished similar reforms in other states, they will be proud of their work and anxious to come forward.

    But I can tell you this: if you hire consultants to prove a point, 99% of the time they will prove that point. The devil is in the assumptions.

  9. Submitted by Patrick Guernsey on 03/25/2011 - 11:31 pm.

    Well, if you don’t believe in evolution, climate change, etc. Why not believe that you can make $5 billion in cuts without harming education, the poor, and the elderly? Can 2012 come soon enough?

  10. Submitted by Ron Gotzman on 03/26/2011 - 08:07 am.

    What a bunch of tax and spend, DFL Kool-Aid drinkers.

    Do you wake up every morning with the same thought, “how can we spend more of other people’s money today?”

  11. Submitted by Paul Udstrand on 03/26/2011 - 08:41 am.

    Actually this reveals yet another facet of Republican faith-based economics and policy. They always go on an on about efficiency but they actually have no clue. The premise is based on the myth the government is less efficient than the private sector.

    These schemes to consolidate for instance have been real popular in the private sector when consultants recommend them because downsizing and layoff’s are always a hit with investors. The problem is they rarely actually produce increased efficiency, and in many cases contribute to inefficiency in the long run. This only seem counter-intuitive to someone who doesn’t actually know what their talking about and doesn’t have experience.

    Pawlenty tried this in a lot different areas. For instance he consolidated the IT departments, this was supposed to centralized operations, this can sound good and look good on paper. The problem is it created a whole new bureaucracy since reporting problems to a centralized location and organizing responses at a distance with reduced staff actually makes things more complicated. When services are localized the technicians are familiar with the equipment and locations, and can respond faster. Now you have to create “tickets” in a system that itself has glitches, and smaller numbers of techs with less familiarity take longer to sort out the problem.

    Another example is the library at the Health Department. Some clueless consultant recommended closing the library and laying off the librarian. They probably figures everyone could just Google stuff. They had a library with a staff librarian, believe it or not a good librarian is worth their weight in gold- it’s not just about putting books on the shelf. This library saved the state tons of bucks because it was able to subscribe to a bunch of very expensive medical journals and obtain articles from other sources. The librarian it super familiar with this whole process. If an epidemiologist needed an article or some data they could just request it from the librarian. Now every department has to subscribe to it’s own journals, and since there’s no existing facility to share journals there will be some very expensive duplication. Not only that but your epidemiologists now have spend THEIR time looking for articles instead of solving, detecting, and stopping outbreaks. All and all it’s it’s going to be much more inefficient and complicate and interfere with the mission rather than simplify it. You now have people with advanced degrees getting paid way more than the librarian used to get paid trying to find articles instead of running statistical models, or in addition to running statistical models.

  12. Submitted by Andrew Kearney on 03/26/2011 - 09:07 am.

    If one adds the Dayton and Horner votes together more voters voted for a tax increase than not. I am not sure one can make statements though that the voters were “saying something.” The voters were mad this time around and voted everyone out-where it worked.

    I am more troubled that the GOP can not exercise basic competence and transparent governing. The most honest is Jim Abeler. Note that he says, “this is the first step, next we have to work it out with the Governor.” So instead of cutting for ex. PCA services for the disabled he identifies a fantasy 300 million in savings from a phantom federal waiver. They will make the PCA cut when meeting with the Governor and then Dayton will shoulder some of the blame. The tax increase he will also insist on can also be blamed on him.

    This is an cowardly ploy but it will work with the inattentive public. It keeps alive the GOP myth that there is waste and fraud in government for the next election and in 2014.

  13. Submitted by Wayne Swickley on 03/26/2011 - 10:01 am.

    In the spirit of transparency, I must ask:
    #1) Who is paying these “consultants”?
    #2) Who are they and how were they chosen?
    #3) How much are they being paid?
    #4) Where is the money coming from?

  14. Submitted by Nate Arthur on 03/28/2011 - 08:48 am.

    Republican’s crying about raising taxes on the wealthy rings hollow when their methods include cutting food stamps and attacking services for the disadvantaged. Who’s needs are more important? As someone who would pay more taxes under Governor Dayton’s budget proposal, I wish more people would stand up and offer their support. I can also say that my income will not go towards providing anyone a job except through my purchases of goods and services. So raising my taxes won’t directly result in more jobs. The trickle down effect is part of what got us into the financial mess the State is in. We have a great State which is great place to live, work and raise children. Good government services are part of the reason for the quality of life here for everyone.

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