What’s Wrong With Minnesota, Part 1

I can summarize what’s wrong with Minnesota government in four words:  privatized benefits, socialized costs.  This post is the first of a series explaining the following conundrum,

Voters on the right are eternally frustrated that they send “fiscal conservatives” to St. Paul, yet the state budget keeps increasing every year—at rates greater than the rate of inflation and the overall growth in the economy.

Yet, voters on the left are frustrated that there never seems to be extra money to fund their spending priorities on children, the poor, and the elderly.

Both criticisms are valid and both spring from the same set of facts, as this series will develop.

In the past few years, a cottage industry has sprung up trying to explain what is wrong with Minnesota politics, and by extension, American politics.  On the national level, Minnesota’s Norm Ornstein helpfully explains that the problem is the failure of Republicans to keep raising taxes.

More specifically to Minnesota, the explanation for what is wrong with state politics turns out to be…Republicans refusing to raise taxes.  How can that be, you ask, when Minnesota has one-party Democrat rule?

As herald of Minnesota’s left, Star Tribune columnist Lori Sturdevant explains, Republicans were supposed to have raised taxes 10 years ago, but didn’t.  Republicans missed this pre-scheduled tax increase and now Democrats in the state legislature have no choice, you see, but to impose the largest tax hike in state history.  Forced into it, really.  $3 billion in “overdue” new taxes are needed to close a budget deficit of $627 million.

Yet, at exactly the same time that state Democrats are raising taxes and fees by $3 billion, they are cutting money for the state’s most vulnerable citizens by $150 million.  One advocate was quoted as follows,

"I nearly went into shock" said Norm Munk, president of the Minnesota Organization for Habitation and Rehabilitation, who said services to the elderly and people with disabilities are already suffering from previous cutbacks.

Sorry, but the problem with modern politics has nothing to due with Republicans and scheduled tax increases.

This pie chart from a couple of years ago shows what state government spends money on.  Although the total dollars spent keeps going up, the relative shares stay roughly the same. 

2010-2011 Minnesota State Spending, All Funds

Source:  Minnesota Management and Budget

Including Federal funds that are spent through the state budget, three items—health and human services, K-12 education, plus higher education—represent 71 percent of total spending.

However, when state budgets are under threat, we only hear about items within the 29 percent:  roads and bridges (transportation, 9.1 percent), police and fire (public safety, 3.6 percent), and state parks (environment, energy, and natural resources, 3.5 percent).  It’s no coincidence that governments reach for "The Firemen First" strategy:  roads, parks, and cops are among the few items that all agree are legitimate functions of government and represent services that are valued by taxpayers.  Except that these consensus items represent a vanishingly small share of the state budget.

When the state House of Representatives recently voted in a massive $2.6 billion tax increase, the headline in the Minneapolis Star Tribune—the state’s newspaper of record—read, “House wraps $338 million for Mayo Clinic into tax proposal.”  Rochester’s Mayo Clinic is seeking state help for an expansion of their operations (debt service & other, 2.7 percent).

So you, Dear Reader, are off the hook for not knowing even the basics about state budgeting.  A large share of the media coverage around the state budget focuses on these perennial set-piece issues.  This year, it was the Mayo Clinic.  In the previous two years it was the Vikings stadium that sucked up all the local media oxygen.  In years past, the Twins stadium, the Gophers football stadium, and the Mall of America filled that role.

Truth be told, as expensive as these white elephant projects are, their impact on the budget’s bottom line is nil.  However, the impact on the bottom line of the project sponsors is huge.

As it pertains to state government, the items we debate in public have next to no impact on the budget.  The items that have the greatest impact on the budget receive the least attention.

In Part 2, I will begin exploring why this is so.

Amateur Hour at the Capitol

A couple of weeks ago I described how, in 2011, Minnesota’s Democrats were trying to tag the incoming Republican legislative majorities with the label of “amateur hour.”

Fast forward two years and it’s the new Democrat majority earning the amateur hour reputation.  Monday afternoon, the Democrats in the state Senate failed to muster the votes for their own multi-billion-dollar tax hike bill.  Later in the day, they had to conduct an embarrassing do-over vote to get the measure through, forcing two members into the never-pleasant “I voted against the tax hike before I voted for it” position.

All of this is made that much more delicious because of this April 16th quote from Democrat Senate Majority Leader Tom Bakk,

"It is the majority's job to put up 34 votes for a bill and we did that."

Sen. Bakk was speaking specifically about the lack of debate on the Senate’s efforts to raise their own pay.  But even in that limited context, I think he misunderstands his role in leading the upper house of the state legislature.

For beginners, he failed to put up the 34 votes this afternoon.  In what had to be ranked as the biggest vote to date of his tenure as Majority Leader, he fumbled the ball.  And this from a Senator so famously intolerant of legislators with less experience than his 18 years.   I’m sure there is an argument to me made for a less stage-managed politics.  Tom Bakk is not the guy to make that argument.

Instead, his job should be more than just putting up 34 votes for whatever whim strikes one-party-rule that day.  If you are raising taxes to record levels, raising your own pay, and regulating industries like never before, you owe an explanation to the voters, even those who did not vote for you.

Does a Bear ---- in the Woods? Not if the MPCA Can Stop Him

On the radio this past Earth Day Monday, I put forward the proposition that the modern environmental movement is a victim of its own success.  As the obvious environmental problems are all solved—burning rivers, open waste pits, etc.), we have to dig ever deeper for new challenges and set new standards for environmental quality, no matter how unreasonable, to make environmental “progress.”

This article in today's Minneapolis Star Tribune on local smog jogged loose a nearly-twenty-year-old memory. 

Back then, scientists were searching for clues as to why certain waters in the Chesapeake Bay region were being contaminated by fecal coliform bacteria.  The usual suspects—agriculture, residential housing, and sewage treatment—appeared blameless.

Scientists from Virginia Tech studying the matter collected data showing that at some locations and times, wildlife are the primary sources of fecal pollution. 

Update on Green Energy Follies

The good folks at the Center of the American Experiment have collected and updated my series on Minnesota's renewable energy policy.

Super-Secret Tax Deals: The Shape of Things to Come

One of my favorite TV commercials from the 1970’s was for Triumph Motor Company’s sports cars.  Promoting the alleged aerodynamic qualities of their triangular-shaped British-made cars, Triumph used the tag line, “The shape of things to come.”  Triumph proved to be far from the mark, as the egg-shaped minivans of the 1980’s demonstrated.

Triumph itself never lived to see that day, ending production in 1981.  When then-Prime Minister Margaret Thatcher (whose funeral was this morning) pulled the plug on government subsidies for state-owned industries, Triumph’s parent company, British Leyland, was broken up and sold off.

Although both Triumph and Baroness Thatcher are now gone, the belief in industrial policy—that government can make better decisions than private business—is still alive and well.

Case in point:  Minnesota state government.  On Monday, Democrats in the state House of Representatives introduced a bill to raise taxes by $2.6 billion over the next two years, which (among other items) would increase the state’s income tax rates to the nation's second highest.

Cheap at Twice the Price

Days like today are the reason that I don’t attempt satire.  Once cannot parody real life, at least not in this age.

To date, the Minnesota State Legislature—despite one-party Democrat rule—has accomplished little of note, unless you count the further government takeover of the state’s health insurance industry.

Yet today the state Senate saw fit to reward their effort so far by voting in a 35 percent pay increase.  One observation that I have not seen made:  the raises take effect in 2015, but senators will not face voters again until 2016—senators will pocket the increase without first having the opinion of the voters recorded at the ballot box.

Arguments in favor of the pay increase were as numerous as they were unconvincing.  A few:

·        We’ll attract better-qualified candidates.  First, I’ll say “none taken.”  Second, does that mean the 34 senators who voted for higher pay will immediately resign, so we can vote in better senators?  Third, I hope our new senators will be smart enough not to raise their own pay before the next election.

·        A raise is overdue.  Of the 201 members of the legislature, 57 just began serving their first term.  In what sense is their raise “overdue”?  They knew the pay level before the filed to run for office.  How common is it to get a raise just 3½ months into a job?  We really have lost the sense that a stint in the legislature is not supposed to be a career.

Meanwhile, over at the state House of Representatives, Democrats there are increasing the state’s income tax to the nation's third highest, (or is it 2^nd highest?) in addition to raising every other tax they can think of.  At the same time, the state legislature is assembling a package of tax breaks to lure a big company here from Illinois.  How can those two sentences possible be true?

We are going to spend $5 million to create 190 jobs, or in the new currency of the day, 119 state senators.

So which is it?  We need to raise taxes on everyone, so that we can lower taxes for a few, well-connected companies?  Or, we need to raise taxes on everyone so we can give state senators a raise?

Neither.  It turns out that the real reason we need to raise taxes on everyone [and I’m not making this up] is that—gosh darn it—we’re just spending too little on government.

Like I said, satire is simply not possible.

Weather Facts

This morning, I carefully scanned my newspaper's weather page for any hope of a return of Spring.

Seeing none, I checked out the weather facts for this date.  Yesterday's high temperature (34) was 23 degrees below the average high for the date (57).  In fact, we have experienced a colder than "normal" winter, as measured by Heating Degree Days: 7,105 so far this winter, slightly more than a normal to date of 7,086.

We had more snowfall yesterday, bringing the seasonal total to 56.1 inches, slightly more than a normal of 53.  We've had above normal precipitation for the month and year so far.

What does this mean?  Nothing.  We have long, cold winters in Minnesota.  That's normal for our mid-continent latitude.

Yet, somehow, Republican weatherman Paul Douglas writes on the same page that this is all somehow proof of something called "Global Weirding."  Douglas writes,

"Global warming implies steady warming, worldwide.  'Global Weirding' better describes what we are seeing."

Yes, the globe has been warming, although not so much in the past 20 years.  "Climate Change" never really worked as a label, as the climate is always changing:  always has, always will.  So now we have arrived at "global weirding."

I wish I could remember who said it, but the adage applies, "If you say that every bit of data proves your theory, the phenomenon you are describing is not science."

There Will Be a Budget Deal

The Minneapolis Star Tribune is out with an article ("DFL still a long way from deal on budget") making exactly the same point that I made a few days ago:  one-party Democrat rule has little to show for its efforts just a few weeks from the end of the session.

Here's a prediction:  there will be a budget passed.  It will be the largest budget ever passed in the history of Minnesota--any way you look at it, per capita, inflation adjusted, or as a share of the state's economy.

The budget will be passed before the "end" of session.  Even if they have to cover up the clock to pretend midnight has not passed, even if they have to come back and fix it in special session.

The budget and much else will be passed at the last second, with bare partisan majorities, in massive bills that no single human being will have read all the way through before they are signed into law.

It will all be hailed as a once-in-a-generation political triumph.  Until...months later...when someone gets around to reading the bills passed...and we all wonder:  now what?

The Deck Chairs, Part 2

Author Michael Lewis (Liar’s Poker, Moneyball) traveled to Iceland shortly after that nation’s bankruptcy in 2008.  His Vanity Fair article on the visit was an early, front-line report on the great global financial collapse, told from the viewpoint of a tiny (population 320,000) arctic-island nation.

One anecdote has stuck with me more than four years after his piece ran in the magazine:  the exploding Range Rovers.  As Lewis recounts to National Public Radio in an interview,

“I had just arrived and there were all these weird noises in my hotel room that were keeping me up in the middle of the night, and the last of them were these explosions.  And I got out of my bed the next morning and went to interview a young banker.  And I said, ‘you know, it was a little odd.  There were all this noises and these explosions.’  And he said, ‘yeah, there have been reports of lots of Range Rovers blowing up.’  And he kind of laughed about it.

“But what he meant was—and what has happened was—during the boom years, 2003 to 2008 in Iceland, Icelanders had taken to—because their own currency, the krona, had a very high rate of interest associated with it; if you borrowed krona to buy Range Rover, you paid a 16 percent interest rate, so they all borrowed Swiss franc and Japanese yen and other currencies to buy these—to buy houses, to buy Range Rovers, and when the banks collapsed last fall and winter and the Icelandic krona collapsed, they found themselves owing huge sums of money in krona terms for these things they had bought.

“And there were really only one or two things you could do to get out of your debt, your car loan.  One was to put the car in a boat, ship it to Europe and try to sell it for some currency that was worth something, or the other thing was to set it on fire and hand it back to the insurance company.  And so that's what the young banker was referring to when he said there have been a lot of reports of Range Rovers blowing up.

Imagine yourself, tooling around Reykjavik (I checked, they drive on the right) back in 2007 and seeing all the magnificent vehicles on the street.  You would have been impressed with the wealth of the place.  Two years later, those vehicles were going up like firecrackers.

And so it is with America in the ‘Teens.’  No kidding, the other day I went to the grocery store and there was a recent vintage Bentley in the parking lot.

If you are a person of the Left, I can imagine how you would think that the government can’t be too big; taxes couldn’t be too high, if someone could afford to take a Bentley grocery shopping.
 

Take another look at the statistics I included in Part 1.  Take that guy’s Bentley, take everything else he owns, and sell it.  There is not enough wealth among “the rich” to balance the budget.  As we saw, you can take all household income—leave people with zero to pay for food, shelter, and clothing—and you will not balance the budget.

The trappings of wealth we see as we move about are just that.  Individuals may be rich, households may hold great wealth, and corporations may have record amounts of cash on theirs balance sheets.  But once you factor in the debt (public and private) and the unfunded liabilities not recognized on the balance sheet (pensions, entitlements) we are broke. 

California—a state blessed with a mild, Mediterranean climate, rich farmland, top-rate universities, and abundant fossil fuel deposits—is worse than broke.  The State Auditor has calculated the net worth of the state government at a negative $127 billion.

Fortunately, the story in Iceland has something of a happy ending.  After seeing the complete collapse of the economy, unemployment has fallen to 6.3 percent and the economy is growing again.  But it took a worldwide crisis, and exploding SUV’s, to get there.                                  

The Deck Chairs, Part 1

For me, one of the more fascinating bits of the Titanic’s story involves the ship’s designer, Thomas Andrews.  He was among the passengers on the doomed ship’s first and last voyage in 1912.

Within minutes of the ship hitting the iceberg, Andrews had gone below to survey the damage.  Using whatever analog tools were at his disposal a century ago, Andrews calculated the weight of the water rushing in, the weight of the water being pumped out, and estimated (in his words, with “mathematical certainty”) how many minutes the ship had left.

The heroic efforts of the crew below decks bought the ship an extra half-hour beyond Andrews' estimate, just enough time to launch the last of the life boats.  As for Andrews, after making his fateful calculation, he helped load passengers into lifeboats and was last spotted on deck tossing wooden deck chairs to passengers thrashing in the water to use as floatation devices.

I remembered the story of the ship builder when I was reviewing this document about the long-term Federal budget outlook.  The Congressional Budget Office calculates that Federal debt will equal 200 percent of our nation’s economic output (gross domestic product, GDP) by the year 2037.

Except that it won’t.  Economist Herbert Stein is credited with promulgating Stein’s Law, which says “If something cannot go on forever, it will stop.”

Somebody bothered to do some simple math this week.  Total spending by all levels of government is estimated at $6.2 trillion for this year in America.  There are 115 million households in America, according to the U.S. Census Bureau.

Dividing one number by the other results in government spending per household of $53,913.  Back to the Census Bureau data, median household income is $52,762.  Government is spending more money than the typical household makes.  Forget “tax the rich,” you can take all (100%) of the income made by the typical household, and you won’t balance the books.  [Please don’t write me about the difference between median and mean.]

Like Mr. Andrews, someone could run the numbers and figure out exactly how many years (months?) our economy has left with “mathematical certainty.”  But somehow, we are all convinced that current government spending trends can go on forever.

In Part 2, I will explore the mystery of Iceland’s exploding Range Rovers.

"I Love It When A Plan B Comes Together"

A friend of mine observed on Twitter this afternoon that there sure seem to be a lot of “Plan B’s” floating around the state capitol for a government dominated by one-party rule.

It’s true.  Everywhere you look in St. Paul this week, the Democrats are playing a mulligan off the tee:  whether it’s the Governor’s Budget 2.0, the Mayo expansion bill, financing for the Vikings stadium, or the on-again-off-again gas tax.

To be fair, I would have trouble getting organized if I were governing from a program completely unrelated to the one I campaigned on.  Minnesota’s 88^th legislature has passed just 10 laws to date.  The gridlocked, hyper-partisan, do-nothing, Republican-controlled 87^th had managed to pass a dozen laws by this point in 2011.

As it happened, back in 2011, I spent much of the first few weeks of the 87^th legislature sitting in committee hearings and watching floor sessions.  Back then, the Democrats, newly in the minority, took every opportunity to leap upon each Robert’s Rules slip up or parliamentary faux pas.  The Democrats were trying to develop an “amateur hour” narrative around the newly-elected Republican majority.  With the 88^th legislature, the amateur hour theory doesn’t work, as Democrats are the natural party of government.

As the possibility of an on-time finish in five weeks recedes beyond the horizon, I am still confident that 2013 will see record amounts of legislation passed—even if it takes all twelve months to get it done.  What I’m most concerned about is the quality of the work product.  Like last year’s Vikings bill, too much of what gets slapped together minutes before committee hearings has that Pelosian “we have to pass the bill so that you can find out what is in it” feel. 

To expand on a quote from a few posts ago, Time magazine’s Joe Klein wrote back in 2010 of the national party version,

Democrats tend to be more interested in legislating than in managing.  They come to office filled with irrational exuberance, pass giant fur balls of legislation — stuff that often sounds fabulous, in principle — and expect a stultified bureaucracy, bereft of the incentives and punishments of the private sector, to manage it all with the efficiency of a bounty hunter.

Our Minnesota version, the DFL, seems to suffer from a similar malady.  Whether it’s the new state healthcare exchange, the ever-evolving tax bill, or the many social engineering efforts, this year’s priorities have no shortage of detail and complexity.  As for workable, check back with me next year.

Conservative vs. Fiscal Conservative

Blogger Aaron Grote was first out of the gate, posting a thoughtful response to my essay concerning the intramural conflict between conservatives, fiscal conservatives, and moderates over the topic of the state budget.

I appreciated reading about his thought process in working through the competing instincts to limit the growth of state government (on the one hand) and wanting to do the right thing in not leaving a "deficit" going forward (the other hand).

It illustrates two strains of conservative thought:  "limited" government and "responsible" budgeting.  Mr. Grote appears to lean toward the latter, while I lean toward the former.

Read his post as part of this series.  I can't say I disagreed with any of it, except the final conclusion.

The Puzzle of Minnesota Moderation

I have long been puzzled by the psychological phenomenon of cognitive dissonance:  holding two contradictory ideas in your head at the same time.  But I am making progress in understanding the cognitive dissonance inherent in the Minnesota political moderate.

Republican moderate—fiscal conservative—pro-business Democrat:  we use these terms so casually that at some point they begin to lose meaning, or worse, begin to mislead.

A New Tsunami of Cash for Political Charity

A little over a year ago, my friend Tom Steward published his eye-opening series on the tsunami of cash flooding into Minnesota from out of state to remake our energy and environmental laws.

Tom focused on the workings of RE AMP, a Minnesota-based media and policy network that operates the website Midwest Energy News.

Today, the Minneapolis Star Tribune reports on the local McKnight Foundation's new grant to RE AMP and others.  The Foundation, arising out of the 3M fortune, has pledged $25 million to fight global warming in the Midwest.  Read that last sentence again.

The Star Tribune reports,

"The two-year grants of $20 million to Energy Foundation and $5 million to RE-AMP, a network of nonprofits, extend existing funding partnerships and the philanthropy’s $100 million commitment, announced in 2008, to blunt climate change.  The two groups will focus on developing policies and public education to reduce dependence on fossil fuels in Minnesota, the Dakotas, Wisconsin, Illinois, Iowa, Michigan and Ohio."

Since when did "philanthropy" mutate into "developing policies"?  How many homeless could be housed with $25 million?  How many hungry could be fed for $25 million?  How many sick children could be healed with $25 million?

I suppose that the McKnight Foundation can spend its $ billions any way it chooses.  What I can't quite see is how global warming policy counts as charity.

“Problem-Solving Democrats” are the new “Pro-Business Moderates”

I’m old enough to remember a time when political campaigns had a beginning and an end.

No longer.  As soon as the 113^th U.S. Congress was sworn in, Democrats began campaigning to re-take the majority in the the 114^th.

In January 2013, Democrats announced their first ten targeted House seats, with the top two being in Minnesota (the 2^nd and 6^th districts).  It may well be that the path for a Democrat congressional majority for President Obama’s last two years in office will go through the Twin Cities’ suburbs.

Republicans and the Young Voter

Rush Limbaugh has some interesting thoughts on the matter, over at PolicyMic.

The Shape of the Playing Field, Part 2

Returning to the topic I began a couple of months ago, I continue to explore exactly what issues we Republicans and conservatives are allowed to engage in.

Somehow I had missed last month the latest screed of David Schultz, the Hamline University professor and the local media’s favorite “neutral” policy analyst.  The good professor writes about what, exactly, is wrong with the Republican Party,

It is a party that believes that opposing gay rights, reproductive rights, the Violence Against Women’s Act, civil rights, higher minimum wages, and reasonable gun restrictions is not a serious impediment to winning the votes of young people, moderates, people of color, and the poor.

He adds,

They are the party of cranky, greedy old rich folks who seem not to care about anyone else.

I was reminded of Dr. Schultz’s invective when reading a recent column in which Mark Steyn made this observation about the state of the policy debate,

Much of the progressive agenda—on marriage, immigration, and much else—involves not winning the argument but ruling any debate out of bounds.

So, if Republicans and conservatives are not allowed to debate the progressive agenda—as Steyn explains and Schultz demonstrates—than what role are we supposed to serve in the political process?

In a column earlier this week, the Wall Street Journal’s James Taranto provides an answer in the course of reviewing the recent work of Time magazine’s Joe Klein on the subject of ObamaCare,

What Klein wishes for is a division of labor in which the two parties would cooperate to make government bigger.  He'd like the Republicans to reinvent themselves as a nonideological party devoted to effective management, which would allow the Democrats to focus on expanding government.  In such a world, Democrats would face no serious resistance to their legislative efforts, and there would be less risk of ObamaCare-style failures because the elephants' job would be to clean up after the donkeys.

I’m all for better and more efficient government.  Republicans and conservative politicians tend to have more private sector and managerial experience than our counterparts and certainly have better relations with private industry and the free enterprise system.  We have much to offer in ideas and energy to make government work better for the people.

In his 2013 State of the State Address, Minnesota Governor Mark Dayton issues this challenge,

But it is time to prove that Minnesota’s leaders are capable of more than ideological skirmishes and political stalemates, which offend our state’s citizens and jeopardize our state’s future.

This is our time and our responsibility…to work together and build a state that works.  So, if you’re coming to this State Capitol during the next four months, bring your best ideas and your sincere convictions.  Bring your work boots and your hard hats.

The Governor is interested in hearing your "best ideas" on how to make the progressive state work better.  He is not, however, willing to listen to any ideas ("ideological skirmishes") that challenge the progressive state.

But our role in the political sphere cannot be limited to merely managing the welfare state better than the other guys, or in the words of Irving Kristol, to stand ready to provide “a brief interregnum of conservative government whose function it is to consolidate and ratify liberal reforms.”

For me there are no issues that are out of bounds.  I am contesting every square inch of the playing field.

Kim Crockett on Minnesota Pensions

My friend Kim Crockett of the Center of the American Experiment goes in depth on the coming public pensions crisis in a commentary in today's Minneapolis Star Tribune.  Here's a taste of what is coming down the line,

"Duluth’s [teacher] pension fund is circling the drain because it has only 900 active members supporting more than 1,200 retirees—and those retirees continue to get cost-of-living increases despite the fund’s $120 million shortfall."

Governing and Legislating

The Wall Street Journal's James Taranto makes a good point in his column today, in quoting Time's Joe Klein,

"Democrats tend to be more interested in legislating than in managing."

Minnesota Waits for Reform...and Waits

In today’s Minneapolis Star Tribune, Minnesota House of Representatives’ Speaker Paul Thissen writes a commentary under the headline “Minnesota DFLers offer a responsible budget.”

Speaker Thissen is a Democrat, or as we style it in Minnesota, DFL (Democrat-Farmer-Labor) and he comes close to tearing a rotator cuff with his self-congratulatory opening sentence,

“The Minnesota House DFL has proposed to balance the state’s budget without gimmicks, including paying back Minnesota schools with a temporary two-year income tax surcharge on the wealthiest Minnesotans.”

Am I the only one who noticed that he contradicts himself within the opening sentence?  How does a “temporary” income tax “surcharge” not qualify as the gimmickiest gimmick that ever “balanced” a budget?

The Stockton Syndrome Infects Minnesota Pensions

In news that should have been bigger new this week, the City of Stockton, California, received the go ahead to file what will be the largest municipal bankruptcy in American history.  It probably won’t hold the record for long.  As the Modesto Bee reports,

"Nearly two dozen California cities, from San Jose and Watsonville to San Bernardino and Compton, are facing bankruptcy filings or financial emergencies—and their hefty pension costs are getting heightened scrutiny."

How bad a shape is the California state pension system (CALPERS) in?  The Bee notes,

"California's $225 billion Public Employees Retirement System is underfunded by $87 billion, which means there are more payments due to retirees than money in the system.

"Stockton's biggest creditors insured $165 million in bonds the city issued in 2007 to keep up with CalPERS payments as property taxes plummeted during the recession. Stockton owes CalPERS about $900 million to cover pension promises—by far the city's largest financial obligation."

So America’s largest pending municipal bankruptcy is due in large part to pension obligations owed to public sector workers.  Doing the math, that nine-tenths of a $ billion works out to more than $3,000 for every resident of Stockton.

We in Minnesota would never let ourselves get into such a mess, right?

Others Act While We Lament on Higher Education

Back in 2011, Texas Governor Rick Perry proposed the $10,000 bachelor degree.  In late 2012, Florida Governor Rick Scott picked up the challenge for his state.

Across the country, Massive Open On-line Courses are shaking up higher education and setting a new price point: zero.

Back in Minnesota, an early contender for higher education headline of the year is “Dayton, Franken lament high cost of college,” Minnesota Public Radio reports,

The two Democrats said students are graduating with too much debt and that federal and state aid to help people go to college needs to be increased.

So while other states are experimenting with new business models to replace the increasingly antiquated guild structure, our Ivy League-educated brain trust is trying to further inflate higher education bubble.  Another opportunity for reform goes begging.

A Reform Agenda for Minnesota

In the five months since the last election, Republicans in Minnesota (and across the nation) have been trying to figure out what comes next.  Consensus has formed around such items s the need for better organization, better use of technology, and the need for better “messaging.”  No doubt.  But what “message”?  My suggestion for a message would emphasize an agenda for state government reform built around performance and accountability.

The DFL majorities in the state legislature and our DFL Governor Mark Dayton have proposed budgets with $ billions in new taxes and $ billions in new spending.  These unsustainable increases in state government come with no strings attached:  government is not being asked to reform or modernize its operations in the least.

A good place to start is right at the top.  The cabinet of the Governor of Virginia, for example, includes 15 members, counting the Chief of Staff,  his senior policy advisor and a “Chief Jobs Creation Officer” (the Lt. Governor)—to serve a state of more than 8 million people.

The Governor’s cabinet in Minnesota includes 26 members.  Adding in the Lt. Governor, the Governor’s chief of staff, and his senior policy advisor would bring the Minnesota total to 29, for a state of less than 5.4 million people.  Indeed, President Obama’s cabinet consists of only 16 members, including the Vice President and the Attorney General.  Clearly, we have some room for agency consolidation in Minnesota.

Moving around boxes on an organization chart won’t solve Minnesota’s chronic budget problems.  Those cabinet officers are confirmed by the state Senate under the “advice and consent” clause, but accountability tends to end there.  A mechanism for the ongoing review of executive branch manager performance—while in office—by the legislature would help reinforce the idea of accountability for results and accountability to the people.

Making the Grade

Taking that idea one step further, each state agency and each state program funded with tax dollars should undergo an annual review and receive a letter grade.  Much of what takes place under the banner of state government occurs within programs and projects, each having rather narrow missions and a specific set of responsibilities.  Each such division should be reviewed and graded.

Letter grades would be based on management of state resources, fulfillment of mission, and achievement of numerical goals.  Merely existing for another year will not earn a passing grade.

As you may recall from the college fraternity movie Animal House, the Delta chapter president boasted of his house’s “long tradition of existence both to its members and the community at large.”  More will be asked of state government.

If you are a state government program begun in the 1970’s (or earlier) either you (1) have accomplished your mission and should be wound down, (2) need significant reform to accomplish your mission, or (3) must acknowledge that your goal will never be accomplished.

Going into this annual review process, there should be an expectation that some programs will be discontinued, some agencies will be merged with others, and some managers will be let go.  Minnesota taxpayers can no longer afford to provide more money with no additional accountability.

Caveat Adsiduus

Accountability to the legislature is one thing, but it is only a substitute for accountability to the people.  Businesses routinely offer money back guarantees for their services, but with government, it’s always caveat emptor.  But with government, we don’t have a choice of whether or not to emptum.

We no longer seem to report on which Minnesota public schools are officially “failing.”  But there can be no doubt that some schools are failing our children.  For this small percentage, state government should pledge to those parents and children:  any child stuck in a failing school can be transferred to a better school within a year.  Minnesota’s nation-leading achievement gap means that another generation of children is in danger of falling behind.

These ideas will surely improve over time and more discussion, but the time has come for government to be accountable.