Caledonia Argus

Local government to bear burden of state deficit

Posted: 2/11/03

Local governments are bracing for expected reductions in state aids, due to a $4.5 billion state deficit forecast for the next two years.

It seems unfair that cities, counties and school districts must take a heavy hit at a time when rapid growth is expensive. With less state aid projected for cities, policy makers will have no choice but to cut expenses or increase property taxes.

Governor Tim Pawlenty is bent on reducing the debt by not raising taxes, and has said state agencies will have to pay for the excessive spending and tax rebates of the past.

While critics of his policies are quick to point out that the economy is to blame, conservative Republicans who are in control say it is past out-of-control spending that has caused the deficit.

Governor Pawlenty repeatedly points out that the stateís revenues are expected to go up by 6.6 percent, accounting for $1.7 billion, while the spending side is going up 14.3 percent. The state is spending more than it is taking in.

Despite property tax reforms of the 2001 session, Minnesota ranks eighth in total taxes paid and it is third highest in sales tax paid, which suggests that raising taxes to ease the debt is not the best avenue.

Minnesota is not the only state struggling with indebtedness. Two-thirds of the states are wrestling with a combined budget deficit of $17.5 billion and in 2004, it could reach $60 billion. Nationwide, spending by state governments has risen 62 percent during last decade, which is double the rate of inflation. Even during the slowdown, state governments have hired more people and taxes were cut more than $30 billion from 1995 through 2001.

During the boom years, propelled by the rising price in technical stocks, lawmakers spent more money than the cost of inflation and gave more back to the taxpayers. Now, many of those legislators are gone and a new class faces an enormous problem.

A case can be made that much of this new money went to help the most vulnerable people, the sick, the elderly, the homeless and the disabled. Proponents of spending will point out that much of the increase went to education which had been neglected in the decade just passed.

The people will have to pay the cost of drawing down the deficit by paying higher property taxes and fees for services. Minnesota has a good quality of life because it has been willing to invest in the health, education and welfare of all of its people.

Most Minnesotans would rather pay a little extra to maintain this quality. Meanwhile, taxpayers, who elected a no-new-taxes administration, will have to absorb the pain of higher taxes to make up for legislators who spent who failed during good times to plan for bad times.

by Don Heinzman, editorial contributor for ECM Publishers, Inc.

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