Saturday, December 6, 2014

MN 1 Billion Dollar Projected Surplus

Thankfully the GOP will be there to hold the DFL in check when it comes time to decide what to do with this surplus. Last time the DFL put some in the reserves, and spent most of it or gave it to people that typically vote DFL.

MinnPost $1 Billion Surplus Projected

MinnPost Anatomy of $1 Billion Surplus

Thoughts?

68 comments:

Anonymous said...

Well, it does seem Republicans have a lot of roads they want to build.

--Hiram

Anonymous said...

Republicans campaigned on the idea that DFLer's in the last legislative session were too "metrocentric". I can tell you DFLer's find this baffling. We don't see a rural agenda that went unaddressed in the last legislative session. Nor did we see then, or see now much interest from Republicans in affirmatively addressing the problems of rural Minnesota. Let's not forget that while rural Minnesota is where the votes came from to put Republicans in the majority in the house, that's not where the money that allowed them to do it came from.

--Hiram

Laurie said...

The surplus does not really exist as the GOP made a dumb law in 2002 that does account for inflation in the budget. The projected revenues allow for inflation and not much new spending. New spending will require new taxes or cuts elsewhere. The 2002 law is dumb because it results in misleading headlines such as MN 1 Billion Dollar Projected Surplus.

Anonymous said...

What will happen is that the surplus will be used to maintain the current level of services, and Republicans will claim this is the greatest increase in government spending in history.

--Hiram

John said...

See page 44 of the report.

As for metro centric or not.

Ignoring the rural position regarding gay marriage, increasing/cancelling the business to business taxes that would have hit the farmers, creating a higher tax bracket, and spending lots on stadiums, light rail, bike paths, etc certainly did not show that the DFL was concerned with the views of people in out state MN.

John said...

Let's try that again

Report Link

Anonymous said...

regarding gay marriage, increasing/cancelling the business to business taxes that would have hit the farmers, creating a higher tax bracket, and spending lots on stadiums,

These really aren't areas specific to the concerns of Greater Minnesota. Given the fact, for example, that Greater Minnesota is struggling financially, higher tax brackets weren't a big concern. They were a big concern for those financing the Republican campaign in Greater Minnesota. Folks who live in places like Minneapolis. And New York.

==Hiram

Anonymous said...

There seems to be a default attitude in Greater Minnesota that rejects measures that benefit the cities. Money that goes for things like office buildings and stadiums, so the feeling goes, is money diverted from and would be better spent on things like roads outside the metro area, or economic development generally. We saw this in the lit, and the bumper sticker messages the Republicans were campaigning on, outstate. In terms of what actually happens, this is mostly nonsense. While money is being spent in the cities, lots of money is being spent in greater Minnesota too. While certain issues became fairly potent symbols such as having an urban legislator chairing the committee dealing with agriculture, there was very little substantive objection to what Jean Wagenius did. And the fact is, if Democrats didn't do enough for outstate Minnesota, it's certainly the case that Republicans in theory, at least are committed to doing less.

--Hiram

Sean said...

In fact, greater Minnesota receives a disproportionate share of local aids and credits based on population.

Anonymous said...

greater Minnesota receives a disproportionate share of local aids and credits based on population.

Possibly. But that's not the point you make when you are asking for their votes.

--Hiram

John said...

Sean, Please share your source.

When I looked into it previously, they only received slightly more and that was mostly because their population was older.

Also, who do you think we built those great roads, tunnels, by passes, etc to cabin country for? The out state folks or the cabin owners who live in the metro?

Sean said...

http://www.house.leg.state.mn.us/hrd/pubs/msa2014.pdf

Page 108, specifically.

On a per capita basis, greater MN receives $70 more per person than the metro, while paying $1,000 less per person in taxes.

John said...

MSA 2014

John said...

Sean,
That was my point, the link shows just part of the picture.

How much is the State spending directly in the Metro on things like the stadium, salaries, light rail, bonding bill, etc?

Also, ~$300 of the sales tax difference may be smaller or non-existent since many rural folks go shopping in the cities. Especially for the big ticket items.

Sean said...

It's still, I think, hard to make the argument that rural needs have been underspent.

The last bonding bill had about $350 million earmarked to metro needs (less than half). The cost of the light and commuter rail to the state annually is pretty small (about $25 million), and the state is projected to only be on the hook for 10% of the construction cost of the SWLRT line.

Are there rural needs that aren't being met today? Sure, just as there are metro needs that are going unfilled.

But, overall, I hardly think that the state's record here is one of neglect. (And certainly nothing the DFL majority did in 2013-14 represented a major shift from how things were done in 2011-12 or for years before that.)

Anonymous said...

hard to make the argument that rural needs have been underspent.

And I don't think Republicans are making this argument. Their claim that the DFL is metrocentric isn't specific to the actual problems of Greater Minnesota. There is in fact quite a lengthy DFL laundry list of things they did and wanted to do for Greater Minnesota which was opposed by Republicans.

--Hiram

Sean said...

"And I don't think Republicans are making this argument. Their claim that the DFL is metrocentric isn't specific to the actual problems of Greater Minnesota."

I would generally agree with this statement, although I think their argument about transit spending and the Senate Office Building imply that "hey, we could be spending that money on you instead!" When, of course, their record indicates they would spend less money on things that Greater Minnesota prioritizes.

John said...

I think you guys misunderstand Conservatives. They want to have more money to spend on their families, their dreams and their investments.

Whereas the DFL opposes this.

John said...

Though you probably know why I wrote the previous comment, some may not... So here goes the short version.

Total Government Spend

The government at one time only controlled <25% of the country's GDP, now it is at ~38%...

That means individual citizens have less money to spend as they personally wish to. This is a trend that Liberals seem to be okay with.

Anonymous said...

They want to have more money to spend on their families, their dreams and their investments.

Sure. Liberals do too. The question is how to bring this about. Not so long ago, Republican policies nearly destroyed the economy. And those are the policies Republicans are eager to return to.

--Hiram

Anonymous said...

The government at one time only controlled <25% of the country's GDP, now it is at ~38%...

When an older person gets Social Security, or a child gets a life saving procedure paid for by Medicaid, does that increase government control of the economy? If reducing such control should be a goal of our politics, does that mean we should allow the older person to starve and the child to die? Are we better off because government didn't control their fates?

--Hiram

John said...

"Are we better off because government didn't control their fates?"

That sounds like something I would read in "1984".

I don't think anyone thinks we should go back to the 5% to 10% government of 1900. But to change our slogan to:

"In Government We Trust" seems a bit extreme.

Anonymous said...

vd"In Government We Trust" seems a bit extreme.

I am not the one advocating that the government should break the promises it made to us.

--Hiram

Sean said...

I guess all roads lead back to the GDP discussion. Somebody tell Kurt Daudt.

John said...

Hello Sean,
Please expand on the Daudt comment.

Hello Hiram,
As you said "In Government We Trust"...

Of course you don't want the government to adjust premiums and benefits as times change.

Sean said...

My point was that we can't seemingly have a discussion about a state issue without getting dragged into the same old % of GDP argument that has been discussed and beaten to death in a bazillion other threads.

John said...

Do you have a better "size of government" metric that you would prefer we use?

In my simplistic world, national GDP equals the value of what America as a whole earns.

If government/society is deciding where the money must be spent, then individuals are not deciding how they want to use the money.

And yes, some of this money is being paid via taxes and recovered via benefits, so the real number is a bit challenging to secure.

John said...

The problematic issue is when society decides that government must protect everyone from feeling the pain of the negative consequences that an individual's actions, inactions, beliefs, etc generated...

Someone chooses to not work at getting an education and a good job, they should feel discomfort, hunger, etc to some level. Unfortunately Liberals want to protect unmotivated folks from that natural consequence.

Someone chooses to have six children when they can only afford 2. Unfortunately Liberals want to protect the procreators from the natural consequence of poverty.

Some person decides to get high, rob a store and attack an officer. ...

Sean said...

That's not the point.

We were having a perfectly reasonable discussion on whether greater MN needs were taking a back seat to the metro and what might happen related to the surplus, but somehow we ended up in the overall % of GDP roundabout again (where we really didn't need to be).

Anonymous said...

Do you have a better "size of government" metric that you would prefer we use?

How about number of employees?

--Hiram

John said...

Sean,
Of course it is important and relevant, we were discussing if the rural people wanted more money, benefits, attention, etc.

What if they actually want everyone to do more with less, so they can keep and use more of their own personal money?

Remember that lots of people wanting more is a major contributing factor in why we have the problems we do...
Forbes Spending Problem

Hiram,
Unfortunately head count is only part of the story. % of GDP picks up head count, compensation, wealth transfer, spending, etc.

And how would one tell if government head count has shrunk adequately through the effective use of technology? If population is up 1000%, what should government head count be up?

Sean said...

Let's do a little thought experiment. What if we left Greater Minnesota alone? Turn off the gas tax and the income tax for them, cut off the road funding, LGA, and school funding. Do you think Greater Minnesota is better or worse off under that scenario, and why?

Laurie said...

I am wondering how John is the expert on what rural people want.

I guess rural people is code for conservative. I think most people favor spending cuts in broad, generalized terms, but don't favor most cuts when specified, like cuts to schools.

I think dems had control in st. Paul for the past two years because statewide voters didn't like the cuts and govt shutdown a couple of years ago and they blamed the GOP. Now that memory has faded and they went back to their default preference, which results in more republicans elected outstate.

John said...

Sean,
It seems that the Southern and Western half would be a lot like Eastern South Dakota... Not sure what the North Central and North East would be like... Maybe like Western South Dakota since they both rely on tourism... So I don't things would change much.

Laurie,
Most of my friends and family are from out state, besides the fact that I grew up and went to school there. (ie go Canby Lancers and SDSU Jack Rabbits)

Most of the rural folks have more in common with SD and ND voters than the MN urban voters. So yes I think many of them value low taxes, small government and self reliance.

Personally I think the GOP foolishness regarding amendments is what cost them the legislative elections. Besides the Independent Governor candidate pulling more Votes from the GOP candidate than Dayton.

Anonymous said...

Unfortunately head count is only part of the story. % of GDP picks up head count, compensation, wealth transfer, spending, etc.

Head count is one way to look at it. % of GDP picks up a great deal more than government size. Social Security is a program which transfers wealth from workers to retirees. How does the existence of such a program make government bigger?

"And how would one tell if government head count has shrunk adequately through the effective use of technology?"

No measure is perfect, and I must say, but if government is smaller because it's more efficient, does that make it less small?

--Hiram

Anonymous said...

Let's say for some reason, your house triples in market value. Let's say your other financial assets don't increase at the same rate such that the value of your house represents a greater portion of your wealth. Let's say also that you use your house more efficiently, insulate it better perhaps.

Do all those things mean your house has gotten bigger?

--Hiram

John said...

Gross Domestic Product is a Product, not an investment. (ie not a house, more like rent earned from renting out a home)It varies with population size, effectiveness, efficiency, cost of living, etc. Just like the government does.

Regarding social security, medicare, and other insurance policies, you are correct that they technically are not part of government. Only the cost of administering them and any wealth transfer aspects are part of government.

However they are part of the "power of government", private citizens lose the ability to invest as they wish, buy the the insurance they choose, etc because the law forces them to pay for social security, medicare, etc through payroll taxes.

That I guess is my point. individual citizens continue to lose more of their financial freedom every time government assumes more financial control.

The assumption of liberals seems to be that society knows better how the money should be used than the wage earner does. It is too bad they think so poorly of people.

Sean said...

"So I don't things would change much."

Sure, it would. Without the subsidy provided by the metro area, greater Minnesota wouldn't be able to provide the same resources without increasing the tax burden on their citizens. So they would have some very hard choices to make.

Anonymous said...

Gross Domestic Product is a Product, not an investment. (ie not a house, more like rent earned from renting out a home)It varies with population size, effectiveness, efficiency, cost of living, etc. Just like the government does

So what's the answer to my question? Do you think your distinction between product and investment is relevant here? If the price of a tube of toothpaste, a product, increases, does it get bigger?

--Hiram

Anonymous said...

That I guess is my point. individual citizens continue to lose more of their financial freedom every time government assumes more financial control.

Does a recipient have more financial freedom before he receives his social security check? Or after?

--Hiram

John said...

Sean,
Sorry, I disagree. South Dakota has lower taxes and a high quality of life... I am not sure what you think the rural Minnesotans would lose under your proposal?

Hiram,
Using myself as an example. As a saver/investor I would be much wealthier if I had been allowed access to the 15+% of my compensation that was seized and invested in government bonds.

However the Liberals have decided maybe wisely that too many Americans can not be trusted to work hard and save for a rainy day and their retirement. Therefore that power and responsibility was taken from the citizens and given to the government.

John said...

Hiram,
Product in this case refers to the amount of value created.

Not sure where you are going with the discussion of homes, toothpaste and inflation.

Inflation is something that increases costs and the GDP over time.

That is why we compare Government Cost as a percentage of GDP at a point in time.

Sean said...

"South Dakota has lower taxes and a high quality of life"

By what measures, exactly? SD has a slightly lower unemployment rate, but both MN and SD are in the top-5 nationally. Median household income is nearly $10,000 higher in MN. MN students score higher on 4th grade and 8th grade NAEP testing, and on the ACT test as well. The OECD rated all 50 states on various quality of life measures and MN came in 2nd, while SD came in 12th.

John said...

Regarding income. Many things also cost less in SD.

And yes smaller cities and schools don't always have the extensive choice in classes. That was the same for Canby MN. I had a lower ACT score than my daughter did, however I still got into a good college and have had an excellent career.

Regarding the OECD measures, I think they are slightly biased to rate Liberal (welfare countries) higher. SD does have less money going to welfare and funding the non-motivated citizens than MN. That is a basic pillar of Conservative belief.

Besides being number 2 and 12 are both pretty excellent.

Anonymous said...

Product in this case refers to the amount of value created.

Is the size of a business determined by the amount of product it produces at any given moment? Do they get smaller during the lunch hour?

--Hiram

John said...

OECD Better Life Index

OECD USA Comparison

John said...

I believe that is why we do this based on an annual basis and look at trends rather than at any half hour in time.

However to your point, one would expect the percentage to increase during a recession. Then it should fall again during the recovery.

Seeing it continuously creeping up over decades is what is troubling.

Sean said...

So your basis for saying SD is better is because they spend less on welfare?

SD is in part able to have lower state and local taxes because they are highly dependent on the federal government. For every federal tax dollar they pay in, SD gets $1.16 back.

Anonymous said...

I believe that is why we do this based on an annual basis and look at trends rather than at any half hour in time.

So it's not product that determines size of a business, it's the trend of product. There is a trend that businesses sell less in the first quarter of the year. Do they get smaller then? What's the product that government produces against which this trend analysis can be applied? Congress enacts fewer laws than they used to. Does that mean it's getting smaller?

--Hiram

Anonymous said...

The great advantage South Dakota has over Minnesota in business terms is it's proximity to Minnesota.

--Hiram

John said...

I wouldn't say $1.16 is "highly dependent". Atlantic: Dependency

Besides, remember why some states receive more and some less. The Liberal folk decided that the whole country needed to conform to their view of what was "fair".

Therefore they moved a bunch of programs from the State's responsibility to the Fed's. Us Conservatives would prefer that these had stayed at the State level.

So it seems kind of odd when Liberals accuse Red states of getting more Federal dollars. Since they set up the system to ensure it occurred.

John said...

Hiram,
I realize you are just being difficult, however here is a question for you.

If the amount you pay for housing and utilities was initially 20% of your take home pay. Then you make some changes over 10 years and it is then 30%. And 10 years later it is 40%.

At year 20, is your home costing you a larger portion of your take home pay than it initially did?

Do you think you can continue this pattern indefinitely without getting in trouble?

As the housing costs increase as a percentage of your take home pay, do you have less money available to spend on food, hobbies, vehicles, trips, etc? Are your choices also more constrained due to fewer available funds?

Sean said...

"So it seems kind of odd when Liberals accuse Red states of getting more Federal dollars. Since they set up the system to ensure it occurred."

It's not "accusing", it's stating a fact. And I don't have a problem with it. What I have a problem with is lazy conservative thinking that ignores that federal support and cites such states as low-tax paradises.

If the feds turned off the spigot tomorrow, these states would be in a world of hurt.

Anonymous said...

At year 20, is your home costing you a larger portion of your take home pay than it initially did?

Yes. Does that mean the home is bigger?

"Do you think you can continue this pattern indefinitely without getting in trouble?"

Depends on what the take home pay is, I suppose. In this situation in real life, lots of people scale down their housing.

"do you have less money available to spend on food, hobbies, vehicles, trips, etc?"

That depends on how much take home pay is. And why exactly did housing costs increase? Did someone buy a vacation home?

In any event, these hypotheticals seem pretty remote from what we are talking about here. The problem we are facing is clear enough. The population is getting older, and that means in some ways it's more expensive to maintain, at the same time it's becoming less productive. It' not really a size of government issue because government, as even conservatives acknowledge is simply a conduit for wealth transfer. It isn't getting bigger, it's simply doing more.

--Hiram

John said...

Sean,
If you turned off the spigot for SD, most people in the state likely would not notice. Of course those individuals who did not save adequately, didn't take advantage of the free public education to become academically capable, and those who do not want to work hard may find it uncomfortable. On the upside they can then move to MN and take advantage of our tender hearts and wallets, or they can become more motivated to improve their situation.

Without the Fed financial extortion, I am assuming SD would then be free to change the legal drinking age back down to 18 or 19. That should raise some more tax dollars and it would be trusting legal adult citizens enough to buy a beer. Instead of having the Federal government determine "what's proper" and "protect" us citizens.

John said...

"it's simply doing more."

On this last statement we agree.

The collective (ie society/ government) is now deciding how much you will save, what insurance you must buy, what you will invest it in, what benefits the insurance must provide, how much you will give to "charity", what "charities" you will give to, which weapons we can own, etc, etc, etc.

Which of course leaves us individual citizens with less freedom of choice...

Laurie said...

I am curious about what charity you have been forced to give to and which weapon purchase you were not allowed to make.

John said...

Laurie,
I think you know the answer, however I will respond any way.

The government collects a HUGE amount of money through taxes that is then given to help the poor, unfortunate, some slackers and some fraudulent parties.

This was a function that was fulfilled historically when generous citizens made a choice to give money and/or time to a charity of their choice. Now the government collects and redistributes it, while charging a very large management and distribution fee. (ie there are a lot of mouths to feed in that bureaucracy)

Now Liberals may say that wealth redistribution is a legitimate function of government. However somehow we made do for ~150 yrs of this country's history with significantly less of it than we have today.

Worse yet, ACA just upped the ante and created even more wealth transfer. (ie charity)

And the Liberals seem to see that even more is needed. (ie single payer healthcare, eliminating the payroll tax cap, more higher ed scholarships, etc)

I am very curious if there is any upper limit to how much personal choice the Liberals want to turn over to the collective?

John said...

Regarding guns, since I only own 2 shotguns... I personally have not had a problem yet.

However if I ever want to buy an automatic weapon, I could not.

If I want to buy large clips in some parts of the country, I can not.

It is just one example of many where the Liberal crowd is working to take away freedoms from American citizens. The irony of course is that the Liberals constantly accuse the Conservatives of trying to do the same thing. Diagram

Anonymous said...

"The collective (ie society/ government) is now deciding how much you will save, what insurance you must buy, what you will invest it in, what benefits the insurance must provide, how much you will give to "charity", what "charities" you will give to, which weapons we can own, etc, etc, etc."

Oh sure, but this is nothing new, and is a set of issues that goes way beyond the role of government.

--Hiram

Anonymous said...

Worse yet, ACA just upped the ante and created even more wealth transfer. (ie charity)

Wealth is transferring all the time. You don't hear a lot of complaints from rich folk when the wealth is being redistributed to them.

--Hiram

John said...

Hiram,
I agree that wealth is transferring all the time. However most of it transfers because people freely choose to spend their personal property as they choose, not as the collective/ society/ government chooses.

The Walmart family is wealthy because people of their own free will go to those stores and buy product. Bill Gates is wealthy because people of their own free will go to those stores and buy MS product.

Domestic manufacturers have been weakened and foreign manufactures strengthened because people of their own free will chose to buy product that was not developed / manufactured in the USA. Thus transferring wealth from this country to others.

Would you support laws that mandated that one must shop at Walmart or must only buy US products?

John said...

"set of issues that goes way beyond the role of government."

Please explain

Sean said...

"If you turned off the spigot for SD, most people in the state likely would not notice."

Unlikely. The federal government spends the equivalent of 41% of the state budget and employs about 10% of the folks in the state.

John said...

However they would only lose ~16% of that...

"For every federal tax dollar they pay in, SD gets $1.16 back." Sean

Sean said...

"Only 16%?" Would you object to your taxes being raised 16%?

John said...

Okay if 40% of SD's spend is from the FEDs, and SD gets 1.16 for every dollar.

That means that SD would need to cut spending or raise taxes to make up ~6.4%

Since the largest portion of the spend goes to medicaid, developmental services, etc, again I say most of the population would see no difference.

Sean said...

"Okay if 40% of SD's spend is from the FEDs, and SD gets 1.16 for every dollar.

That means that SD would need to cut spending or raise taxes to make up ~6.4%"

Re-read what I said. Federal spending is equivalent to 40% of the state budget. Meaning that the 40% is on top of the state budget, not part of it.