Taxes and the Economy
According to the Tax Foundation, Minnesota’s state and local tax burden is 8th highest in the U.S. The Foundation also ranks our state as one of the 10 worst for business taxes. With rankings like these, I opposed Governor Dayton and the DFL’s $2.1 billion tax increase in 2013 because I believed it would weaken our state’s economic competitiveness and impede productivity and wage increases. I remain opposed to raising taxes on our businesses and citizens. The goal of the legislature should be to strengthen our state’s economic competitiveness and ensure that our tax and regulatory climate is conducive to attracting entrepreneurs and growing jobs.
People with higher incomes are voting with their feet and moving to friendlier tax climates, according to a recent study by the Freedom Foundation of Minnesota. Their taxes as well as their civic contributions are lost not just for one year, but for all future years as well. The estimated state and local taxes lost due to out-migration between 1995 and 2009 was $2.5 billion.
Education is the largest line item in the Minnesota state budget. The state budget picks up 75% of the cost of educating kids, relatively high in the percentage of funding coming from the state. The remainder comes in the form of local property taxes. While the Basic Ed formula for every pupil is the same, currently $6,312 per pupil, there is extra funding for programs for special student populations and special districts. Also, because property wealth varies district by district, local dollars for education are raised more easily in some districts than others.
We’re fortunate that our schools here in District 38A are high quality. We have top leadership and top teachers who are achieving excellent results in narrowing the achievement gap, improving graduation rates, raising reading and math scores and driving ACT test scores. That is not the case across Minnesota. And we must challenge the status quo, institute reforms that achieve better results, and provide intensified programs to address literacy issues such as dyslexia. Minnesota comes in 17th in per pupil spending for education. Student ACT scores in Minnesota scored highest among the 17 states with the highest participation rates on ACT testing.
Raising the minimum wage by government fiat abandons marketplace mechanisms which dependably set wages based on skill levels, productivity and market demand. For a single city such as St. Paul or Minneapolis or the state to mandate higher wages ignores the reality that businesses and customers can and will go elsewhere. Job flight and lay-offs can be expected to result. Such a move will hurt all low-skilled and entry-level workers, especially young people and minorities. It will harm small businesses and create across-the-board inflation in wages and prices of goods and services. If an increase in the minimum wage is to happen, it should come through Congress so that all states operate on a level playing field.
Reform of the Metropolitan Council
As a suburban representative, I am concerned about the growing power of the Metropolitan Council, and its “mission creep.” The Council, which began as a regional planning agency for coordinating metro area waste water and sewer infrastructure, has acquired taxing and regulatory power despite being unelected and accountable only to the governor.
The Council’s Thrive MSP 2040 “guidelines” have restricted roadway expansion and single- family housing development in favor of light rail transit and multi-family housing. The outcome will be increased traffic congestion and commute times and higher housing costs due to artificially-created shortages. To fund the plan’s expansion of transit, Governor Dayton sought a ¾-cent sales tax increase (atop the current ¼-cent tax) in metro sales tax, a proposal the Republican-led House of Representatives rejected.
Public sector spending on health care is rising at twice the rate of private sector spending. The reason: people spend money more readily when they don’t see the bill. Government is ineffective at controlling health care costs. A good example of this is the 21 new taxes and 155 new agencies established under the federal health care law (ObamaCare).
Private health plans have more incentive to watch costs than government. A recent study of Medicare fraud reveals that government uses the “pay and chase” method – they pay the bill and investigate after, resulting in an estimated $60 billion (10%) in fraud annually. In the private health insurance market, the claim is investigated before it is paid – and fraud amounts to 1.5% annually. Market-based health care solutions are the most effective way to stem the rising costs of health care.
Issues Facing District 38A
- Congestion on the freeways in our area has made commuting very frustrating. Solutions such as the MNPass project along I-35W in Blaine and Lino Lakes will relieve some of that congestion and give commuters more alternatives. I support the MnPass project.
- Cities in the northern suburbs are relying on groundwater from the acquifer for irrigation and watering lawns. This is not only expensive but it is unnecessarily depleting the groundwater resource which must be available for our drinking water. New methods for re-using surface water for irrigation are efforts I support and have authored legislation to advance. The City of Hugo is developing the first-ever housing development in the state which will use surface water collected in ponds for watering residents’ lawns.
- This area of the metro has lower commercial-industrial (C/I) property wealth than many others. As a result, property taxes on residences are higher than in some parts of the metro, and our schools have more difficulty raising local dollars. The Fiscal Disparities program has become essential to all local governments in Anoka County to supplement property tax revenue. More industry in our area would benefit our community.
What is the Primary Role of Government?
At the state level, the primary role of government is one of funding and providing those services which are a “public good”. A public good describes such things as a road, a library, a park – my use of which doesn’t diminish or detract from anyone else’s use. Providing for public safety is a fundamental role of government as is providing a welfare safety net. Like many, I believe government is doing a disservice when it enriches the benefits of the welfare system to a level that discourages work and self-sufficiency.
I have consistently voted against government’s funding of projects like football stadiums that benefit a private business and are not a public good. Government intrusion into private industry in the form of subsidies or favorable tax treatments distorts the market and leads to crony capitalism and corruption.
City-owned golf courses, for example, operate tax-free resulting in lower fees for golfers but set up unfair competition with privately-owned golf courses which must charge higher fees to cover heavy property taxes and income taxes. In Minnesota, state government subsidizes local governments (cities) through the Local Government Aid program. This program gives out millions in carte blanc funding which in turn subsidizes inefficiency and over-spending by local governments who in turn organize to vociferously appeal to the legislature for more taxpayer subsidies.