The 85th legislature adjourned on Sunday, May 18 and at that very moment, the 2008 election season began. What had originally been four months of highly contentious legislative wrestling is now being portrayed as “one of the most successful sessions in decades.” At Monday’s press conference, legislative leaders from both sides of the aisle flanked the governor and touted the accomplishments of the 2008 session.
The DFL-controlled legislature had an aggressive agenda from the very beginning of the session to raise taxes, increase government spending, expand regulations and implement social engineering programs. While Republican minority leaders fought valiantly to block most of these measures, some caucus members broke ranks with leadership, thereby allowing some of these bills to slip through.
Thankfully, Governor Pawlenty vetoed many bills such as Legalized Gestational Surrogacy, Infant DNA Warehousing and Local Government Domestic Partnerships. But the governor’s veto of the Transportation bill was overridden by six wayward Republican House members, thereby allowing one of the largest tax increases in Minnesota’s history to be passed into law.
The sound bytes being fed to Minnesotans by the mainstream media don’t begin to tell the whole story behind the 2008 legislative session. Our analysis seeks to separate the hype from the reality, thereby allowing Minnesotans to assess what they really got out of this year’s session.
Hype: A $935 million budget deficit was erased and the budget balanced without raising taxes.
Reality: The budget fix was nothing more than a band-aid and taxes were raised – significantly. Lest we forget, the override of the governor’s transportation bill veto cost us a $6.6 billion tax increase on sales, fuel and vehicle registrations. And if approved by voters this November, Minnesotans will be paying more in state sales taxes to fund arts programs and wildlife habitat.
The final budget deal also included a $125 million tax increase on corporations with foreign operations. This was sold to the public as “closing a corporate loophole,” as if corporations were doing something underhanded. In reality, this provision was enacted by the state legislature years ago to avoid driving corporations with foreign operations out of Minnesota.
Senate Minority Leader David Senjem (R - Rochester) cautioned that the fix relied too heavily on tapping the state's “rainy day” reserve fund and not enough on actual spending cuts. Nearly $500 million needed to balance the budget came from the state’s rainy day fund, tapping about 80% of the fund’s reserves. Senjem predicts the result will be a much worse budget problem in 2009.
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Hype: A 3.9% property tax cap resulting in $460 million in property tax reductions.
Reality: When does a tax increase become a reduction? When the government doesn’t raise taxes as much as they otherwise would, it’s billed as a tax cut. This is like expecting to gain 30 pounds and stepping on the scale to discover only a 20-pound gain. Using legislative math, that’s a ten-pound weight loss.
Most politicians somehow failed to mention that while they were creating the property tax “cap”, they were simultaneously increasing local government aid by $60 million. This sleight of hand maneuver essentially took taxpayer money out of one pocket and put it in another, thereby diluting the real impact of the property tax “cap”.
The so-called “cap” includes exemptions that allow communities to exceed 3.9%. Local governments can exceed the cap for things like population growth and emergency services. The cap also doesn’t include local school district referendums. And what happens when cities blow their budgets on non-essentials and then need more funding for police and fire departments, or when the cap expires in three years time? This “cap” is really more like an open-top visor. In reality, many Minnesotans will see property tax increases that well exceed 3.9% and their projected “savings” to Minnesota taxpayers will be nowhere near the claimed $460 million.
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Hype: Nation-leading health care reform that includes increased transparency, pay for performance, e-prescribing and tax credits.
Reality: While there are some positive aspects of the health care bill like greater consumer transparency and electronic prescriptions, its major thrust is to grow government involvement and enroll more families onto state-subsidized health care. Families making up to $57,000 now qualify for state welfare health plans, adding thousands of new people to taxpayer-funded health care. The bill adds insult to injury by offering a bounty to outfits (schools, non-profit groups, insurance brokers, etc) that recruit new dependents to feed at the public trough.
Grants are doled-out to local community health boards (more government bureaucracy) to try to enforce lifestyle changes targeting weight-loss and smoking cessation.
Government bureaucrats are given the power to define “quality,” determine physician compensation incentives based upon this definition and even decide what procedures are medically necessary.
Bottom line: this bill expands government involvement in health care, which will ultimately result in higher costs for patients and taxpayers. Unmet hospital costs resulting from the legislation will mean non-subsidized families will see an increase in their insurance premiums and doctor bills. Taxpayers will pick up the tab for the thousands of new people added to welfare health plans.
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Hype: The Central Corridor light rail line will ease traffic congestion and improve the environment.
Reality: The Central Corridor line, like the Hiawatha line, will be built at traffic grade, meaning it will significantly interfere with automotive traffic and eliminate most street parking. Delays at intersections will mean more idling vehicles, more congestion, more wasted fuel and more exhaust emissions. For some reason, no study was conducted to compare the rail transit proposal to bus transit for the Central Corridor.
The real reason Minnesota lawmakers allocated $70 million for the Central Corridor this session was that the state was in jeopardy of loosing $450 million in federal funding for the project. Even at that, it begs the question of where the rest of the money is going to come from to build a line that will cost more than $1 billion. The construction costs are just the first installment. Most, if not all, light rail lines across the country operate at a net loss and rely upon significant ongoing taxpayer funding to stay afloat. This means Minnesota taxpayers will have to annually ante-up on this boondoggle project for years to come.
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So, in the end, how did everyday Minnesotans really fare out of the session? Our approach to answering this question is to evaluate the session’s results within the context of some of our core values:
Q. Were there any meaningful reductions in government spending?
A. No. Despite this year’s budget deficit, the state legislature actually increased spending by 9.8%. House Minority Leader Rep. Marty Seifert (R – Marshall) said, “It is unfortunate that private sector job growth took a backburner to an expensive and explosive growth in government programs and services.”
Q. Were there reductions in taxes?
A. No, in fact there was a record $6.6 billion tax increase with the transportation bill. And other legislation, like the Green Solutions Act, sets the stage for the implementation of a carbon cap and trade system that will levy a huge tax increase upon all energy consumption in our state in the future.
Q. Were there reductions in the government’s involvement in the lives of everyday citizens?
A. No, in fact there were increases in government involvement in areas like ticket sales, teen drivers and car windows. Creeping socialism was especially evident in the health care legislation with tobacco and weight control funding while building a nice long electronic list for universal health care.
Q. Did the legislature create a more business-friendly environment that would encourage businesses to come to Minnesota?
A. No, in fact they made our business climate less friendly to business. Case in point – Northwest and Delta declined to locate their newly merged corporate headquarters in Minnesota.
Q. Did the legislature pass laws that encouraged greater personal responsibility?
A. No, in fact the state created additional dependents with legislation like the health care bill.
Q. Did the legislature protect our state’s sovereignty by combating the problem of illegal aliens?
A. No. While Governor Pawlenty did issue a number of executive orders strengthening laws to combat illegal aliens, the DFL-controlled legislature resisted all attempts to pass this type of legislation. This is hard to imagine in a year when four innocent children lost their lives as a result of an illegal alien.
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Who were the real winners out of this year’s session? Clearly it was the special interests. Folks like the Ghermezian Brothers who can now build their new Mall of America parking lot on the backs of local property owners. Or the construction companies that lobbied hard for the $6.6 billion transportation tax increase that can now line their pockets with the proceeds. And don’t forget the $38 million expansion for the Duluth Entertainment and Convention Center.
The best thing we can say about the 2008 legislative session is that it is finally over. The damage could have been a lot worse, but it also begs the question, “Is this the best that Minnesotans can expect from their elected officials?” In our humble opinion, voters will need to make some dramatic changes in their representation this November if they want to see different outcomes in the next biennium.