MinnPostToasties runs a long, gushing review of Sen. Tarryl Clark, repeatedly bringing up "she could be governor". It does its best to portray her as moderate; I've heard her "my daddy was a Republican" pitch before. Those of us familar with her views on taxes, what bills we try to pass in response to a bridge collapse, stadium taxation without referendum, or denying access to a business development tool preferred by businesses in her own district, might not be as in awe of Clark as the Post is.

Labels: legislature, Minnesota

Two quotes about the requested state subsidy of the Mall of America:

1. Mall of America executives, planning a $2 billion expansion of the mall, are continuing to press for nearly $400 million in state subsidies. Mall officials warn that the mall has "no chance of being built" if the subsidies are not given. If they have such a crummy business plan, maybe they just shouldn't bother.

2. What are the folks who own the Mall of America going to do if they don’t get their state subsidy — build Phase II in Iowa?

Source 1, 2. Interesting.

Labels: economics, Mall of America, Minnesota

I had some private conversations with people on both sides of the ideological spectrum here after the per-diem debate, and at that time I suggested getting the problem solved by some changes in how legislative salaries are set. Current law says you can fix salaries for the upcoming session, but not your current salaries. As a result there was pressure to increase per diems as back-door salary increases.

So what does our senator Tarryl Clark propose? The worst of both worlds:

Lawmakers could vote next week to ask Minnesota voters to take the job of setting their salaries out of their own hands.

However, they will likely keep the power to increase their per diem and other forms of reimbursements where they now sit — with committees of their senior members.

...If approved, HF 3796/SF 3793 would give the job of setting legislative and executive salaries to the state’s Compensation Council, which now only makes recommendations.

The bills originally would have given the council — which consists of 16 citizens appointed by legislators, judges and Gov. Tim Pawlenty — the power to determine legislators’ daily reimbursement rates for food and other expenses, known as per diem.

But members of the Senate and House Rules and Administration committees, who now set those rates, amended the bills to retain that power.

“The problem isn’t per diem. The problem is salary,” said Clark, who saw her bill through the Senate committee Thursday. She is the committee’s vice-chairwoman. “I believe if compensation changes, per diem will be modified downward.”

No, no, no. First of all, Clark is saying "hey, give us a salary increase and then we'll see if we can reduce those per diem. Trust us." But you obviously don't think we trust you because you could have voted salary increases yourself before. Your rules committees have proven their distrust of the system by not putting per diem rates in the hands of the Compensation Council, which has the power and the knowledge to do this. Under this bill, the Legislature could still compensate itself through per diems if it didn't like what the Compensation Council came up with. It changes no incentives and abdicates responsibility for choosing one's own salary.

I wish she was running this year. "The problem isn't per diem" is a great line when used by someone who gets $96 a day. I'd love a chance to ask her how she spends hers. You really want me to trust you to reduce that once you get your salary?

And notice, she got it not just for the days the legislature is in session, but for all the committee meeting days she took away from the capitol.

Meanwhile, last Friday oral arguments were heard in the case of Citizens for the Rule of Law's suit that we discussed last February. The AG's office is arguing that only it can bring a case against the legislature and that citizens do not have standing to file the suit. That motion should be ruled upon sometime this summer.

Here's the simple solution: Move both salaries and per diems to the Council, and cap the number of days on which per diems are paid to, say, the number of legislative days plus twenty, or some such. The symbolism of the cap would do wonders.

Labels: legislature, Minnesota

Rankings of things tend to annoy me. I would always prefer to know the actual values involved, but we tend to like lists. But they get you in trouble when people try to change how their measuring things.

Today's example is from our local paper. It takes exception with the Tax Foundation's rankings, largely because the Foundation thinks tax efficiency is a proper goal of public policy. The Foundation adds federal taxes to its ranking of the states, though as the link points out, removing federal taxes changes Minnesota's ranking not at all for 2007. Of course the letter writer forgot to tell you that.

He then switches to a report issued by the Minnesota Taxpayers Association, which includes both data based on taxes per capita and taxes per $1000 personal income. Using the latter measure, and using all state and local taxes, he finds that Minnesota ranks 23rd. Of course, he is now comparing apples and oranges. But he says "That one state has higher-income residents than another has nothing to do with the level of state and local taxes."

But the reason for his letter, that Rep. Steve Gottwalt (R-St. Cloud) has proposed the state corporate income taxes are too high, is belied by his own report use. The state ranks 8th in corporate income taxes per $1000 personal income. The letter writer uses a measure of all taxes to rebut a specific point about one tax, by playing fast and loose with which rankings one uses. Our top marginal corporate tax rate, 9.8%, is sixth-highest in the nation.

He also plays a little fast and loose with his choice of who is a non-partisan by quoting at the end lovingly from something published by the Economic Policy Institute. If you are going to call the Tax Foundation "extreme conservative", then you don't get to use an institute run by folks like Robert Reich and Robert Kuttner as being unbiased.

Charlie Quimby pointed out something similar in the Mn2020/Mn Free Market Institute spat over Matt Entenza's 32nd ranking. It's not a fruitful debate (and I say this as a fellow of the latter, with some trepidation.) The question is whether taxes effect people's willingness to truck, barter and exchange in Minnesota, and choosing between Minnesota and other states. Rankings and arguments over what's in the numerator or denominator of this or that ratio won't help solve that debate.

Labels: economics, Gottwalt, Minnesota

I appreciated LL's coverage of the floor debate of HF3149, which passed with an 80-52 vote, including five DFL legislators opposed. The bill, the darling of Tax Committee chair Ann Lenczewski, completely upends the basis of a property tax, in a state where we rank about in the middle of property tax collections.

There is debate whether the Revenue Department's testimony, mentioned by the Taxpayers League, that 69% of taxpayers would see a net tax increase under this formula (because they would lose the ability to deduct state property taxes from their state income tax, which for some will cost more than the property tax relief advertised). I do not find anything on Revenue's website with the 69% number, and if someone wants to point me to that analysis I would eagerly read it. It doesn't sound implausible, however. The state income tax has always been set to tax relatively lightly the "perfect MN family", with a mortgage, kids in school or day care, etc. Single renters making more than $35,000, I've always thought, don't get treated so well. As I mentioned when I filled out #1's taxes last month, if you don't have itemized deductions in Minnesota, you tend to pay in at fairly low income levels.

There's also the removal of the circuit breaker on local property tax increases. Part of the property tax refund that HF 3149 repeals is to shield homeowners from sudden increases in property taxes from, say, new levies passed by local government. But you still had to pay some (I make it as 64% of a property tax increase stays with you, the state refunding the remainder. The House Research analysis makes no mention of the income tax recapture.) That 64% is enough to keep some people from voting for your new local project, which makes local governments unhappy. Now, however, if you end up with taxes greater than 2% of your income because of a levy, every last dollar is relieved from your property tax: It is paid by the state out of its income and sales tax revenues. It is an attempt to tear down the barrier to greater government spending -- the Truth in Taxation statement that tells you "vote for this, and your taxes go up." The DFL, along with the LGA booty it distributes under this bill, takes a brake off of local spending.

But the truly most bizarre portion of this thing is the premise Lenczewski is using for the bill, that your property tax depends on your income. Why do we tax property, anyway? Property provides us with a stream of income, much of which is not realized. My recuperation from surgery this week has helped remind me I live in a nice house, in a great neighborhood. Many of the services I receive are non-monetary, and many of them are the result of the city of St. Cloud's public expenditures, such as the paths behind our houses that travel up from Whitney Park through the old airfield that pre-dates the development I live in. The city provides flowers that I am walking by along that path. It provides these services to everyone living in this area, true public goods. Since I am receiving that benefit as the result of the property I own, should I pay for it by a tax on property or a tax on income? We tax property precisely because the flow of its benefits are non-monetary. And the removal of the circuit-breaker says we can increase benefits to all property owners -- who will enjoy those in equal share -- but that we will tax only those who have non-property income, labor income, in excess of what the Minnesota DFL decides is "enough".

Labels: legislature, Minnesota, taxes

Ed Morrissey is right in pointing out that the private sector works in how the I-35W bridge might now be open in September rather than in December.

Perhaps at some point, people will learn to harness the power of the private sector more completely for future public efforts as well. If we started to apply this lesson to non-emergencies as well as emergencies, perhaps we would have fewer of the latter. When we incentivize success, we succeed. When we incentivize bureaucracy, we get red tape, delays, and frustration.

I hope the planners of the DeSoto bridge reconstruction are paying attention. They might want to invite Flatiron to bid on the project. (If they could also reopen the old Flatiron Tavern, it'd do this St. Cloudian's heart good after I get done recovering.)

What the STrib article made very interesting to me was how they structured the incentives in the I35 contract to get faster delivery from Flatiron:

Flatiron-Manson was awarded the project under a MnDOT formula taking into account construction costs, time to completion and factors such as aesthetics and public-relations efforts. At the time of the award in September, critics assailed the agency for choosing the most expensive contract and the longest construction time

Now, if the bridge is finished in 337 days instead of the 437 in Flatiron's proposal, the construction period will be shorter than any that were proposed -- but will widen the cost gap.

One of the four bidders, Maple Grove-based C.S. McCrossan, offered to build a steel bridge in 367 days at a cost of $177 million. The second-shortest time was proposed by the team of Ames/Lunda, also based in the Midwest, which proposed 392 days for $178 million. The fourth bidder, Walsh/American bridge, proposed the same time frame as Flatiron, 437 days, but a lower cost, $219 million.

...State officials said last fall that the bridge closure is costing Minnesotans $400,000 a day in travel-related expenses alone. The $200,000 daily incentive was arrived at by dividing that number in half.

Gutknecht says the estimate of $400,000 a day, which was based on drive times and fuel costs, is a minimum. "When we figured it out,'' he said, "fuel was quite a bit cheaper."

So the value to Minnesotans of having the bridge done sooner is higher now than before; those additional benefits will accrue to drivers. In some sense, the incentive's value is greater when the date of completion is further into the distance. Once you cross the 368th day, there's no incentive for the low local bidder McCrossan to move any faster, unless penalties were imposed. I don't know the terms on the other contracts in re: incentives, so let's assume they all had the $200k/day incentives. It changes how I think about the contracts.

Labels: economics, Minnesota

So we've had the state house now pass cap-and-trade. Leo notes comments by Rep. Kate Knuth about the transformative nature of cap-and-trade.

"Cap-and-trade will change the jobs that we have in Minnesota -- I think it will change the jobs for the better," said Knuth, DFL-New Brighton. "It will bring clean-energy jobs."

CBO director Peter Orszag, commenting on federal cap-and-trade proposals, notes that this is simply giving revenue to those who get the allowances under the cap. Proposals currently exist in S. 2191 to give away allowances that CBO values at $145 billion. We don't have a similar number for Minnesota. And if the feds pass their cap-and-trade proposal, what happens to Rep. Knuth's bill?

Orszag's idea instead: Have government sell the allowances, and use the revenues to reduce taxes. Did anyone in the DFL legislature come up with this idea of reducing taxes? Naw, they're happy to give away your air rights for a better Minnesota!

Labels: economics, Minnesota

As you probably know, today is referred to as Tax Freedom Day. But, if you live in Minnesota, hold on for Monday. Our state and local taxes push Tax Freedom Day for us out to April 28 (see p. 7). Congratulations, Wisconsin, yours is tomorrow.

Meanwhile, you can learn a nice tune:

Labels: Minnesota, taxes

The housing boom hits much of Minnesota, but in a series running the last two days in the StarTribune the most dire area is Wright County, where there is see-through housing.

Some houses in the subdivision have been empty or unfinished for more than a year. Garage doors are missing, unopened mail clogs mailboxes, and dormant lawns have turned into tangled masses of weeds. Some homes are priced for $80,000 to $100,000 less than their original price.

"A lot of the prices that people were paying for property in Wright County had no basis in reality," said George Schmidt, a real estate agent with Remax in Anoka. "They were destined for foreclosure."

Blogger and frequent Scholars commenter 'bleak' argues that these homes in the exurbs had imaginary value.

What were the bogus justifications for the housing bubble? Prices only go up? No more land being made? (There's plenty of land in Wright County.) Baby Boobers were going to buy investment properties?

Humbug! Within a blink of the eye, all of that 'home equity' everyone was banking on is gone. It was never really there in the first place.

I have written articles locally about "the corridor", that area between Interstate 94 and U.S. Highway 10, which largely runs through Wright and Sherburne counties. It is an area that has filled in dramatically with businesses and housing as homeowners sought more room and escape from the tax burdens and land restrictions of the metro counties. Demographic estimates show an expected increase in population in these areas of 18-19% between 2006 and 2010. (The comparable number here in Stearns county is under 7%.) The answer to bleak's question of what justifications being made were "people are moving there". And not just from the east.

In the early days of the current housing crisis, the state implemented two new laws which placed restrictions on the mortgage market. No one is a fan of liar loans or the subprime market more generally, and everyone would like to require every one else's mortgage banker to be licensed under stricter laws. But the effect of these laws has been to signal that lending is to be restricted, and it is, and that is leading to difficulty of sellers finding buyers.

Undoubtedly, as the STrib stories tell you, there are stories of fraud (by sellers) and greed (by buyers). At least one of the buyers in today's story is holding on to his underwater properties because "if I can't get rid of these for a profit in five years, then I'm in trouble." There's enough blame to go around many places. But the value isn't imaginary. That area will eventually fill in. Cleaning up after this episode will mean that takes longer, as some land and housing is misallocated and the government continues to impede the unwinding of those positions. But it will unwind.

The STrib indicates that tomorrow's article will include the response of area cities and townships.

Labels: economics, Minnesota

A local DFL activist and Wellstone! award winner writes about the Democrats she knows as being charitable:

The Democrats I know live and promote the value of personal responsibility. They believe in hard work, honesty, persistence and self-reliance.

But the Democrats I know also understand the value of social responsibility.

They know that there are many areas such as transportation, public education and police and fire protection where responding as a community for the common good is more effective and efficient than only responding individually.

I can't remember who said this last week, but it bears repeating: Do you ever notice that when liberals want to justify government spending they always go to transportation and police and fire? At least Pat includes public education, for which there are private substitutes. K-12 education in MN consumes 39.9% of a $34.5 billion state budget; public safety only 5.4%. Transportation comes out of a different fund. Tell you way, Pat, let's make a deal. You restrict us to police, fire and transportation and even K-12. How about that part called "health and human services"? Ready to privatize that?

But I digress. What does it mean for her to be socially responsible?

These Democrats also know that for many in our society, the playing field is not level, and that if we believe in our democratic principles, we must live the value of social responsibility.

The failure of a market-driven health care system is one example where all of this comes together.

Personal responsibility alone will not solve that mess.

When you hear "level playing field", what you should translate that to is "egalitarianism", and often we are talking about ex post egalitarianism. I have more than you, so that's not right. And there's plenty to that the person alone could do. Bob Collins notes that 87% of people in a survey by the Northwest Area Foundation said they agreed that "I would like to do more to help people struggling in my community", to which Bob wonders, well, what's stopping you?

It would seem that if the 87% who would like to do more, actually did more, then not quite as many people would be struggling. Armed with only anecdotal evidence, I'm going to theorize that 87% of the people are not going to do more and a sizeable number aren't doing that much now.

...A closer look at the survey shows that a large percentage said they would be willing to get together to talk about ways to help. Others said they would be willing to talk to an elected official. Seventy-eight percent said they would take part in a church project to help someone. A somewhat smaller group said they would adopt a family temporarily if they were struggling. About the same number said they would pay another $50 in taxes.

Times are tough for a lot of people, of course, but could it be different if we did as we say? As individuals, what's stopping us, aside from our belief it won't make a difference? And what do you consider to be a definition of doing something?

I suspect for most of them it's the opportunity to get together and talk about someone else doing something. Learned Foot makes the point well:

...why on earth would someone volunteer time, money and / or effort when they can just vote for [someone] who will make them feel as altruistic. The only effort required is 5 minutes at a polling station, a pull of the lever for your local machine Democrat, and then you can go forth and proclaim to the world how compassionate you are. Giving feels good. To the feeble minded and selfish, feeling like you gave while doing nothing feels just as good.

And let's face it: in most cases that compassion is going to be extracted forcibly from someone other than yourself.

The takeaway from all this, I think, is that people are well-meaning, but lazy.

We refer to this as "self-interest", Foot. And the statements like those of Mrs. Welter are simply "cheap signaling". Anyone can be generous with OPM: Other People's Money.

Mrs. W then doubles down by assaulting the church-goers while reviewing the evidence of Arthur Brooks' study Who Really Cares?:

Conservative people are a percentage point or two more likely to give money each year than liberal people, but a percentage point or less likely to volunteer. And while conservative people do give more to charities and churches, when religion is factored out, charitable giving between liberals and conservatives is not distinguishable.

This shows only the most shallow reading of Brooks' work. He notes that religious people are more charitable towards non-religious charities than the secularist population. "A religious person is 57% more likely than a secularist to help a homeless person," he writes. And the last sentence seems to suggest that the only thing a religious person gives to is a church, and thus for reasons involving his or her own salvation, not to help the poor. There's nothing about conservatism or religiousness that would necessarily encourage one to go to the Red Cross, but according to Brooks' estimates, the amount of blood banked in America would rise 45% if liberals gave blood as much as conservatives do.

If they ever figure out how to tax blood, Heaven help us!

Labels: Democrats, Minnesota, politics

After reading Mitch's excellent summation of what's going on at St. Thomas with its insistence that the Young Americans Foundation cannot bring Star Parker to its campus (and follow the links to Ed and Scott Johnson while there), I decided to peruse its website for comments on freedom of inquiry. Since that freedom accords first to the pursuit of the truth by its faculty, I thought to look at its statements on faculty. (In fact, as part of my assignment to a campus committed on academic freedom, I had already bookmarked this page.)

Freedom of inquiry and freedom of expression are safeguarded by the university. The rights and obligations of academic freedom take diverse forms for the students, the faculty, and the administration; in general, however, they derive from the nature of the academic life, and they are consistent with the objectives of the university as a community which pursues the highest scholarly standards, promotes intellectual and spiritual growth, maintains respect for individuals as persons, and lives in the tradition of Christian belief.

Specific principles of academic freedom supported at the university include: freedom to teach and to learn according to one’s obligation, vision, and training; freedom to publish the results of one’s study or research; and freedom to speak and write on public issues as a citizen. Correlative obligations include: respectful allowance for the exercise of these freedoms by others; proper acknowledgment of contributions made by others to one’s work; preservation of the confidentiality necessary in personal, academic, and administrative deliberations; avoidance of using the university to advance personal opinion or commercial interest; and protection, in the course of one’s conduct, utterances, and work, of the basic aims of the university and of its good name.

Emphasis added. I don't see anything in that statement that addresses the administration's comfort level. It is interesting to me that the university's Women's Center sees itself as having a role for creating "unruliness", its speakers policy is said to require responsibility:

The first principle is that there are varying degrees of responsibility with the effect that the university is eminently responsible for speakers that it invites on campus to speak to students or other members of the community. But obviously when the university allows legitimate outside groups to use its facilities, the burden of responsibility is autonomous with the sponsoring group. It is a corollary that the university, in allowing such groups to use its facilities, is governed by fairness and equity toward various conflicting views and interests, being mindful of the needs for wider information on the part of students and the larger community.

The principle of freedom, holding high respect in academic life and in our spiritual heritage, is never divorced from responsibility on the part of sponsoring groups or sponsors.

Do these statements reflect to you a commitment to freedom of inquiry? Do they reflect a mission statement that says the school values "intellectual inquiry as a life-long habit, the unfettered and impartial pursuit of truth in all its forms, the integration of knowledge across disciplines, and the imaginative and creative exploration of new idea"? It is a very audacious use of the word "unfettered." Those who would send their children to UST should consider what will fetter their education.

Labels: higher education, Minnesota

Responding to something I said on air Saturday, Speed Gibson wonders why we don't have a simpler tax form for state income taxes (perhaps x% of the federal taxes paid.) The answer is quite simple: To do so means that the Legislature forgoes its ability use the tax code to favor its political supporters and harm political opponents. Filling out my own last night I noted the various credits offered for certain kinds of expenses. Luckily I have a child in a private school; I make too much to get a credit for that, but I do get a deduction. That tax policy makes it cheaper to send children to private schools, or to piano lessons, or for public schools to shield the cost of its extracurriculars from taxpayers. In Minnesota as much as any state, taxes can be much more burdensome if you don't spend your income in the ways the legislature has decided is socially desirable.

Labels: economics, Minnesota, taxes

Most regular readers know I do not do many national political issues on this blog. It isn't for lack of interest, but there are so many other blogs out there spending more time doing that, that it doesn't seem a good use of my time. Economic issues and state/local politics are more my game.

But there are times where they coincide, and the story of using what a politician or elected official in a private function for the purpose of either embarrassing them or trying to catch them saying something that can be used against them is playing right now at both a national and local level.

You'd have to live in a cave not to have heard by now of Barack Obama's comments about the motivations of people who carry guns or are religious. And if you recognize the term I used in the title of this post, you probably are aware of the use of videos and PhotoShop to try to humiliate local elected officials, most notably Rep. Michele Bachmann. The natural reaction to me of both campaigns is to do a better job of controlling the environment in which the politicians speak.

In Obama's case there was the belief that the environment was controlled. The event was a $1000 per person event, and the attendee who reported the story had been a supporter (though, in fairness, we note that some claim her support was false.) She had recording equipment and, in a group that was supposed to be full of supporters, she heard something that got her to post something that might cost Obama the election.

I wonder if the supporter with the recorder was instead a reporter at the St. Cloud Times. The reporter sent to cover the Sixth Congressional District GOP Convention had been told that no video or audio of the event was to be allowed. As John Bodette, the paper's executive editor, relates the story, this was just another skirmish in the "battle in our effort to cover news."

In today's media world, reporters can do their work using more than a notebook and pen. Our staffers can cover a news story with words, still photos, audio and video. These restrictions on what equipment reporters can use is an abridgment of the journalist's effort to cover the news.

The reasons for the audio/video ban are baffling.

It appears that Rep. Michele Bachmann, the Republican incumbent, has shown up in several YouTube.com videos in less than flattering ways because people altered the video. To avoid giving people more fodder to make fun of the first-term House member, the district's executive committee decided to block any audio or video from the convention sessions.

The committee also decided to bar video and audio because more than 90 people were scheduled to go to the microphones and speak during the endorsement sessions, Swanson said. Some of those people may have been nervous and said things they later regretted, Swanson said.

He compared it to a family picnic. And you don't want news cameras showing up at a family picnic, he said.

I consider the editorial staff at the Times to be friends, but I am troubled by this editorial. Let's take note first of Bodette's use of the word "can" in how Larry Schumacher "can do his work" in covering the convention. He was a witness; he wrote columns and his blog. He was just told one of the tools that he might use to cover the convention was not to be used. That might have made his job more difficult, but it didn't make it impossible, obviously.

Second, and perhaps more important, is whether it is healthy for the political process to have the space in which it operates continually shrunk, invaded by cameras, recorders and live feeds. The Times has made it a habit to complain about private working meetings of the City Council. I can see the point that when a government is sitting in deliberation doing "the work of the people" (or is that "working the people over"?) that the Fourth Estate might think it should be able to provide coverage. But a political rally or a party convention not only is not a deliberation over the use of force, it is in fact part of another part of the First Amendment, "the right of the people peaceably to assemble." The question is, is that right subservient to the First Amendment rights of the press?

And note again, as John does: Unlike the deliberations in working meetings of the City Council, the entire convention was open in plain sight to Schumacher. The comparison is terribly strained, and quite misleading. (See update below)

If the claim is that public officials will speak in this private group and that their publicness makes their speech "a news event," then where stands the line that allows the governor or the senator the opportunity to speak privately with supporters? Does the representative have the right to sit in a public restaurant with three friends who also contributed to her last election and say to the person from Dump Jane Doe that "this is a private conversation"? If they said you could take notes but no cameras, would this warrant a vituperative editorial from your boss?

John Bodette acknowledges that he has no legal claim to access, but says that because it's a news event, the paper should be able to cover it as it sees fit. He makes a statement asking whether Rep. Bachmann "supported the decision" to ban audio and video. Why should she or any one else give up their protected right to assemble peacefully, and why should a newspaper decide it can interfere with that decision simply by calling it a "news event" and insisting to bring in whatever equipment it chooses?

John notes at the end that the DFL has invited his cameras and audio into their district convention. Nice bit of advertising there, and nice bit of gamesmanship by the party. I don't necessarily agree with the CD 6 GOP decision, but it's their right to make it, and a statement of the sorry state of decorum that has come over political coverage of some political candidates. Maybe the question the print media needs to ask itself is whether it has become "the man who could look no way but downward with the muck-rake in his hands; who would neither look up nor regard the crown he was offered, but continued to rake to himself the filth on the floor." Because the others there with the cameras surely are, and sometimes they're even your supporters.

UPDATE: Larry Schumacher informs me that the City Council's working sessions are open to the public but were not broadcast like the Council's regular meetings. I will ask whether you could bring the video and audio equipment to it and posted the materials. I see no such recordings on the Times video site.

UPDATE 2: Larry points out they are sitting on the paper's opinion page.

Labels: Minnesota, politics

From this morning's WSJ Political Diary, Stephen Moore writes:

Pooh-poohing the idea that low taxes and/or the job growth associated with lower taxes are important incentives to movers, the New Century Foundation cited several high-tax areas -- such as Washington D.C., Vermont and Oregon -- that have been attracting new residents. True enough, and another exception is North Carolina, which has a relatively high income tax and yet remains a destination state -- although North Carolina also has a smaller tax burden overall, thanks to low sales and property taxes.

Yet the general trend seems clear. The eight states in the continental United States without an income tax all gained population, even South Dakota. One of the few states in the northeast that has continued to attract people is New Hampshire -- a no-income-tax state. Indiana State University's John Tatom, a former economist at the Federal Reserve Bank of St. Louis, did more than just eyeball the trends. He applies sophisticated econometric techniques and concludes that tax rates do matter: "The in-migration rate is sensitive to the tax rate.... Each one percentage point rise in the tax rate will reduce the in-migration rate by 0.41 percentage points."

Tatom's paper is here. Below is the graph that displays the data with the trend line of -0.41%.
This should be used by our discussants from February on the relationship between state taxes and migration. Let me also add this fascinating State Demographer's Office report (the fascinating was a joke, son) which includes data of paired tax returns of in- and out-migrants to Minnesota. "Minnesota gains net migrants from most Midwestern states except Wisconsin. Other than Wisconsin, the biggest net losses between 2000 and 2005 were to Florida, Arizona and Texas. The largest net gains were from foreign addresses, North Dakota, Illinois and Iowa." The data would suggest to me that people leaving here are getting warm; we don't have data on age, but it's a fair guess, I'd think, that many of these are retirees.

Labels: Minnesota, taxes

It had seemed to me, after my post last week about the decision whether or not something untoward had happened at the CD 6 GOP convention, that the wording of the questions would be important to know. I have confirmed these with district chair Mark Swanson, who spoke with me by phone this morning.

1. Are you a Republican?
2. Will you support John McCain at the Republican National Convention?

The email I got on this confirmed that wording and had an explanation:

...what does that mean?...It means that everyday at the convention you will be supporting Senator McCain. Additionally, I discussed with Dan [Nygaard, nominations committee chair] and he said he took time with every person that gave any sort of a qualifying criteria, that is why some people were listed as "no" or "maybe" and were given the opportunity to correct the print-out (what was displayed on the screen).

Swanson said paper copies were handed out because of the changes made on the fly, and I'm expecting to receive one later today. The screen, he said, may have been hard for district delegates to read. All of the delegates elected answer the questions "yes", and none were reported to have changed their answers or stated they were uncertain until after the election, when the motion was made to bind the delegates to vote for McCain to what they told the nominating committee and what was reported to the delegation. (UPDATED: I've changed this passage based on an email from Andy Aplikowski, who made the motion. He also notes that nobody answered the first question as a no or a maybe. Thanks for the correction, Andy!)

I am hoping to get someone from the Ron Paul campaign to tell me whether or not they have the same understanding of the events. Swanson said to me that he had no problem with slates of delegates, but that they are the responsibility of the presidential campaigns, not of the district leadership. He also thought the meaning of the questions asked were clear, and that the answers of those elected were untruthful. There does not appear to be anything in the RPM constitution that I am aware of that would allow one to unseat those delegates, but I think it fair to question the candidacy of someone willing to use such tactics to get themselves heard at a national convention.

One must wonder how the RPers would feel if the roles were reversed. Given their state co-ordinator's statements last July that they would not support Rudy Giuliani for president if he won the primary, and where one says

If the Republican Party is so, um, flexible as to nominate a statist, then certainly the voting public is within its right to enjoy its own flexibility...

and who thinks "the GOP must lose" because of its pro-war candidate, did they actually correctly answer the first question?

Labels: Minnesota, politics

Arthur Laffer and Stephen Moore have issued a study through the American Legislative Exchange Council on which states are rich or poor. Minnesota ranks 26th for 50 states for economic performance and 35th for economic outlook. Performance is a combination of income and employment growth plus net domestic migration. Outlook is a "forward-looking forecast based on the state’s standing (equal-weighted average) in the 16 important state policy variables." The study runs through 2006. Minnesota fares worst in corporate tax rates (45th of 50), rising tax burdens (43rd), and marginal personal income tax rates (39th). So far, it doesn't appear those numbers have been changed so perhaps backsliding in other states will improve Minnesota's score for 2007.

The report emphasizes that progressive personal income taxes exacerbate the cyclicality of state revenues. During booms, the states spend too much:

The analysis and case studies discussed in this chapter have shown that states often find themselves in fiscal trouble because they spend far too much during economic expansions. They are like the scorpion that is carried on the back of the frog across the river that then stings the frog causing them both to drown. “Why,” asks the frog in his dying breaths. “I couldn’t help myself,” responds the scorpion. “It’s in my nature.” It seems that overspending when the coffers are flush is in the nature of state legislators.

The most advisable path to avoid future fiscal crises is to keep spending and tax receipts at a manageable and justifi able rate, usually population growth plus inflation.

Minnesota's population grew faster than the national average between 1992-2000 (10% vs. 8.8% nationally). The additional families created demand for government services but also more revenue. Their analysis suggests the state received a windfall of $701 in revenue per person, above and beyond the revenue needed to keep real per capita tax revenues constant. Only three states had higher "excess" revenue taken from taxpayers: Michigan, Vermont and California. For the country as a whole, state tax revenues above inflation and population growth rose $108 billion between 1992 and 2000.

As Governor Pawlenty and the Legislature both look at tax reform, these trends should be considered. Laffer and Moore are fans of the Colorado tax limitation amendment (TABOR) which may not fly here. But weaning government off its addiction to income tax revenues does provide a more stable tax revenue stream. Now would be a good time to start.

Labels: economics, legislature, Minnesota, taxes

On August 14, 2007, there was $4.486 billion in state general obligation bonds outstanding; on Feb 1 this year the level stood at $4.339 billion. The government has to service these bonds (i.e., pay interest and principal) and this was currently forecasted for 2008 to be at the level of $409.4 million, up from $353.7 million in 2006, a rate of increase of 7.5% per year. The growth in the next biennium adds another $50 million in debt service costs. The maximum that was set for this year was $885 million, and with today's actions on line-item vetoes by Gov. Pawlenty we spent $777 (the $717 million today and the $60 million in the transit bill.)

Also worth noting: That bill obligates the state to issue bonds going forward of an additional $1.8 billion. While it has gas money dedicated to its expenditure, the state also has a guideline on debt service as a share of state personal income, which is unlikely to rise as the result of tax increases. It's not yet the binding constraint of the state's debt management policy, but any slowdown resulting from higher spending on fuel could cause the state to graze that 3% limit. Limiting the bonding bill to the lower figure chosen by Gov. Pawlenty today will give the state at least a little breathing room.

Labels: legislature, Minnesota, Pawlenty

A commenter on MDE says the governor is just announcing the bonding bill will be vetoed in toto. I should have taken the bet with Michael on the air Saturday, dang it!

Now the question is: Will the DFL try to override (which I'm told will fail in the House, but I've heard that before)? If they fail to override, will they offer a second bill? Will Keith Langseth pay a price for his $925-or-bust strategy?

Should make for more good show material!

UPDATE: I had heard the rumor he might cut down more than the $825 million limit, but my God!

Gov. Tim Pawlenty has signed a borrow-to-build plan after cutting out projects to reduce the price tag. Pawlenty decided Monday to use his line-item veto authority rather than taking down an entire $925 million bonding bill. The trimmed bill contains $717 million of general state debt.

Among the 52 rejected projects are the Central Corridor light-rail line linking Minneapolis and St. Paul, a Como Zoo gorilla exhibit and the proposed new Bell Museum of Natural History.

"Somebody has to be fiscally responsible. That job falls to me," Pawlenty said.

On the block was $81 million in easy pickings from the Central Corridor rail project and the now infamous gorilla pad at the Como Zoo. All told, more than $102 million came out of the Met Council requests (full list courtesy MPR.) The letter sent by Gov. Pawlenty to Speaker Margaret Kelliher-Anderson was quite emphatic.

I am very disappointed that the legislature ignored an understanding between my office and legislative leadership and my repeated warnings to abide by the state's longstanding debt limit. It is irresponsible to exceed the "credit card limit" that has been maintained by governors and legislators from both parties for the past 30 years. Doing so could jeopardize our state's strong credit rating and low interest rates. The overall limit is $885 million, including $60 million already allocated in the transportation bill. The legislature spent well beyond this figure.

In addition, this bill reflects misplaced priorities. As just one example, I find it inconceivable that legislators would fund a brass band music lending library and yet provide no funding for a much needed new nursing facility at the Minneapolis Veterans Home.

...The legislature should keep in mind that upholding the state's three percent debt service limit guideline is important to our overall fiscal well-being. Debt service is one of the fastest growing items in the general fund. Based on previously enacted bonding bills, the state's debt is projected to increase $239 million from the 2006-07 budget to the 2010-11 budget.

The St. Cloud Times reports that all the local projects survived. Larry Schumacher also speculates at the end of the article that the cuts below $825 million provide a little room for a second bonding bill and that the Governor's veto might indicate a willingness to logroll the legislature for the Veterans Home and Lake Vermillion projects. I doubt that will happen, though. Gary's description of treadmarks on Sen Langseth's back are probably enough reward for Pawlenty's work.

Labels: legislature, Minnesota, Pawlenty

I received a letter from one delegate to the CD 6 convention, one portion of which I used in the post just below. Here's the letter in full, unedited:

It was interesting what happened at the CD6 convention and I wanted your take on it. I don't know whether you witnessed any of what went on Saturday or heard from anyone. The session lasted until after 7pm. All of the National Delegate candidates were vetted beforehand to determine whether they would vote for and support John McCain's nomination. That information was provided on the displayed list of the candidates to aid in voting by the BPOU delegates.

From the results of the voting, it appears that the Ron Paul supporters plan to hijack the nomination from John McCain I am making that judgement from observations of went on during the meeting, discussions overheard. Just linking the events together with the results proved to be interesting. Such analasys of causality is characteristic of my profession. The final capper was towards the end of the resolution balloting when the National Delegate selection results were anounced and what happened at the end when a motion was made to bind the selected delegates to vote for John McCain The sound of a stuck pig is more civil than the Paulestinian Jihadists (Ron Paul Supporters) cry of foul. They started getting really uncivilized during the discussion. At least one of the selected delegates selected claimed that he "didn't understand" the question that was asked each delegate. The Rules Committee made it clear during the discussion that during the vetting process everyone was asked the same two questions in the same words.

If one was the suspicious type one might suspect that the Ron Paul supporters were given marching orders before the convention to vote in a block for specific supporters of Ron Paul as delegates. I must confess that I looked over the shoulder of one of the known Ron Paul supporters in violation of their secret ballot privilege to see who they were voting for. My interpretation of the way thing went is that this was orchestrated in advance. If one could get access to the ballot, one might surmise from the numbers there may have been an unbalanced number of votes for the ones who won. Being of a suspicious nature I might further surmise that it wsa an unnaturally high block of votes for supporters of Ron Paul's names that had the highest vote totals. Have you heard any rumblings of such possibilities?

Also it was interesting who wound up being selected as tellers for that process that when I volunteered they didn't want me in the group. Aren't the tellers and assistants picked in advance?

First, I wasn't there as my broadcast duties prevented me from participating at the caucuses, and because I knew the convention was going to go long (I'd pretty much have left after the speechifying, which frankly I'd have to say would be the least interesting part of the day.

Second, the description of the question asked by the nominating committee in this letter says the candidates were asked if they "would vote for and support" McCain. The description on Leo's blog says only support with a 'maybe' answer possible. I'll ask around to get the exact wording, which seems important to me now. As noted by commenter J. Ewing, you can be a Fred Thompson guy who now supports McCain. But if you were asked if you would vote for McCain at the convention and misrepresented that, a more serious question can be raised about whether those delegates should be seated. And regardless, in my view the motion to bind the delegates to McCain, passed by CD6 late in the day, exists and will have to be decided by higher rules and credentialing committees.

Last, I was told by Andy Aplikowski that many delegates left the convention after voting for national delegates, so that while more than 300 were there the vote on binding was taken by a group of less than 200. I would argue this is not a problem for the Paul supporters, if we are to believe that they stayed in higher proportion than the McCain supporters. It is a problem for McCain's supporters. Michael and I have questioned on air whether the McCain campaign in Minnesota has been adequately staffed and organized. That you might have lost that vote because your people left the room should be of great concern to the McCain campaign. Even if you think the national convention will be like a coronation, there's work to be done to be sure the crown rests easily.

Conventions are often messy (and DFL ones more so, taking Kevin Ecker's example) but it appears this one was more than it should have been, and that the majority might have taken a play off, as we say in sports. That's not the minority's fault.

UPDATE: Drew Emmer has an independent assessment from the front. He apparently had no problem telling who the Paul supporters were. Drew thinks the rules were changed ex post; again, I am asking what questions were asked by the nominating committee. I am told that some answers to the two questions were changed during the nominating speeches.

Labels: elections, Minnesota

First I read that they kicked out the video cameras. But perhaps we should have had them, not to help the stalkerazzi but to have seen the end of this clusterfarg.

SD 15 co-chair Jeff Johnson sent a newsletter this morning that included a list of national convention delegates and this note:

Ironically, all of these individuals (except Congresswoman Bachmann who supports John McCain for President) have been reported as Ron Paul supporters. It sure got ugly today at the convention!

I had also heard this on the phone last night via Gary. I saw some reference to this also at Leo's blog. The story has since gone national with a headline at World Net Daily by former KNSI talk host (and erstwhile Huckabee supporter) Andy Barnett.

The story is that 98 delegates were nominated for the three national delegates and three alternates. Leo says they were asked

1: Are you a Republican?
2: Will you support John McCain? (yes, no or maybe).

The answers to these questions were displayed on a screen as the vote was taken. If you answered no or maybe to the second question you could still stand for election, but people would know where you stood. The choices of delegates and alternates were:

Delegates: Congresswoman Michele Bachmann; Ron Baert (Benton County); Bob Swinehart (SD52)
Alternates : Steve Hackbarth (Wright County); Scott Anderson (SD52) ; Dean Mahlstedt (Wright County)

I have met Mr. Baert, who worked in electronics for a long time on the east side of St. Cloud, and he is indeed a Paul supporter. Wish I'd've been there, I could have told people that. Neither electee from SD 52 are in that district's leadership. Drew Emmer had warned of the Wright County phenomenon after his district convention where he warned that 60% of his county's delegates were for Ron Paul and "the delegation we elect to the state and national GOP conventions may contain an unexpectedly high percentage of Ron Paul devotees."

Got no problem with that, but not if they are liars. Andy Barnett continues:

A motion was made to ensure the delegates supported McCain at the national convention.

"I moved that we bind the national delegates and alternates to what they told the nominating committee which is what was reported to the voters," said Aplikowsky [sic, actually our friend Andy Aplikowski.]

A heated debate lasting more than an hour followed the motion. Eventually, the motion passed by a slim margin, but not without harsh words and harsh exchanges.

The feeling among many of the congressional delegates who voted was that the Paul supporters had been dishonest. Ron Baert, one of the elected national delegates and a Ron Paul supporter disagreed.

According to other people I've spoken with or exchanged email with, the discussion was very heated. One emailed me

The sound of a stuck pig is more civil than the ... Ron Paul Supporters cry of foul. They started getting really uncivilized during the discussion. At least one of the selected delegates selected claimed that he "didn't understand" the question that was asked each delegate.

I'm pretty sure Leo transcribed the projected questions, and it is reported that all six elected delegates had indicated "yes" to question #2. If so, what was to understand?

Weeks after his post, an anonymous comment was left:

Excellent, but we more DELEGATES!

1. Sign up
2. Show up
3. If you cannot show up, still sign up
4. If you cannot become a delegate, sign up to be an alternate
5. If it's to late, become a Volunteer

You know what? It is working, it is easy, and this is action that RP will need at the Republican National Convention in Minneapolis-Saint Paul the first week in September.

This is more then only talk - it is real action....

At least forward the link to minimum 10 potential delegates. That I’m sure you can do.

This is the core of the useful things to do. Way more useful then all this talk. Because DELEGATES=POWER.

Yes, we know it's working, and may be way easier than you think too. Just get people out of their chairs please - to get RP some real help before the Republican National Convention in Minneapolis the first week in Sep.

A link to dailypaul.com left with that comment takes you to a site I am "not authorized" to read.

I note this isn't the only case of Paul supporters becoming national delegates in Minnesota. Bill Jungbauer won in CD 4. You'll note his site is full of Ron Paul links and positive comments. Now will he vote for Paul or McCain? Did anyone ask, did anyone move to bind those candidates? Andy Barnett reports that the Paul supporters swept CD 4, but one of the delegates is Taxpayers League and former state Rep. Phil Krinkie. I will be interested to hear whether he is part of this movement.

One source on the floor of the convention said it appeared to him the vote was orchestrated. There was even concern over the choice of tellers and their assistants for the vote. That source said he volunteered but was told he would not be needed.

Some writers from the left had picked up this possibility even in February. Marianne Stebbins, Paul campaign coordinator for Minnesota, has said herself she thought they would get nine delegates to the national convention from this state. She had created a video presentation last December to show them how to get elected. Republicans by asking the questions asked by the CD6 nominating committee at least tried to stop this, but it appears to have been thwarted by excellent electronic communication among Paul supporters. Far from a sneak attack, this has been signaled all along.

What would the GOP leadership like to do about it? Will it allow those who did not properly represent themselves to the nominating committees to be seated at the national convention?

Labels: elections, Minnesota

Elwyn Tinklenberg, running for the Congressional seat in the Sixth District, attacks incumbent Michele Bachmann for her vow to forgo earmarks this legislative session.

When 6th District Rep. Michele Bachmann recently pledged not to use the earmarking process to obtain federal funding, she could not have foreseen the emergency closing of a bridge in the heart of the largest city in her congressional district.

Therein lies the problem with taking extreme political positions that leave no room for the unexpected.

The Office of Management and Budget generally defines earmarks as "add-ons" to a general appropriation that direct additional spending to a very specific project. The problem being that too often the earmarks are "dropped" into committee reports and never seen by most of the Congress.

In 2005 earmark appropriations were estimated to total $18 billion. It was then that President Bush urged the Congress "to reform the budget process and expose every earmark to the light of day ... ."

The now-infamous $223 million "bridge to nowhere," in Alaska (almost as long as the Golden Gate and higher than the Brooklyn Bridge but only connects the 50 or so residents of Gravina Island to a city of 8,000), was an earmark obtained by Alaska Republican Congressman Don Young and often used as an example of earmarking excess.

Yet instead of citing the abuses of Young, Bachmann often is critical of Minnesota colleagues such as Jim Oberstar and Colin Peterson, who understand that earmarking is a legitimate response to important needs such as the I-35W bridge.

Well, El, our criticism of the Oberstar earmarks is not about the bridge but about the trails. Oberstar was quite proud of his 2005 bill that kicked a goodly bit of money into trails (I cannot even count them all.) But we continue:

The concern is that not all earmarks are "bridges to nowhere."

In fact, the emergency situation created by the closing of a bridge across the Mississippi in St. Could is a classic example of a time when earmarked funds can be an appropriate process. With what we know now, it's not clear that the DeSoto Bridge can be repaired, and there is some speculation it may stay closed until it can be replaced.

Originally scheduled to be replaced in 2016, that schedule could be accelerated if federal dollars could be secured to help pay for a new bridge; however, that appropriation would be an earmark — hence, the problem with Bachmann's pledge to not take earmarks for her district.

If the De Soto bridge is a project worthy of federal funds, then let Senators Klobuchar and Coleman and Rep. Bachmann enter a bill for the money. It may be attached to another bill for passage, but it would be owned by those people asking the government to spend the money.

My good friend Gary Gross comments in the chat on this article that the I-35W bridge is not an earmark. It was an appropriation and centerpiece of the legislation. The earmark reform people want is for spending to be accountable, not to forswear ever having an appropriation go to a specific project. To use the definition Tinklenberg chooses here would make the Tennessee Valley Authority an earmark.

But even more interesting is that Tinklenberg, rather than tack towards Bachmann on the earmark question, is willing to take a pro-earmark position. John Fund reports (quoted by the Club for Growth here) that Congress cannot get itself off the earmark habit even when it sees polls that strongly oppose it. It appears that the ability of people to even track them is being made more difficult now. Elect Tinklenberg, and he'll have an easier time sneaking a few in for us.

Hardly a profile in courage there. If he's going to be pro-earmark, you'd think he'd not want to hide his grabbing hand.

Labels: earmarks, Minnesota, Tinklenberg

I mean the single-payer health advocates, who probably are cursing into their green tea after reading that Minnesota is the healthiest state in the union.

That's according to CQ Press, which is out with its list of the most healthy and livable states for 2008.

Minnesota supplanted Vermont as the nation's most healthy state, marking the first time since 1999 that Minnesota has come out on top in the annual survey. In its "Health Care State Rankings 2008: Health Care Across America" survey released Wednesday, the publisher examined 21 factors such as access to health care providers, affordability of health care and the general health of the population to come up with this year's list.

New Hampshire came in second followed by Vermont, which won the award as the nation's most healthy state six out of the last seven years. Maine and Massachusetts round out the top five.

Also in the rankings was an emphasis on preventative care. "Congratulations to the very healthy citizens and leaders of Minnesota!" the introduction concludes.

What say you now, Sen. Berglin?

Labels: health care, legislature, Minnesota

The Student Senate at St. John's University has issued a condemnation of the Minnesota Legislature for its override of Governor Pawlenty's veto of the gas tax.

WHEREAS: The Minnesota Legislature raised the Minnesota tax on gasoline and diesel fuels; and,
WHEREAS: This increase has an enormous financial impact on people with fixed and low income; and,
WHEREAS: Students are a major demographic of people living on limited budgets; and,
WHEREAS: This tax will only affect students negatively when they are traveling within the state for internships and trips home; and,
WHEREAS: This will place an additional, undue burden on families who are scrapping to make tuition payments; and,
WHEREAS: This is a wholly avoidable tax levied against the students of the state; and,
WHEREAS: If the Minnesota Legislature is going to make claims that it will stand in support of its student constituents, it must understand that this tax is contradictory to any such notion; and,
WHEREAS: Saint John’s University and the College of Saint Benedict rely on diesel fuel for inter-campus transportation; and,
WHEREAS: This transportation fee is paid for by student dollars
NOW, THEREFORE, BE IT RESOLVED, THAT WE, THE SAINT JOHN’S UNIVERSITY STUDENT SENATE, do hereby condemn the Minnesota Legislature for raising the gas tax to levels so high that student mobility is threatened.

Will other student governments follow suit?

Labels: gas, legislature, Minnesota, taxes

Given the lengthy comments made in the chat accompanying this article, there appears to be a great deal of interest in banks trying to cater to Muslim businesses seeking credit. The comments seem to think this some great injustice, that Muslim borrowers are getting a favor from these banks.

It means no such thing.

Islamic banking in the United States is still relatively new, and there are regulatory concerns regarding it. In short, Islamic or shari'a law forbids the use of interest (riba, in Arabic) in any debt contract, be it as a payment on deposits or as a payment for a loan. Western banks see this set of customers as a potential source of revenue, and seek ways to accommodate the religious beliefs of the borrowers. It's similar in type to producing food that is Kosher to capture a Jewish clientčle.

Islamic loans involve a different risk-sharing arrangement, so that banks in essence have an ownership stake in the business for a fixed period. On loans, that doesn't appear to be too hard. Deposits are a little harder. I can find several examples of lariba or no-interest financing of business firms. (I'll note that the Islamic bank I've just linked to, American Finance House LARIBA, has Islamic mortgages that qualify for repurchase by Fannie Mae and Freddie Mac.)

Now this is pretty much all I know about these types of loans as made in the USA, from my notes for teaching Money and Banking. I am not an expert in this field.

I fail to see, however, why anyone should be upset by the presence of a finance instrument that conforms to Islamic law. An ingredient to a hand up (vs. a hand out) is to give people access to credit. These loan programs are a good way to get someone into the role of entrepreneur, invested in and connected to the local community.

One person I spoke with asked if a Christian or a Jew would be able to take out this kind of contract? I would hope that answer is yes; I wish I could speak with a local banker who's offering them to see if this is true. Meanwhile, to qualify for these loans here in St. Cloud, potential borrowers are going through a financial education program.

It doesn't appear anyone has started the programs locally. I certainly hope some of the ignorance in the discussion from the Times does not leave a useful idea stillborn.

Labels: banking, economics, Minnesota, St. Cloud

The closed DeSoto bridge sits about 300 yards from my office up the river. It is one of three bridges within about three miles of each other, with a fourth a few miles further up that was just finished connecting St. Cloud and Sauk Rapids. Everyone thought that last bridge was wa-a-a-ay overdue for replacement; the new structure is visually pleasant. But not very busy. While traffic so far has been pretty light due to the holiday (there was a fender bender at 9am this morning on the Veterans Bridge, two blocks north of DeSoto, but it was gone when I crossed it at 9:35), I think tomorrow will be the first real test.

Veterans Bridge was built in its current form in 1971, and was redecked and widened to four lanes in 1996. Traffic was routed for some time to DeSoto. We have thus had experience with having a bridge out. While St. Cloud has grown dramatically in the last ten years, most of the growth is either on the west side of the river anyway, or is up in Sauk Rapids and comes over the new Sauk Rapids bridge or the University bridge (to the south of Desoto -- many old-time Sauk Rapidians I know that come to campus use that bridge instead.) Most of the Sauk Rapids traffic will now come in over the SR bridge, but it then gets caught in a pinch to two lanes in North St. Cloud (between 11th and 15th Sts. North.)

Personal note: Littlest ends her schooling in Sauk Rapids this May; for the last two years that particular area has been our personal issue. The new bridge, as I say, is nice!

The east side of the river would more naturally commute west than the other direction. There are 15,703 on the east side of St. Cloud as opposed to the more than 50,000 living on the west side; the downtown and the shopping areas are mostly congregated to the west. (Data via ZipSkinny, h/t: Carpe Diem.)

Everyone up here is still wondering -- replace or repair? The key point most people should keep in mind is that there are plans to both widen the University bridge (a long story of slow-growth advocates winning a battle and losing a war, but that's another blog post some day) and renovation of Highway 23 through downtown and out about halfway to Crossroads mall at the other end of town. Both of those other projects were due to go in 2010. The desire would be to handle the Desoto/Highway 23 bridge with the road reconstruction, but you don't want TWO bridges out at the same time and you don't want to repair the road and the bridge separately. So when people ask me what's going to happen, I don't know. It makes far more sense to do the DeSoto bridge first, but that means someone has to agree to move forward the road reconstruction or accept the slow build-out of Highway 23.

It's not going to be pleasant no matter what for those who commute from the east side, but the lack of east side development is actually now a blessing. If that side of St. Cloud had developed like the west and south had, this would be a much bigger disaster.

Labels: Minnesota, St. Cloud

If you've read here for awhile, you know I'm not a very big fan of JOBZ. That said, St. Cloud area business leaders assert that it has saved 970 jobs in the area and added about 610 more jobs. That's not a huge surprise, as Central Minnesota is the fastest growing area for jobs outstate. Some wonder, with good reason in my opinion, whether the jobs they say they have saved.

Smaller towns complain that St. Cloud and Rochester don't need it. That's a bad deal for those two Cities, since the metro-area legislators don't like it. It's thus no wonder that the House DFL plan for closing the budget deficit throws JOBZ (and Q-Comp) on the pyre. That they are both initiatives of Governor Pawlenty just makes it all the better. The smaller cities in outstate are going to complain, but if there's enough cover for killing JOBZ, it will happen.

So it is interesting that while Reps. Gottwalt and Haws are trying to protect JOBZ for the benefit of St. Cloud according to radio reports -- Haws asking for revisions to improve efficiency, but no indication of using it as a funding source for deficit reduction or supporting other spending -- Sen. Tarryl Clark is disagreeing with the Governor's budgetary choices, without mention of how she would pay for this. Is she therefore siding with the metro DFL in axing a program that doesn't help Metro? If so, whose interests is she representing? She may be cheering the Husky fans with handouts of the renovated National Hockey Center, but she doesn't seem to say anything about how that is to be paid.

If she would like to take a stand to say JOBZ should be axed, or should be amended as Rep. Haws has, that's one thing. Killing the program, though, seems to go against the interests of the St. Cloud area.

Labels: DFL legislature, Minnesota, St. Cloud

I spent a segment of this morning's show on KNSI reading through Craig Westover's column on the Governor's Health Care Transformation Task Force. My first reaction: Any time you hear the words "government" and "transformation" in the same sentence, you can bet the outcome will include the use of coercion. Craig and I are on the same page.

"Successful transformation of Minnesota's health care system will require active participation and engagement from consumers, employers, health care providers, health plans and government," declares the Task Force Report. The obligations the Task Force envisions for the first four groups require fundamental behavior change; government's obligation is to "enact the necessary changes to law to implement the transformation plan." In other words, supply the muscle, the force, the coercion.

Craig has just posted part II of this essay. The report from the task force calls for competition and patient-centered care, but it cannot deliver:

"Competition" logically means individual health care providers competing for individual patients on quality and price based on the individual's conception of value — much like Lasik surgery works today. Independent Lasik surgeons have had to innovate, improve their procedures, upgrade their technology and lower their prices to attract patients. Lasik surgeons operate outside the managed care payment system.

In the task force world, "competition" is "managed." Under the task force payment reform plan, health care providers must bid as low as possible for a contract to serve a population of patients offered by a managed care organization. Think of it like putting out a bid to provide computer maintenance: The task force approach is health care on an industrial model where we carbon-based units are maintained and repaired according to the manual. Unfortunately, we are not all the same make and model.

In the task force health care system, a provider's profit depends on how "efficiently" it provides medical treatment. The provider can be "efficient" by developing innovative treatment methods or by rationing the treatment it provides. Which method the provider chooses has great consequences for the patient, but from the task force's perspective of keeping costs down, either approach would yield "high value health care."

And, lest the Transformation Task Force leave any minor detail of your life untouched, it would require every Minnesotan to have a minimum amount of health insurance, dictate to health plans whom they must cover for what at what price, and create a health insurance exchange that effectively would eliminate the role of private insurance brokers.

The beginning is HF3391, a bill wending its way through the Legislature now. The Lady Logician highlights the backdoor to universal care. All four of these links should be on your reading list.

Labels: health care, Minnesota

Craig Westover points to the flaw in thinking about the bonding bill.

The emphasis is on “How much CAN we spend?” not “How much MUST we spend?”

I spoke this morning to a group of about fifty bankers, social workers, financial counselors and others on strengthening financial stability. In the process of doing this I was looking at materials we use to teach economics to kids in K-6 and 7-12 education. (My strategy is to reach the parents through the kids.) There were worksheets on how much of what we spend is discretionary versus mandatory, how much is fixed versus variable, etc. This is all pretty standard fare for teaching financial literacy. (I grabbed most of what I used from the Fed's education site.)

Now what about that logic applied to government? Craig's right -- we have both sides of the political debate agreed to borrow -- to "put on the credit card" -- 3% of what government takes from us. And we will be expected to pay the bill on that credit card. All that we teach in getting new families, families in financial distress, about financial literacy is contradicted by what their government does. Imagine if an employer were to take a share of your labor; he has signs around the plant announcing that you should be willing to pay more for a better Minnetaxco, Inc. He then announces that he is borrowing and additional 3% of what he has taken from you to "make investments" in Minnetaxco. To repay that loan, he will have to take a slightly larger share of your labor. There's interest to pay. But no worries, he is allocating those borrowed funds to help you produce more (which, of course, he can get a share of.)

Government doesn't calculate investment returns. At best, if it followed Craig's advice, it would do a cost-benefit analysis. But it has so many decisions to make about who's benefits count, and whose costs count. You cannot expect a government to calculate investment when it has no conception of risk of loss. It bears no risk. You do.

Craig continues:

If the bonding bill at that point is a mere $600 million, then that’s the appropriate and legitimate level of state bonding. If indeed everything on the list is both constitutional and necessary and the total is $1 billion, well, then we have to look for other sources of revenue – first eliminating extra-constitutional or unnecessary expenditures elsewhere in the budget.

To say we must know how much we have to spend before crafting a bill is simply indicative of the political division of spoils that is the bonding bill.

And that really is the issue here. The 3% is not a fund for investment in infrastructure; infrastructure is the vehicle to which we attach a spoils system that sees you as the source of the spoils. It only uses roads and bridges as a means of keeping you acquiecent.

Labels: legislature, Minnesota

Others are focusing on the Survey USA result that the State Legislature has a 28% approval rating. There's also the result that half of voters said they would be less likely to vote for those legislators who voted for the transit tax.

But, 58% approve the Governor's plan for closing the budget deficit. The crosstabs indicate a 55-28 lead with independents, and the plan is only opposed by self-identified DFLers by a 40-48 spread. The DFL plan has yet to be found.

Attempts to dent the Governor's popularity so far have not succeeded.

Labels: legislature, Minnesota, Pawlenty

In one of the sillier articles I've read, MPR is busy figuring out whether Gov. Pawlenty is qualified for Gold Elite on NWA. They even have pretty graphics. Does anyone check to see what the Legislature did for the month and a half before the Legislature even opened for session?

MPR is measuring inputs. What I care about is output. Has he delivered the production we expect from the governor? And how do I measure that? It's NOT based on how many times he talks with the DFL leadership.

"I've seen more of the former governors than I have of the current governor during the start of session," said DFL House Speaker Margaret Anderson Kelliher.

Kelliher said she's worried that Pawlenty has not been meeting with her or other DFL legislative leaders. She said the last time she met with the governor was on Feb. 13, one day after the legislative session started.

DFL House Majority Leader Tony Sertich said he hopes to see the governor come to the table as budget negotiations intensify.

"I think it's shocking. It would be shocking to Minnesotans to know that their governor and their elected legislative leaders have not been in the same room since the start of the legislative session," Sertich said. "I've seen him more on the Sunday morning TV talk shows ... than I've been in the room with him."

Now, go to the last paragraph for the punchline,

House Speaker Margaret Kelliher acknowledged she hasn't invited the governor to any meetings. She said she'd be happy to hold one in her office if the governor would attend.