Posted: 02/18/08 13:39
by Dave Mindeman
One of the spotlight letters in the Pioneer Press today goes like this:
It's a Bad Time to Raise Taxes
As the 2008 legislative session convenes, it is important for our legislators to recognize that Minnesota families are hurting. Middle-class families are faced with rising inflation rates, higher property taxes and the ever-expanding mortgage crisis. Even the cost of basic necessities, such as groceries and gas, are skyrocketing, hurting both the middle class and our seniors.
In these tough economic times, the worst thing our legislators can do is raise taxes and fees. Yet the DFL-controlled Legislature intends to do just that. Legislators have announced their 2008 budget proposal, essentially their "Declaration to Tax and Spend." Instead, our legislators should set a good example for families by cutting taxes and wasteful spending.
Citizens will need more of their paychecks, not less. In these tough economic times, taxing and spending is the wrong thing to do.
JEFF HAGEN
White Bear Lake
A letter like that begs the question: When is it a good time to raise taxes? And of course, the GOP answer is NEVER!
During the Ventura administration, we had the pleasant task of having a huge budget surplus to work with. But did we invest in transportation?..Nope. Did we work for universal health care? No, again. Did we invest more into education? Wrong, once more.
No, we sent everybody a check. Republicans said..."Give the money back.... it's the taxpayers money." And a couple years later we had the biggest deficit in the state's history with a Govnernor who had signed a "no new taxes" pledge. We have struggled ever since, despite several years of solid economic growth. And our transportation problems have worsened. Our education system has been dependent on budgeting by levy. And health care costs continue to skyrocket.
It is not a question of taxes or no taxes....the real emphasis needs to be on consistent revenue. Gas taxes have not been raised since 1988 -- that is truly an irresponsible fact. If your average family income was stagnant for 20 years, how well do you think they could have survived....even with 2% inflation? You know the answer.
In tough economic times, the states have to face tougher solutions than the Federal government. States have to balance budgets...the Federal government can deficit spend. The Minnesota state budget has to be balanced... and instead of looking for band-aid fixes, we need to look at the long term.
We have 3 basic options:
1) Borrow money: The Pawlenty solution to everything. The problem is that we have been borrowing, heavily. State debt service continues to grow and takes up a significant portion of the general fund. That is money we cannot shuffle around. We will borrow some more this year, but the Republicans want to use bonding money to meet transportation obligations. They admit that we need more revenue in this area, but want to push our obligation to pay into the next generation. Transportation is a basic obligation of the state -- it must come from dedicated general revenue and right now, that means a tax increase in the revenue areas that support transportation.
2) Cut spending: We have done this as well. Funny how one district's needs are another district's pork. But that is the constant argument that follows spending priorities. The real problem is that if you bundle all of these special funding and bonding requests together and eliminate the whole package, it never puts a dent in how we balance the budget. Instead, our Governor has cut the areas that often need funding support the most. While JOBZ and Green Acres and TIF financing and Ethanol subsidies and NWA breaks are untouched, social services get targeted. Spending cuts are certainly part of the budget balancing process, but the methodology used by this administration has no sense of fairness whatsoever.
3) Tax Increases: Yes, there is NEVER a good time to increase taxes... but at some point it is necessary. It certainly needs to be a last resort, but to arbitrarily cancel it out as a means of raising revenue is ludicrous. The legislature needs to carefully measure the economic effects of tax increases, and it also needs to make sure the revenue raised meets proper revenue needs. We should be willing to adjust tax rates downward when surpluses are generated. But, right now, our problems cannot be solved by spending cuts and borrowing alone.
Tax discussions are difficult and never popular. But we need to be realistic about how we meet a balanced budget goal. We are headed into uncertain economic times, and a state that uses all of its tools to make sound fiscal policy, has made wise choices.
