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Downsizing Minnesota: The True Price of Government

March 30, 2011

ST. PAUL, Minn. - Minnesota lawmakers are trying to get a state budget to Gov. Mark Dayton's desk by the Easter break, and so far GOP leaders have justified a cuts-only approach, citing "out-of-control spending" they say is not sustainable.

But how much does government actually cost Minnesotans? The answer may be surprising.

For much of the 1990s, the average share of a household's income for state and local government hovered around 17.6 percent, peaking at nearly 18 percent in 1993. Nan Madden, director of the Minnesota Budget Project, says today that number has dropped to 15.2 percent.

"When we look at the data about the size of state and local government in Minnesota over time, we do see that government has been downsized from where it was for much of the '90s."

The economic downturn, not overspending, has led to the state's budget deficit, Madden says, because less income- and sales-tax revenue is coming in to cover state operations, programs and services. Spending down reserves or delaying public-school payments are some examples of short-term solutions she says may have offered temporary fixes, but later became problems when the bills came due.

It's true that health care is one area of the budget that has grown, Madden says, but that's not unique to government. It's happening in the private sector as well, she says, adding that cutting thousands of vulnerable Minnesotans off medical assistance isn't going to make the problem go away.

"We don't bring down the cost of health care simply by government saying we are going to buy less of it. It really needs some system-wide changes in the health-care system to bring those costs down, both in the public and the private sector."

A cuts-only approach to balancing the state budget isn't the best solution, Madden says, because services need to be paid for one way or another.

"Over time, we've seen cuts to state funding for cities and counties that has led to upward pressure on property taxes. We've cut state funding to our public colleges and universities, and as a result we've seen some dramatic increases in tuition. So we are raising revenues, we just have tended to do them in ways that are not as in sync with people's ability to pay."

With differing House and Senate budget bills on the table, Madden says, the real work begins with making concrete choices about what's truly important to the state and the quality of life for Minnesotans.

"When we take a look at the budget choices that have been made in this decade, we have largely relied on short-term solutions and cuts to services as a way to balance our budget. The easy solutions are well behind us. Now, we're looking at much more severe reductions to services that really bring into question what kind of state we're going to have in the future."

The Minnesota Budget Project has data on the price of government online at mnbudgetproject.org/resources.

Sharon Rolenc, Public News Service - MN