Now based on the 15Jul11 ParentsUnited update, it looks like the Liberals will be viewing this as a loss for their side. In fact the quote by Sen Tom Bakk is priceless...
"But let’s be very clear about what this budget deal means for Minnesota: rather than asking the richest 0.3% of Minnesotans to pay their fair share, Republicans instead chose to solve the state’s budget crisis with a borrow-and-spend proposal that does nothing to solve the long-term financial challenges."As we have discussed before, it seems to me the "rich" are paying their share and that of about another 40+% of the MN population... As we know of course, someone has to be paying the fair share of those that pay little or no taxes. (since those individuals certainly are not)
I of course see it as a true compromise, in maybe the worst way... The LEFT and RIGHT are again agreeing to SPEND MONEY THEY DO NOT HAVE !!! And since they can not take out an operating loan or create a true "State Operating Debt", they make the school districts and others do it for them. They force the schools to do this by increasing the payment shift to a WHOPPING 60% upfront and 40% at the end, vs the historical 90/10 split !!!.
Well let's just pray that the MN economy booms in a good way soon so that the State revenues start increasing sooner than later. This reliance on debt by our Federal and State governments is REALLY BAD and CONCERNING...
Thoughts regarding this "compromising" agreement to take out loans and keep spending like drunken sailors?
11 comments:
At last, somebody else that thinks borrowing money to spend $36Billion when you only have $34Billion in the checkbook is a bad idea!
I can't believe the Republicans are seeing this as victory when they're already spending $34B, when last year they spent $30B. Nor can I believe the Left bemoaning Dayton's "loss." Seems like he got everything he wanted, except for the tax increase that wouldn't have paid for it anyway.
J. Ewing
Opposite sides agree, the budget deal totally sucks, but a really bad deal is better than no deal at all.
What I find most interesting in the resolution of this budget impasse is the GOP's belief that borrowing and spending is preferable to (any form of) taxing and spending. Both Zellers and Koch seem to have sincere good governing intentions. I think they are mistaken, both policy wise and politically. What do you conservative voters think?
I am satisfied that Dayton did the best he could. Remembering that what he wanted was ~$3 Billion in new revenue brought in by raising tax rates on the those with very high incomes he hardly "won."
About those soon to be released MCA results, I agree with a LtE writer that perhaps it is time to discontinue this accountability program until the schools are provided an adequate and reliable funding stream. We could start by including $ in the bill being written now to protect charter schools from this new ed shift, Some (hopefully not mine) are predicted to close due to their much higher interest rates for borrowing.
"...but a really bad deal is better than no deal at all."
Really? how bad does "really bad" have to be before we all walk away from it? I've said from the beginning that there should be no compromise with the basic principle that the state must live within its means. That means that the correct amount of borrowing and spending is zero, not another $2 billion of one-time money that gets added to the"budget baseline" every year from here to eternity.
And if that weren't bad enough Dayton is now insisting that not only must we spend money that we don't have but that we can't have any reforms whatsoever in the way we spend it. We must always do it the way we've always done it, so that we always get what we've always got – bloated, inefficient and overly-intrusive big government.
If I were the head Republican I would say we're going to quit compromising in the press, and we will just wait until the Gov. calls that special session. The GOP was winning the PR battle, especially with beer being pulled from the store shelves, campers being pushed out of the state parks, no money coming in from the horse tracks or lottery, and people being fined for fishing without a license that they could not get.
And just remember, it is Dayton who is insisting upon this education funding shift. Republicans actually wanted a smaller shift than what Dayton insisted upon in the final bill he vetoed, and now he wants a bigger shift still. (and By the Way, Republicans are including additional money for the school districts to pay their borrowing costs.) Laurie, you have a good point about stable funding, but that isn't going to do a darn thing for student achievement. Real per student spending has tripled over the last 30 years while student achievement has either stagnated or gotten worse. Funding is not the problem.
J. Ewing
I think Loans are better than Tax increases... Time for another household analogy...
A household wants to control their spending. They experience a time period when spend exceeds income. Their choice is to steal from their 401K or take on a line of credit.
If they steal from their 401K, their will be little incentive to reduce spending or make more money to pay it back. Where as if that loan is visible and it has an interest cost, there will be an incentive to skip the Starbucks run until that debt is settled...
Whereas the stealing postpones the pain so far out that there is little motivation to seriously change. I mean you can always steal another $10K next year...
As for Educational funding, as I just noted in the previous post's comment. Their are a lot of savings available whenever the School system decides to seriously start pursuing them rather than spending their time asking for more money. (ie 350+ Districts, Tenure, Steps/Lanes, Defined Benefit Plans, etc)
After a moment of thought...
The National Debt situation is probably an EXCELLENT example of this. If we had just kept taxing more and more and had a low National Debt.
Would anyone be SERIOUSLY talking about cutting costs and improving governmental effectiveness?
Probably not... DEBT like NCLB is forcing some serious discussions that people have been putting off for 70 yrs...
Better for us to deal with them now than to push them off on to our children and grandchildren's generations.
John,
This new analogy on why borrowing is preferable to spending for a household that wants to control spending is quite good. Makes sense of the Koch/Zellers compromise for me. I imagine by tomorrow I will have thought of a counter analogy for a household with a different goal, but I won't subject you to it.
The 2012 election should be both very interesting and consequential, as the parties campaign on their different priorities. If the GOP retains their majorities they will have a stronger hand for deeper cuts in the next budget go round.
Extending this principle to the fight over the debt ceiling makes certain sense as well, though you do have a faulty premise. Federal taxes have not gone up and up. They are in fact at a 50 year low.
The way you have applied the principle to schools looks like mostly cutting teachers' pay and benefits, which fits right in with the GOP national playbook this year.
about that counter budget analogy, I am going to share one after all and it is not made up. It's a simplified description of the large deficit my family faces this next year and how we are dealing with it.
Due to college costs and the need for some major dental work we are about $25,000 short. How we plan to close the gap:
Spending cuts:
defer dental work (savings~$2,000)
New $:
accept finan. aid offer (~5,000)
accept gift from wealthy relative (~$10,000)
spend down our reserves (~$5,000)
spend child's savings (~$3,000)
This is a structural deficit that we will face for many years as we try to get 2 kids through college. I expect future solutions to include continued gifts (if the stock market doesn't tank), a second job (at least for me), and lots of borrowing (mostly by the kids.)
I share these details of my personal finances because I see interesting parallels to state situation. I would appreciate it if you would just ignore rather than rip apart my circumstances/choices with critical analysis of how we should be better money managers both past and present. A know-it-all style comment would likely piss me off enough to take a break from your blog for a while.
Laurie, thank you for sharing and I have nothing but sympathy for your situation. Although some of it could have been foreseen– having kids means you may have to pay for college – a lot of this bad economy is no fault of yours. Other people have worse situations, like being out of work for a year or two, and big-spending, big-government types are whom I blame.
I do wish to point out one thing from your earlier post that I believe needs correcting. That is, you said that reducing teacher pay and benefits was a national GOP "playbook" item. It isn't true unless you assume, as good liberals do, that we need each and every teacher now employed. But if you lay off 10% of the teachers, let us stipulate they are the "worst" ones, the remaining ones get a 10% raise. It's just that simple and not as big a problem as you might think. When I asked the local school board what our pupil-teacher ratio is, and then divide that into the total number of students, I find out that we have some 500 teachers (about 30%) "left over." Furthermore, eliminating the worst teachers and spreading those students around to the better teachers, even though it increases class sizes, has been proven to result in better academic achievement for everybody, so it's a win-win. There's no good reason why a K-12 education today should cost twice, in inflation-adjusted dollars, what it did 20 years ago, unless we are paying too many teachers too much to do too little.
J. Ewing
Sorry for your situation and yes I will behave myself.
Here is an interesting link that seems to support both the Left and Rights view of spending and revenues. HP Tax Free Day
It looks like if we had kept raising taxes in alignment with spending. (ie line including Natl Debt) Taxes would have just trending upward.
Since we held taxes fixed or reduced them by a few days, the Natl Debt blossomed. Thus creating this excellent opportunity to re-evaluate our spending model.
Pretty scary how much more of the year the upper quintile has to work (25.1%) than the bottom quintile (4%) to pay their "Fair share". Seems a bit like slave labor for the few. Well the upside is that they are well compensated for the other ~75%...
Oh... I forgot to mention.
I have NO Interest in paying Teachers less. I am interested in letting the market set the compensation for each individual Teacher based on their capabilities and effectiveness. Not based on their Education, Yrs in the district, etc. For some Teachers this will result in compensation reductions and for some it will result in raises.
Also, I am very interested in Mgrs being free to apply both carrots and sticks to get the most out of their employees for the good of the students. Probably only the Supt should have a "contract". This only because theirs is such a "political" position and we need some consistency within a District.
The other 99.999% of Public School employees should perform or perish. This would align with Private Industry, and there are plenty of laws out there to protect us typical working folk from wrongful termination. Why would the Educ System need more?
As for Defined Benefit vs Defined Contribution, the latter is standard in industry now.
As for 360+ Districts w/ 360+ Administrations, Staffs, Boards, Policies, Curriculums, Transportation systems, Benefits Pkgs, District offices, etc... It surely seems a bit excessive and wasteful. I am guessing we could get by w/ 36... That would hopefully free up a bunch of money for use in the classrooms where it belongs.
Back to the original question a bit more. Why does it make any sense to delay payments to schools (cut their budget, really) by $700M (as Dayton commands) and then increase the budget for schools by $800M, like the GOP budget? Any honest observer would say, fine, let's just "repay" part of the last shift, and not have a bigger one?
J. Ewing
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