The Legislature returns to St. Paul on Tuesday, Jan. 7, for what could be the most contentious session ever. With a $4.5 billion budget deficit, this session will see far-reaching changes in the shape of government. Whether those changes will be for good or ill for Rural Minnesota, only time will tell.
The budget deficit is 13% of the entire two-year budget. Even a complete shut-down of state government will not cover that gap. That means that we cannot solve the problem with little cuts or "improving efficiency," even though those things ought to be done.
Gov.-Elect Tim Pawlenty has pledged not to raise taxes - although now it seems like he's put a little asterisk on that pledge. The asterisk means "this pledge does not include local property taxes."
The reason that asterisk has to be there is that about two-thirds of state spending is transfers of money from the state level to cities, counties, townships and schools. That's all designed to reduce local property taxes. The cost of K-12 education is 41% of the budget. Direct aid to local governments is another 10%. Health care and human services account for 26%, and about half of that amount is for nursing homes, public hospitals and other services provided by the county governments.
The current system is a good deal for Rural Minnesota. That's because two-thirds of state revenue comes from the Twin Cities metro area, while two-thirds of the money spent on education, health care and local government aid is given to Rural Minnesota. In simplistic terms, it means that $1 of state tax paid by a rural resident gets us $1.33 of services, while the Twin Cities resident gets only 67 cents of service for their tax $1. Anti-government groups like the Taxpayers League constantly complain about this rural-metro disparity. Suburban Republicans, including Gov.-Elect Pawlenty, know they pay most of the bill for services that are mostly used in Rural Minnesota, and they don't like it.
SESSION PREVIEW
Gov.-Elect Pawlenty will submit his budget recommendations by early February. Those proposals will tell us how the new governor intends to treat Rural Minnesota.
If Gov. Pawlenty proposes a cut in local government aid, rural cities and counties will face the choice of cutting back core services, like police or fire protection, or else raising property taxes. Many rural communities receive up to half of their budget in the form of state aid.
If Gov. Pawlenty proposes cuts in education, it will likewise mean cuts in core programs - or an increase in school property taxes. In some rural school districts, state aid provides 70 to 80 percent of their budgets. Cutting education could be a back-door method of forcing rural school consolidation.
If Gov. Pawlenty proposes cuts to health and human services, we could see many rural hospitals and nursing homes pushed past their financial breaking point. Who will take care of our ailing seniors?
The choices are equally unpleasant. We as citizens will pay more - if not in state taxes, then in property taxes. And even as we pay more, we will get less in services, especially in Rural Minnesota. Anyone who tells you there is an easy way out that won't involve either higher taxes or loss of services is just being downright dishonest.
After dealing with the budget crisis, the Legislature is unlikely to have the time or energy - or the money - to address any other issues.
It's uncertain what will happen with the proposed Twins and Vikings stadiums. Certainly there's no state money available. Gov.-Elect Pawlenty has not made it clear whether his "no tax hike" pledge extends to the local taxes (ticket tax, parking tax, etc.) involved in proposals to finance the stadiums.
There will likely be another attempt to discuss prescription drug price controls, but it's doubtful that would make much headway. Neither Gov.-Elect Pawlenty, nor the Republicans who control the House, have supported these proposals in the past, and there's no sign they've changed their minds.
As always, please feel free to contact me on this or any other issue that is of interest or concern to you. You can reach me at the Capitol by phone at (651) 296-6206, by e-mail at rep.al.juhnke@house.mn, or by mail at 371 State Office Building, St. Paul, MN 55155.
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