Tuesday, July 22, 2003

Starry Minnesota 

Or "stare Minnesota", if you speak Russian. Read Dick Winzer sends along a link to this graph in USA Today which shows government performance in the 50 states. Minnesota ties North Carolina and Dingelbutt's Michigan for fourth place, behind Utah, Delaware and Georgia. I find the list odd, so I clicked on the methodology page. It grades on three scales: government spending restraint, for which Minnesota gets only 2 of 4 stars (thanks, Jesse); our bond rating, which is quite good; and then 4 of 4 stars for our "tax system". The last one threw me -- I talk to any number of people in the tax field in Minnesota, and public finance was my "back-up" field in graduate school. So I thought this required a little investigation.

The methodology points to a study at Governing.com, which is a resource for local and state government officials. Now click that last link and go to the first map showing state tax revenue per capita. We're one of the orange states, with taxes in the second highest category. The authors then create a second map -- go ahead, scroll down there -- to set the measures as a share of personal income. We're still fairly high, but now we don't stand out quite as much, because state median income here is above the national median. Still, wouldn't you think these higher rates would at least knock one star off us? Well, no, because after all that, they didn't use the numbers.

It would have made this project significantly easier if there were a standard set of multiple-choice questions that could be asked of the states. But there is clearly no �one-size-fits-all� formula for a state�s taxes. It would be simply absurd to anticipate that Alaska, with its wealth of oil, rely on the same sources of revenue as Rhode Island. New Hampshire, which takes pride in providing bare-bones government, simply can�t be held to the same standards as Minnesota, with its emphasis on many citizen services.

So, a �scientific� approach in which clearly quantifiable data could be used to compare the states was simply out of the question. Instead, it made far more sense to start with a solid general outline of the elements that contribute to adequacy, fairness and management and then � through interviews and document review � see how successful states had been in establishing them.

That is, because Minnesota has always been a nanny-state, lowering taxes would make it less adequate in providing for nanny's finances, and thus a lower rating, while New Hampshire (my home state) would be punished for raising taxes, because it's got a history of providing few state services (even if the Supreme Court there is trying to force change.) What kind of cockamamie scheme is that? We are stuck with old (stare) Minnesota as far as Governing.com is concerned.