Wednesday, November 30, 2016

The Money Tree

Liberal commenters on MP often state that the way to the out state voter's heart is by spending more money on them. Since I came from out state this concept often confuses me. MP Confused
"I am always fascinated at where folks think the government money to service bonds and spend on projects comes from? Is there a secret money tree in St Paul?

From my simplistic understanding, every dollar that the government spends has to be taken from the citizens. Or in the case of bonds, it is spent on the current citizens while the burden of paying the bill is transferred to our children.

Now I understand that many here think that the MN government has not been increasing their spending fast enough. However this data from the MMB clearly shows that gov't spending is/has been increasing more rapidly than our incomes. Probably not a good trend. MN Spending History

And please remember that it was the DFL who wanted to raise taxes on fuel (regressive tax), rather than finding ways to make government more effective and efficient.
 A related string from MP GOP Surprise. (see link for responses from Dan)
"When I was visiting my family in SW MN, I heard this interesting story. Apparently one of our neighbors works road construction in MN and SD, he is apparently paid $16/hr in SD and $32/hr in MN due to MN's wage laws. Now the reality is that $16/hr is a good wage in that community, however the folks in St Paul apparently know better than the employers what a fair wage is.

Therefore citizens across MN are paying more in taxes, and the locals are not too happy about that."

"Actually they mandate much higher wages in the Metro...Prevailing Wage

Just remember that when you are wondering at the staggering cost of road, bridge, light rail, stadium, etc construction. It is the folks in St Paul who mandated the wages and drove up the project costs.

Not sure how taking more from all of us citizens to give more to certain citizens makes sense. Maybe it encourages those folks to vote for them..." G2A

45 comments:

Sean said...

"And please remember that it was the DFL who wanted to raise taxes on fuel (regressive tax), rather than finding ways to make government more effective and efficient."

Are you suggesting we should pay for roads out of the General Fund instead of how it is currently done?

Anonymous said...

I am always fascinated at where folks think the government money to service bonds and spend on projects comes from?

It comes from taxes.

--Hiram

jerrye92002 said...

Perhaps the key to understanding is to remember a MN Federal Reserve study from a while back. When asked where government gets the money it spends, over 50% said "it has its own money" aka the magic money tree. I couldn't find that survey online, but I did find this "economic literacy survey" on which the average score was, apparently, an appalling 45%. I got 100% and I don't think I'm that smart, so how economically illiterate must Americans be?

https://www.minneapolisfed.org/publications/the-region/economic-literacy-survey

jerrye92002 said...

Sean, isn't "the way it's currently done" that repayment of road and bridge bonds come from the General Fund? Or does it come from "dedicated" gas taxes, of which the DFL has decided that 50% must go to light rail?

John said...

Sean, To me they are just pockets in the same pair of pants. The sources and which pocket is used is immaterial.

Hiram,
And who pays the taxes? Are they collected off a tree?

Jerry's Link

Sean said...

"Sean, isn't "the way it's currently done" that repayment of road and bridge bonds come from the General Fund? Or does it come from "dedicated" gas taxes, of which the DFL has decided that 50% must go to light rail?"

At the state level, almost all road and bridge bonding has been backed by gas taxes. There have been a few exceptions over the years, though. Gas taxes are constitutionally dedicated to road and bridge construction at the state level as well -- they are not diverted to LRT.

Sean said...

"Sean, To me they are just pockets in the same pair of pants. The sources and which pocket is used is immaterial."

That may be, but it doesn't accurately reflect the challenge that legislators face when trying to fund transportation.

John said...

I think you are incorrect... Certainly transportation taxes have constraints as you note above. However, if I remember correctly the GOP wanted to use a different more progressive pocket for transportation funding and Dayton said no.

John said...

More Background

Sean said...

There are lots of holes in the GOP plan, but two scare me the most. First off, that $3B shift of General Fund revenues is highly problematic. The first time the state runs a deficit, that pot of money will get shifted back into the General Fund so fast it will make your head spin. Why? Because both parties will jump at the way to close the deficit without raising taxes. In fact, the great majority of the GOP plan is based on General Fund dollars, which would introduce significant uncertainty into the efforts of MNDOT planners. Gas tax revenues have been reasonably predictable over the years, which enables the state to coherently plot a course forward. Second, without any actual plan to back it up, the notion that there's $1.2B is savings in MNDOT's organizational structure seems tremendously optimistic. By most accounts, MNDOT is already running a pretty slender organization.

John said...

Remember that prevailing wage law that jacks up the cost of many of the projects?

And the few stories I have heard about the DOT is that they are as screwed up as the Public Education system with Union promoted "time served / seniority" rules and regs.

John said...

Random Interesting Link

OLA Link

John said...

MPR Wisc Changes Worked

Wisc State Journal

John said...

Incredible if this only the State employees we pay... What are they all doing?

MN Budget FAQs

Here are some state payroll facts:
◦$110 million bi-weekly payroll
◦37 thousand direct deposit / paychecks issued bi-weekly
◦$2.134 billion annual all funds salaries and wages paid out in FY 2013
◦$2.853 billion in total compensation costs for FY 2013 (including retirement, social security, and insurance costs)

This payroll includes executive branch state agencies, constitutional offices, the judicial branch, retirement systems, and the Legislative Auditor which are paid through the state's payroll system. Not included are payroll estimates for the Legislature, higher education systems (University of Minnesota and MNSCU), and and quasi-state entities such as the Minnesota Historical Society and Metropolitan Council which are generally not on the state payroll system and are effectively treated as grant or aid payments.

On average, the cost of total state compensation can be broken down into the following general components based on FY 2013 payments:
◦74.8 percent - Salaries
◦5.0 percent - Employer-paid retirement contributions
◦5.2 percent - Employer social security contributions
◦15.0 percent - Employer insurance contributions

John said...

Math for Thought

Total Cost: $2,853,000,000
Employee #: 35000
Cost per employee: $81,514.28

jerrye92002 said...

"Gas taxes are constitutionally dedicated to road and bridge construction..." -- Sean

Aren't you forgetting the recently passed Constitutional amendment to dedicate AT LEAST 50% of gas taxes to "transit"?

The advantage of putting transportation in the General Fund rather than "dedicated taxes" is that it allows the legislature to prioritize their spending. This last session the DFL absolutely insisted that transportation was their top priority, yet demanded new taxes to fund it because, apparently, there was nothing else in the budget that was a lower priority than their top priority.

John said...

What are you talking about?

Ah... This one... Looks like it only applies to vehicle sale tax.

Sec. 12. Motor vehicle sales tax apportionment. Beginning with the fiscal year starting July 1, 2007, 63.75 percent of the revenue from a tax imposed by the state on the sale of a new or used motor vehicle must be apportioned for the transportation purposes described in section 13, then the revenue apportioned for transportation purposes must be increased by ten percent for each subsequent fiscal year through June 30, 2011, and then the revenue must be apportioned 100 percent for transportation purposes after June 30, 2011. [Adopted, November 7, 2006]

Sec. 13. Motor vehicle sales tax allocation. The revenue apportioned in section 12 must be allocated for the following transportation purposes: not more than 60 percent must be deposited in the highway user tax distribution fund, and not less than 40 percent must be deposited in a fund dedicated solely to public transit assistance as defined by law. [Adopted, November 7, 2006]

John said...

This one seems to still be in place.

"Sec. 10. Taxation of motor fuel. The legislature may levy an excise tax on any means or substance used for propelling vehicles on the public highways of this state or on the business of selling it. The proceeds of the tax shall be paid into the highway user tax distribution fund."

jerrye92002 said...

Sean is correct. The amendment 10 years ago dedicated only the motor vehicle sales tax to roads and to transit, funds which formerly went to the general fund. So the criticism that transportation should come out of the General Fund and be subject to the Legislature's priorities still holds.

Anonymous said...

Liberal commenters on MP often state that the way to the out state voter's heart is by spending more money on them.

I don't agree with that and the evidence is that we do spend of money on them, and we have not yet found a way to their hearts.

There has been a sort of historical bargain between urban and rural Minnesota, that they would support each other in their endeavors. In the last few years, that bargain has been rejected by voters who have come to focus on their own interests, at the expense of the interest of others. So we have gridlock since neither side, at the moment at least has the political strength to enforce their will alone.

--Hiram

John said...

I assume the mega spending the cities has been doing has not helped the perception of our rural cousins. (ie multiple stadiums, billions in Light Rail, that fancy new Senate office building, etc)

They just get care for the elderly and children... And Minneapolis gets all that + a shiny Billion dollar stadium... Perception is reality.

And passing the LGBT marriage law within a year of that part of our population voting to ban it...

There is definitely a divide that will need to be resolved.

jerrye92002 said...

And you forget the urbanites imposing their environmental sensitivities on those who need the jobs in outstate MN.

Anonymous said...

I assume the mega spending the cities has been doing has not helped the perception of our rural cousins.

That's the argument they seem to buy certainly. They seem to be saying why aren't you spending more of your money on us? Instead of responding to your transportation needs, why aren't you doing more for ours? Hence the gridlock.

Stadium wise, let's always remember that it was forced on the city of Minneapolis by outstate legislators who wanted the benefit of a stadium without paying for it. Vikings Stadium will always be Julie Rosen's baby.

--Hiram

Anonymous said...

And you forget the urbanites imposing their environmental sensitivities on those who need the jobs in outstate MN.

I don't forget that at all, actually, it's a big issue, and one where the conflict is genuine. Lots of stuff Republicans talk about in rural areas, the Senate Office Building for example, seem to me to be appeals to jealousy or envy, but environmental issues and the conflicts they entail are real.

--Hiram

John said...

Nah, I think of the stadium as Mark Dayton's baby... He signed the paperwork.

Personally I don't think it is jealously as much as... Why do you keep raising my taxes to buy that unnecessary stuff???

Remember that a lot of them are very conservative with their money, and not prone to spending on extravagant things.

John said...

And I am certain the Senate office building was seen as mark of government waste.

I mean everyone else is using technology and automation to make work forces more efficient / effective. And for some reason government needs even more people and buildings to do the same things...

Sean said...

I really don't think the stadium has any legs as an issue that moves voters. Plenty of rural GOPers voted for the stadium, and they aren't paying price for it.

The GOP did an expert job of framing up the Senate office building -- which, of course, was jammed through by a guy from a town with 574 people -- as some grand urban conspiracy to screw the rural folks.

Anonymous said...

I think of the stadium as Mark Dayton's baby...

Mark's not running for anything. Julie wants to run for governor. And she was the stadium's principal supporter; if it's an occasion for blatant political corruption as now seems to be the case, she will bear part of the responsibility for it.

Personally, I don't understand why any politician, but especially a DFL politician would ever take the enormous political risk of being seen in a luxury suite. For myself, I would never even attend a game at Vikings Stadium out of concern that someone might see me there. For the average Minnesotan, Vikings Field is just a football stadium, but for a politician, it's a minefield.

--Hiram

Anonymous said...

And I am certain the Senate office building was seen as mark of government waste.

The senate needed an office building. It wasn't wasteful. And the proof I would offer for that is that Republicans intend to move into it now that the election is over. My longstanding suggestion is that the Senate Office Building be turned over to the University of Minnesota's political science department, but that one seems to have been mostly ignored.

--Hiram

John said...

Why again after 100+ years did they need more office space?

Did our Legislative bodies grow in size?

Did technology slide backwards so that more people were needed to do the same job?

Have they never heard of WEBEX and Virtual Meetings?

John said...

Look at Dayton's Big Smile

jerrye92002 said...

The general perception out there is that the new SOB was NOT necessary, and certainly didn't need to be the "palace" that it is. There is plenty of empty office space in StP that could have been used on a temporary basis for a LOT less money, until their capitol offices had been renovated.

Anonymous said...

The general perception out there is that the new SOB was NOT necessary, and certainly didn't need to be the "palace" that it is.

Then why are Republicans moving into it? Why are they not taking my suggestion and turning it into a U of M facility or use it for office space generally?

The point of having legislative offices is to have some place where constitutents can meet with legislators. Strewing them all over St. Paul would hardly serve that purpose.

--Hiram

Anonymous said...

Why again after 100+ years did they need more office space?

Because senators had makeshift offices all over the capitol.

But now that Republicans are in control of the legislature they can do anything they want with the building they believe is unneeded for legislative purposes. So why don't they find a better use?

--Hiram

John said...

Hiram, The money is already spent... Why wouldn't they move into it?

The question is was it worth removing $90,000,000 from the pockets of us citizens to give part time legislators nicer offices?

John said...

Office Building Opens

John said...

It looks like the State does operate quite a few buildings.

Sean said...

"Have they never heard of WEBEX and Virtual Meetings?"

Have you ever heard of open meetings laws?

John said...

WEBEX is the best kind of open meeting.

People from all over the State could attend by just logging in.
It could be recorded and speakers are identified by log in.
It can not be disrupted by protesters standing up in the middle of it.
etc...

Sean said...

"WEBEX is the best kind of open meeting."

Utilizing that sort of technology would be great for encouraging public participation in hearings. But the actual officials themselves need to be in one location accessible to the public.

jerrye92002 said...

Why?

John said...

Back to the details Page 6 -7

"Meetings may be held by interactive television if specified conditions are met to ensure openness and accessibility for those who wish to attend.24 The Commissioner of Administration issued an opinion in 2013 that attending a meeting using a web-based technology like Skype is like attending by interactive TV and is allowed as long as the requirements for attending by interactive TV are met."

Sean said...

Or perhaps let me clarify: the officials should all be in a public location. Unless there is some sort of emergency, we shouldn't have legislators taking votes from their basements.

Why? There's all sorts of reasons, including the fact that legislators should have to appear in public and actually interact with constituents.

John said...

I am fine with the committee members all being in the room... But 7 politicians and a web cam don't need a very big room.

jerrye92002 said...

I think you have different kinds of meetings. e-meetings can be held with some number of active participants and others simply monitoring. Those where public testimony is taken would need to at least have the testifiers included as "interactive" participants. Those who insist on open meetings so they can harangue and intimidate the politicians, well who cares about them. And some meetings don't really need to be open, say for example formulating legislative strategy or electing leadership.