True North

The 85th legislature adjourned on Sunday, May 18 and at that very moment, the 2008 election season began. What had originally been four months of highly contentious legislative wrestling is now being portrayed as “one of the most successful sessions in decades.”  At Monday’s press conference, legislative leaders from both sides of the aisle flanked the governor and touted the accomplishments of the 2008 session.The DFL-controlled legislature had an aggressive agenda from the very beginning of the session to raise taxes, increase government spending, expand regulations and implement social engineering programs.  While Republican minority leaders fought valiantly to block most of these measures, some caucus members broke ranks with leadership, thereby allowing some of these bills to slip through.

Thankfully, Governor Pawlenty vetoed many bills such as Mandatory Comprehensive Sex Education, Legalized Gestational Surrogacy, Infant DNA Warehousing and Local Government Domestic Partnerships.  But the governor’s veto of the Transportation bill was overridden by six wayward Republican House members, thereby allowing one of the largest tax increases in Minnesota’s history to be passed into law.The sound bytes being fed to Minnesotans by the mainstream media don’t begin to tell the whole story behind the 2008 legislative session.  Our analysis seeks to separate the hype from the reality, thereby allowing Minnesotans to assess what they really got out of this year’s session.Hype:  A $935 million budget deficit was erased and the budget balanced without raising taxes.Reality: The budget fix was nothing more than a band-aid and taxes were raised – significantly. Lest we forget, the override of the governor’s transportation bill veto cost us a $6.6 billion tax increase on sales, fuel and vehicle registrations.  And if approved by voters this November, Minnesotans will be paying more in state sales taxes to fund arts programs and wildlife habitat.The final budget deal also included a $125 million tax increase on corporations with foreign operations.  This was sold to the public as “closing a corporate loophole,” as if corporations were doing something underhanded.  In reality, this provision was enacted by the state legislature years ago to avoid driving corporations with foreign operations out of Minnesota.Senate Minority Leader David Senjem (R - Rochester) cautioned that the fix relied too heavily on tapping the state's “rainy day” reserve fund and not enough on actual spending cuts.  Nearly $500 million needed to balance the budget came from the state’s rainy day fund, tapping about 80% of the fund’s reserves.  Senjem predicts the result will be a much worse budget problem in 2009.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Hype:  A 3.9% property tax cap resulting in $460 million in property tax reductions.Reality:  When does a tax increase become a reduction?  When the government doesn’t raise taxes as much as they otherwise would, it’s billed as a tax cut.  This is like expecting to gain 30 pounds and stepping on the scale to discover only a 20-pound gain. Using legislative math, that’s a ten-pound weight loss. Most politicians somehow failed to mention that while they were creating the property tax “cap”, they were simultaneously increasing local government aid by $60 million.  This sleight of hand maneuver essentially took taxpayer money out of one pocket and put it in another, thereby diluting the real impact of the property tax “cap”. The so-called “cap” includes exemptions that allow communities to exceed 3.9%.  Local governments can exceed the cap for things like population growth and emergency services. The cap also doesn’t include local school district referendums.  And what happens when cities blow their budgets on non-essentials and then need more funding for police and fire departments, or when the cap expires in three years time?  This “cap” is really more like an open-top visor.  In reality, many Minnesotans will see property tax increases that well exceed 3.9% and their projected “savings” to Minnesota taxpayers will be nowhere near the claimed $460 million.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Hype: Nation-leading health care reform that includes increased transparency, pay for performance, e-prescribing and tax credits.Reality: While there are some positive aspects of the health care bill like greater consumer transparency and electronic prescriptions, its major thrust is to grow government involvement and enroll more families onto state-subsidized health care.  Families making up to $57,000 now qualify for state welfare health plans, adding thousands of new people to taxpayer-funded health care.  The bill adds insult to injury by offering a bounty to outfits (schools, non-profit groups, insurance brokers, etc) that recruit new dependents to feed at the public trough.Grants are doled-out to local community health boards (more government bureaucracy) to try to enforce lifestyle changes targeting weight-loss and smoking cessation.Government bureaucrats are given the power to define “quality,” determine physician compensation incentives based upon this definition and even decide what procedures are medically necessary.
Cross-posted at Minnesota Majority. Comments welcome.