Tracking the Omar Fateh scandals: Ethics complaint edition
Seven of state Sen. Omar Fateh’s colleagues have signed on to an ethics complaint lodged against the first term legislator from Minneapolis. Filed on the final full day of the…
The problem of overspending isn’t just anecdotal, it is systemic.
On December 7, Minnesota’s Office of Management and Budget released a forecast projecting a $7.7 billion surplus for the 2022-2023 biennium. Of that amount, $3.1 billion is already on hand. Minnesota’s state government, in short, is awash in money, both because it has taxed its citizens beyond government’s “needs” and because the federal government has lavished borrowed money on the states.
What to do with this surplus will no doubt dominate the 2022 legislative session.
As American Experiment’s economists have documented time after time, Minnesotans are over-taxed. We currently labor under the fifth highest overall tax burden of any state. Our top personal income tax rate is the fifth highest in the country, and our corporate income tax rate is the fourth highest.
As a result, job creation lags in Minnesota. Our productivity is below average, our economic growth is below average, economic growth in the Twin Cities metro area is below average, and we consistently lose residents to other states in every income range over $50,000. The states to which we lose residents on a net basis are, almost without exception, lower tax states whose economic growth and high-quality job creation leave ours in the dust.
But the problem of overspending isn’t just anecdotal, it is systemic. One year ago, American Experiment documented the fact that Minnesota’s spending on welfare programs per person in poverty (as defined by the Census Bureau) is the country’s third highest, at $30,479 per person. If Minnesota simply spent the average amount per person in poverty, we would save $7.1 billion per year.
The same is true with regard to education. Our 2020 paper “Allergic to Accountability” showed Minnesota spends more and more money every year on K-12 education, while getting worse and worse results. Per pupil spending is up 75 percent since 2003, so money is obviously not the problem. This quarter’s Thinking Minnesota poll finds
a strong consensus among Minnesotans that the projected $7.7 billion surplus should be given back to taxpayers or devoted to reducing debt. Minnesotans emphatically reject the idea that the surplus should be spent on more government programs.
Thus, 24 percent say the state should give the surplus back to taxpayers in the form of permanent tax cuts. This is the course favored by American Experiment’s economists. Another 12 percent say the surplus should be distributed in the form of a one-time rebate to taxpayers. A further 21 percent prefer a different, fiscally responsible course that would also benefit taxpayers: using the surplus to pay off state debts. Thus, 57 percent think that the surplus should be used, in one way or another, to benefit the taxpayers who evidently have paid too much.
Meanwhile, only 28 percent of respondents, including just six percent of Republicans and 20 percent of independents, advocate spending the surplus on government programs like education and welfare.
One might think that in a democracy, a two-to-one consensus in favor of returning the surplus to taxpayers, or using it to pay off debt for which the taxpayers are responsible, would assure that elected officials won’t ignore public opinion and spend the money instead. But governments are probably the greediest institutions in our society. It will not be easy to pry $7.7 billion out of the grasping hands of politicians and bureaucrats who want to use the money to advance their own agendas.
The question of what to do with the surplus will be hotly debated in the upcoming legislative session. It is incumbent on all of us to keep a close eye on our elected representatives, let them know what we think, and hold them accountable for their votes.