Friday’s Star Tribune carried an op ed entitled “LGA Smackdown.”  As framed in the op ed, in one corner was Governor Pawlenty, who was quoted in his radio program insisting that state aid cuts were not the cause of rising property taxes in Bemidji.  In the other corner was Bemidji Mayor Richard Lehmann, who countered that Pawlenty’s claims constituted “a drive by rant…based on a questionably loose interpretation of facts.”

Pawlenty argued that Bemidji’s LGA has been cut only slightly from 2000 to 2009; let’s assume that’s correct.  The problem is that Pawlenty makes no adjustment for inflation.  The Governor is fond of making the “family by the kitchen table” analogy.  Let’s take a page from his playbook.

Let’s say the family of four had an income of $30,000 in 2000.  The same family has an income of $30,000 today.  The problem is that everything that the family buys—from gas to groceries to health insurance—has increased in price.  This family would be considerably worse off today than they were in 2000 because the real purchasing power of their income would have fallen dramatically.

From 2000 to 2009, per capita state government revenue increased by approximately 30 percent.  However, Pawlenty apparently expects the City of Bemidji to get by with a zero percent LGA increase and still not increase property taxes.  The Governor is applying a fiscal standard to Bemidji that the State of Minnesota—even under his penurious leadership—has been unable to meet.

The reasonable way of examining state and local government finances over time is in real (i.e., inflation-adjusted) dollars.  Using the same measure of inflation recommended by Pawlenty’s Senior Policy Advisor, increases in real per capita property taxes in Bemidji since 2000 have been insufficient to keep pace with real per capita cuts in state aid.  The result is that the real per capita revenue base of the City of Bemidji has declined over this period despite property tax increases.

If we examine state aid to Bemidji during Pawlenty’s tenure as governor, it becomes apparent why Mayor Lehmann is upset.  From 2002 to 2009, Bemidji’s state aid (including both LGA and the homestead credit) decline by $190 per capita in constant 2009 dollars (a 44 percent drop); Bemidji recouped this loss through equal measures of budget cuts ($94 per capita) and property tax increases ($96 per capita).  Thus, Bemidji residents were compelled to pay higher property taxes at the same time that real cuts were made in the City budget.

And so goes Pawlenty’s property tax shell game.  In order to solve the state’s budget problems, Pawlenty disproportionately cut the revenue of counties, cities, and school districts, thereby compelling local governments to cut budgets and increase property taxes, while he sits back and sanctimoniously postures as a “fiscal conservative.”

A true fiscal conservative would address Minnesota’s budget crisis honestly through a balanced mix of spending cuts and revenue increases, rather than by dumping a disproportionate share of the state’s fiscal mess on to the backs of Minnesota local governments and property taxpayers.

Postscript: If the Governor’s July LGA unallotment is struck down as unconstitutional and Bemidji receives the full aid amount certified for 2009, the real per capita decline in Bemidji’s LGA from 2002 to 2009 will be $174 per capita (40 percent).

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Over morning coffee, newspapers and last night’s uncollected homework sprawled across my kitchen table, I heard a state legislator’s radio interview. He declared that “we need to find some money” for a particular program. He made a great case for why the program’s additional $40-60 million was important.

I agree. It’s an important program but that’s not my issue right now. Ruminating over the legislator’s remarks, it was his verb choice that really stuck with me, not his argument for the program’s efficacy or impact.

“Find” means to discover, locate or reveal. It also means “to come upon by chance.”

Suggesting that money can be “found” reinforces the conservative argument frame that government budgets are bloated and wasteful. Finding money suggests that money may also be lost. Pulling on a lighter jacket from my closet, last worn in October, I may find a $20 bill in the pocket. Problem is, I didn’t lose it. The bill was there all along, revealing that I was a less than faithful steward of my family’s financial resources.

Minnesota doesn’t need more process. We need positive, progressive outcomes.

A better way of approaching state budgetary priorities is to first establish progressive state budgetary priorities. I understand that legislating involves negotiation and compromise but clear public policy direction involves hard choices. The “something for everyone” approach isn’t going to work with a state budget deficit that starts at $1.2 billion and will likely range to $4 billion.

The truth of the matter is that some budget priorities are more important than others. If we, as progressives, don’t make a strong, clear case for every line item in our proposed budget as well as identifying its place in the larger plan to move Minnesota forward, we surrender frame and context to conservative interpretation. If we do that, we lose and Minnesota continues sliding backwards.

Money doesn’t grow on trees and manna won’t fall from the heavens. Minnesota revenue is generated by Minnesota economic activity. Better schools, health care, transportation and economic development policy will expand that activity. It takes hard work and tough choices, not fortuitous intersections with chance.

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A report released Wednesday by the non-partisan Office of the Legislative Auditor found that students who attend “extended time” classes – those offered before or after the school day or during summer vacation – perform better on standardized tests than students who don’t take the classes.

The state’s alternative education programs serve about 150,000 students at risk of not graduating from the traditional education system. Alternative education programs are provided by area learning centers (ALCs), alternative learning programs (ALPs), and contract alternative schools. They often substitute for a traditional school, and many also offer “extended-time” programs that take place outside of the traditional school day (either during the summer or before or after school). About 75 percent of students in alternative education programs were enrolled only in extended-time programs.

Only students who are academically behind their peers are eligible for the programs. “Not surprisingly, alternative education students had lower rates of proficiency than other students on the Minnesota Comprehensive Assessments, Series II (MCA-II) exams,” the report found.

However, students in kindergarten through eighth grade who received extended-time services showed higher-than-expected growth on the MCA-II and the Northwest Evaluation Association’s assessments when compared with other Minnesota students and national norms.

Meanwhile, students who attended regular-day alternative education programs full time were “more likely to have high growth than low growth on the MCA­II reading exam, although the difference was not statistically significant,” the report stated.

Other findings include:

• Alternative education secondary students generally had lower attendance and graduation rates than traditional students, but many students showed improvement on these measures;
• High school students reported high levels of satisfaction with their alternative education experience;
• School districts provide the primary oversight of alternative education programs, but some school district staff are concerned about the rigor of the curriculum in programs attended by their students in other districts;
• The Minnesota Department of Education has adopted policies that limit access to targeted services.

The report recommends that the state initiate a pilot project to use and evaluate alternative education student performance, as well as allow all school districts to offer extended time classes, regardless of whether they provide other alternative education programs.

The increase in test results is encouraging, as is the improvement in attendance and dropout rates among those more likely to drop out. This is further evidence that the more students are engaged in school, the more likely they will stay in school and perform better in school. The future of education should include longer school days and longer school years. This much is clear.

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Was it something we said?

In his first statewide radio interview in nearly a year, Governor Tim Pawlenty was asked about today’s Star Tribune editorial noting Minnesota 2020’s recent report showing that as Minnesota has cut revenue more than any other state in the union, our overall economic performance has become average relative to other states. The Governor couldn’t dispute the facts, given they came from reputable sources like the US Census Bureau. So, he decided to shoot the messenger.

Instead of addressing for Minnesota’s drop to a 37^th rank in student-to-teacher ratio and 39^th ranked employment growth on his watch, he decided to launch a cheap political attack against Minnesota 2020. He reached to find statistics that show where Minnesota is maintaining (which we note in the report) while ignoring critical areas where we are slipping.

We can take all the criticism the Governor can throw at us. In fact, we appreciate that he thinks we’re credible enough to mention on a statewide radio program. However, Minnesotans can no longer take the poor outcomes his blind adherence to “no new taxes” orthodoxy has brought us.

We tried it his way. For nearly a decade, conservative public policies have resulted in record deficits and mediocre economic performance. Minnesotans expect more than mediocrity. We don’t live here because we enjoy freezing temperatures most of the year; we live here because of the high-paying jobs, top notch schools, and affordable health care decades of investment have brought us. We strive to be above average.

Governor Pawlenty has 11 months remaining in office and a state sliding toward mediocrity. It’s time to clean up the mess his conservative policies have created. Both the Governor and legislators need to come together and chart a new course for Minnesota’s future. Let’s re-commit ourselves to having the best schools, jobs, transportation infrastructure, and health care in the country. Let’s focus on what really matters.

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More grizzly news, but logical, has come since Minnesota 2020 issued an update on the weak housing market on Feb. 1.

The Washington Post reported that same day 9.1 percent of FHA-backed mortgages were in default after missing at least three mortgage payments. That was up from 6.5 percent at the end of December a year ago.

Meanwhile, the California-based RealtyTrac research organization now predicts 3 million foreclosure actions for the current year, up from 2.8 million in 2009.

Oh, and DailyFinance.com also points out that Fitch Ratings credit agency reminds us that $47 billion in interest-only loans will be reset to full payments this year.

This is occurring at the same time researchers note employment is lagging and is so far unaffected by the statistical signs that an economic recovery may be in the works.

We shouldn’t be surprised. There’s essentially 10 percent unemployment, and 10 percent mortgage failures across the country. Data show only slightly better negative news in Minnesota, but nothing to brag about.

Minnesota could use a boost to both employment and the housing market. As we’ve noted, there are tools for both.

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Statistically speaking, precinct caucuses didn’t happen. Seriously. With roughly 40,000 Minnesotans participating last night, about 3,000,000 Minnesotans of voting age stayed home. Participants constitute about 0.013% of the electorate.  40,000 people populate a Saint Paul city ward or an under-attended Minnesota Gopher football game at the new stadium.

Precinct caucus attendees have, however, a leveraged impact on Minnesota’s public policy debate. Precisely because they’re focused on both politics and policy, we pay inordinately greater attention to caucus results than an activity involving 0.013% of the population merits.

As breathlessly as the candidate beauty contest is covered, the real story concerns Minnesota’s public policy direction. That’s a trickier outcome to measure. In fact, it’s not particularly covered at all.

We observed, last night, earnest declarations of support for schools, jobs and economic growth but not much policy detail. To some degree, that’s to be expected. Proposed state-wide leaders must convince Minnesotans that they, the candidates, are worthy leaders. Policy orientation and proposals are one critical leadership element but so is a winning smile, a decent haircut and an ability to persuade people to support a course of action.

All of this leads to the central question, initially proposed last night, as Minnesota precinct caucus attendees gathered: what’s the path forward?

We need a fundamental shift, discarding failed conservative public policy direction and replacing it with a progressive plan than puts people first. Minnesota does best when it focuses on education, health care, transportation and economic development. For the past ten years, state public policy leaders have embraced different priorities; now, it’s time for a change. We must move forward.

That’s something that I think 40,000 Minnesotans can agree on.

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An image used by the modern tea party movement shows colonial patriots dressed as American Indians dumping tea off of ships into the Boston harbor in December of 1773.  When it comes to selecting a signature event, today’s “tea partiers” have chosen poorly.  The tax protests of modern tea partiers have nothing to do with the Boston Tea Party of 1773.

The impetus behind the Boston Tea Party was the Tea Act of 1773.  In response to colonial outrage, Parliament repealed most of the taxes imposed through the Townshend Act of 1767.  However, the hated tax on tea was left in place as a demonstration of Parliament’s authority to tax the colonies.  Irate colonists would have none of it.  Tea laden ships were not allowed to land in New York and Philadelphia.  In Boston, tea was taken from the ships and dumped overboard.

The outrage of the colonists was not about the price that they were forced to pay for tea because of tax; in fact, the price of tea declined in the American colonies as a result of the Tea Act because the East India Company was allowed to directly export tea to the colonies rather than having to go through middlemen in London.  The rage of the colonists was not about the amount of the tax; rather, they objected to the principle of any tax imposed upon them by government officials that they had no voice in choosing.

Modern tea partiers can make no such claim of “taxation without representation.”  At the federal level and in all 50 states, taxes are imposed by elected representatives.  You might not have voted for the current officeholders, but you still had the opportunity to vote.  Americans and Minnesotans today are taxed with representation.  Thus, there is no connection between modern tax protesters and the patriots who dumped tea into the Boston harbor nearly twelve score years ago.

Modern tea partiers have constitutionally protected free speech rights.  Indeed, a fact-based debate over taxation is healthy and should be encouraged.  However, those who advocate for low taxes and less public investment should not misappropriate historic events that have nothing to do with the cause they espouse.  Nor should they pretend to be any more patriotic than the rest of us.

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Higher education rarely takes center stage on the national agenda, and the current political environment, dominated by proposals to stimulate the economy and reform health care, is no exception. However, among the many programs and initiatives President Obama highlighted during the State of the Union address on Wednesday were two higher education programs that would prove very important to Minnesota students as they weigh the increasing cost of higher education alongside the high unemployment rate.

First, President Obama urged the Senate to pass a student loan reform bill that would direct billions of dollars to Pell Grants and community colleges, generally making higher education a more affordable option. He also called for an expansion of the government’s newly created Income-Based (student loan) Repayment Program to make the burden of student debt a little lighter following graduation.

The legislation would end the Federal Family Education Loan Program and shift all student loans into the direct loan program. According to the Congressional Budget Office, the plan would generate an estimated $87 billion in savings over 10 years, which would be redirected to increase grants, a new community college initiative and other programs. The House of Representatives passed its version of the bill in September and President Obama urged the Senate to follow their lead.

The Income-Based Repayment Program, created by Congress in 2007, allows borrowers with federally subsidized loans to make reduced payments on their loans that total no more than 15 percent of their discretionary income. President Obama’s proposal would cut the maximum payment to 10 percent of a borrower’s discretionary income, and would allow those loans to be fully forgiven after 20 years of payments rather than the current 25 years. The program aims to increase government support for college students who take low-paying jobs after they graduate. The President also indicated that there would be even more extensive loan forgiveness for individuals who enter public service careers.

These proposals are definitely helpful tools for students in Minnesota (and around the country) as they try to find ways to find ways to finance their education without being hindered by overwhelming debt after graduation. I know I’m repeating myself, but I can’t say it often enough: making college more affordable is vital to creating a skilled workforce that will keep Minnesota competitive in the years ahead, and these programs definitely take a necessary step in the right direction.

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The future is here!

Actually it’s in Germany, but close enough. The German government and their public-private partnership health care system has introduced electronic health insurance cards that not only hold your billing information and insurance information, it holds your important medical information. Why is this important?

Imagine you are in an accident and you arrive at the hospital unconscious. That is pretty bad in itself, however, more importantly you are allergic to a common pain medicine and you are unable to alert the doctors treating you. If you are given this drug your body will get into all kinds of trouble, severely lowering your chances of survival. You were alone in the car and thus no one else are able to tell the doctors about this either. However, because you are in Germany and you have an electronic health insurance card the doctors simply read the information in the computer chip embedded in your card and thus avoid using the wrong medication on you.

Another scenario: You and your spouse are on vacation and you have an accident. Your spouse is not a particularly sick individual, but she is in her 70s and is on a rather extensive drug regiment. In the confusion of it all, neither of you are able to remember the different medications she takes, and the doctor ends up giving her something that has a bad reaction with her regular medication. Because the doctor lacks information, what started as an undramatic trip to the hospital ends up being very serious.

It is for reasons such as these that the technological development in Germany is important. I am no doctor, but I do know that the more information your doctor has about your health the better he can treat you. If Minnesota and the country as a whole want to get serious about lowering health care costs, this innovation should be seriously considered.

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The Surface Transportation Reauthorization Outreach Meeting, held January 25^th at the University of Minnesota’s Humphrey Institute was full of noble goals. Speakers from both the public and private sectors who emphasized the urgent need to update, expand, and maintain the nation’s freight and passenger infrastructure and ease the gridlock so many of us confront on a daily basis. This last point was of special relevance to me, as I was forced to battle my way through a ninety minute commute from the outer suburbs to attend the meeting.

I was not alone in my frustrations. Bad weather delayed the aircraft carrying Secretary of Transportation Ray LaHood and Representative Jim Oberstar, Chairman of the House Transportation and Infrastructure Committee. Upon settling down to business, we attendees were exposed to the numerous ways Minnesotans rely on our roads, bridges, sidewalks, and harbors. Steve Carter, Director of Transportation Planning at Target Corp, discussed the need to maintain shipping lanes, both on land and water, to facilitate the flow of commerce into the state and the ultimate affect these policies have on consumers.

Barbara McCann, President of the National Clean Streets Coalition delivered a compelling account of the group’s success in making Charlotte, North Carolina into a more commuter-friendly city. The city’s success was built through the addition and improvement of sidewalks and bike lanes and was completed with no supplementary funding. As a result, Charlotte was awarded the National Award for Smart Growth Achievement in Policies and Regulations. Minneapolis and St Paul could benefit by looking toward Charlotte’s example.

The major announcement of the meeting concerned the Twin Cities’ Central Corridor project. Secretary LaHood announced the addition of three new stops, all in St Paul, that would help to stimulate the neighborhood’s economy. Though as I will demonstrate in an upcoming report, more stops on the line may not be the advantage they may appear to be.

It was heartening to see support for improving this state’s transportation infrastructure come from diverse sources. Because of the federal money available to the state as part of the recovery package, Minnesota now finds itself with a unique opportunity to reverse our crumbling infrastructure and take on projects that will go far to stimulate commerce as well as ease commutes.

While the need to improve Minnesota’s transportation infrastructure was met with near-universal accord, the method of how to proceed with such measures did not. In discussing the construction of an inter-city train line connecting the Twin Cities with Chicago, a self-identified “Tea Party” supporter noted that while he supported an expansion of rail travel, he rejected the notion that the projected should be funded with the help of taxpayers.  Yet if we wish to regain our place as a model for the rest of the country, we Minnesotans must be willing to invest in our state.

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