Demography Trumps Dayton's New "Minnesota Miracle"

It was inevitable in the fawning local media coverage of Governor Mark Dayton's "post-modern budget" that some commentator would compare the effort favorably with Governor Wendell Anderson's 1971 "Minnesota Miracle" budget.

Star Tribune columnist and keeper of the liberal flame Lori Sturdevant stepped up and wrote this yesterday,

"In 1971, while the baby boomers strained school facilities and budgets, Gov. Wendell Anderson faced a property tax revolt when he pushed through what is still Minnesota's largest-percentage sales and income tax increase, in order to reduce property taxes and boost education funding.

"Dayton's new budget employs essentially the same strategy. He would raise both income and sales taxes in order to cut property tax bills, via a $500-per-household rebate, and send more resources to education."

She's right, it is essentially the same strategy from 40 years ago.  The only problem is, today, the baby boomers have long departed from the school system.  We are closing schools, not opening them.

The old saw goes, "Demography is Destiny."  As I wrote back in May 2011, Minnesota's demography will not support Dayton's taxing and spending plans.

In the 19th century, Minnesota's median age was in the early 20's.  By the 1950's, it had peaked out at 30.6 and then started falling with the baby boom.  At the time of the 1970's "Miracle," the age had bottomed out again in the mid-20's.

Since 1971 the median age has only risen.  In the 2010 Census?  37.4 years.  Simply put, a tax strategy for a society getting younger (1971) won't work in an aging society (2013).  Here's what I wrote two years ago,

"A young society [in 1971] had plenty of earning years remaining to overcome the drag of higher taxes, and still save enough for retirement.  The relatively young state needed more investment in its large school age population.  And the state's population was young enough to be around to enjoy the benefits of that investment.

"Fast forward to 2011:  aging baby boomers are, in large part, driving the pressure for more spending on health care.  But our median age is now 11 years older than it was in 1970.  We are a middle-aged society and no longer have the luxury of time to earn enough to overcome the higher taxes the Governor proposes."

"What looked good in 1971 as a policy alternative can't be sustained with 2011's demography."

The situation has not improved in the past two years.  In fact, we are now in the 4th year of a new baby bust.  From my perspective, Dayton's budget represents not "a bold vision" but a dangerous disconnect from demographic reality.