How the Democrats tax proposal affects Minnesota
On Monday, Sept. 13, House Democrats released their tax proposal, which is supposed to pay for their $3.5 trillion spending plan. Among other things, the proposal raises the corporate tax…
Valentine’s Day is traditionally a day when people spend their money on a loved one. For Minnesota’s Senate DFL, it is also a day when they try to spend somebody else’s money:
Roses are red ❤️
Violets are blue 💙
Let's fully fund education, create clean jobs,
And support Minnesota families too!
— Minnesota Senate DFL (@SenateDFL) February 14, 2021
In fact, looking at the numbers, it is impossible to argue that Minnesota’s state government is in any way not “fully funded” already. Indeed, as we wrote in our recent report “Closing Minnesota’s Budget Deficit,” in inflation-adjusted, per-person terms, Minnesota’s state government is already spending more money than it ever has before.
Let’s start with General Fund spending numbers from Minnesota Management and Budget going back to 1960. These are nominal numbers, they do not reflect the inflation that has taken place over that time. To account for that, so that we can compare numbers across time, we can adjust the numbers using the Consumer Price Index produced by the Bureau of Labor Statistics, which is the standard measure of inflation in the United States. This gives us a total of General Fund spending over time adjusted for inflation, i.e. in “real” terms. Then, of course, Minnesota’s population has grown over this time so that that money has had to cover more and more people. To get the per capita real terms spending, we simply divide total General Fund spending by the population (the Bureau of Economic Analysis provides easy access to these numbers). This gives us Figure 1:
Figure 1: Per capita General Fund spending, 1960 to 2020 (2020$)
Source: Minnesota Management and Budget, Bureau of Labor Statistics, and Bureau of Economic Analysis
As we noted, this shows that, in inflation adjusted, per person terms, Minnesota’s state government is already spending more money than it ever has before. Given this historic river of cash, how can it seriously be said that the state government is not fully funded? What even higher amount would constitute full funding?
If the state government is genuinely having trouble paying for essentials, the problem is not that Minnesota’s politicians don’t get enough of your money to spend, it is that they spend the huge amount they do get badly. Rather than dipping their hand deeper into their citizen’s pockets, they should sort that out.
John Phelan is an economist at the Center of the American Experiment.