By Aaron Klemz
While the perception persists that Minnesota is a high-tax, high-spending state, testimony in front of a joint hearing of the Senate Taxes and Finance Committee this morning demonstrated that this is no longer true. According to Mark Haveman, executive director of the Minnesota Taxpayers Association, Minnesota is about average in both taxes and spending. Minnesotans kept a larger percentage of their income after paying state and local taxes in 2008 than they did in 1998, the opposite of the national trend. Additionally, property tax burdens on businesses fell significantly, including industrial, commercial, and apartment buildings.
Haveman also presented spending figures, leading to comments and questions from lawmakers with some dramatically different conclusions about their meaning. Sen. Larry Pogemiller (DFL – Minneapolis) stated that “the bottom line is that [Minnesota} has gone from 5th to 15th in spending per capita, and from 15th to 31st in spending per $1,000 in income.” Republican Senator Julianne Ortman argued that Minnesota spend $1,915 per person on “public welfare” programs. When DFL senators responded that public welfare programs include health care for the elderly, nursing homes, and other programs, Ortmann replied that “we can’t misread this chart” and act like we don’t spend that amount of money.
Earlier in the hearing, the committees heard from Kevin Goodno, former Commissioner of the Department of Human Services and co-chair of the Minnesota Budget Trends Study Commission. Goodno’s presentation echoed others that predict a demographic shift in Minnesota that will place greater strain on the state budget. According to Goodno, over the next 25 years there will be a 8.5% annual growth in health care spending as Minnesota’s population grows older. Both presentations used data that ended in 2008, frustrating legislators who wanted to know the impact of the recession on their projections. That data won’t be available for some time but one consequence is obvious, Minnesota has no budget reserves. The Minnesota Budget Trends Study Commission recommended a $2.1 billion budget reserve to account for volatility in tax receipts. This recommendation seems like a distant dream for legislators struggling to balance a budget with a $6.2 billion deficit.