Growth & Justice Blog

Who's hurt by transit funding cuts? The poor and smaller communities.

Transit for Livable Communities blog links to a report by Transportation for America that surveys the nationwide "Impact of the Financial Crisis on Public Transportation." 

The report notes that the price of a monthly bus pass for the public transit system serving the city of Marshall and Lyon, Redwood and Jackson counties has jumped from $25 to $80 per month. The price bump is just one consequence of the cascade of spending shifts as state funding for local services diminishes — through unallotment and budget cuts and, in the case of transit, through a decline in dedicated funding streams such as state sales taxes on motor vehicles.

Especially in urban areas, there are two types of transit riders — those who ride by choice and those who are transit-dependent. Bus service cuts and fare increases may drive the "choice" users back to their cars, but for the households without a vehicle (see chart) their options shrink. In rural areas, where transit may be their only link to employment, medical care or other services, the impact of underfunding goes far beyond "transportation."

 

The post by TLC's Katie Eukel underlines some of this local impact, quoting the director of the non-profit that runs the Marshall system.

“Transportation services are not a luxury for people living in rural areas — they are a necessity," says Jeanette Porter, Transit Director with Western Community Action. "When transit providers are forced to shift so much of the financial burden onto our passengers, or agencies helping their clients, it creates a devastating cycle that is already beginning to take effect... Often people must move to a larger area where more options are available. This not only affects those who depend on public transportation, but the economic and social vitality of their communities, as well.” 

It's a point we made in a recent editorial, but it bears repeating again and again as the state tries to set budget priorities. Transit service cuts and fare increases may make sense if you’re looking for ways to affect a budget line item. But they're a poor bargain if you’re looking at the actual people and communities affected.  

— Charlie Quimby

State economist affirms: Cuts cost more jobs than income tax increase

State Economist Tom Stinson estimates the spending cuts Gov. Tim Pawlenty will start making today will cost Minnesota 3,300 to 4,700 jobs.

By contrast, Stinson told the Legislative Advisory Commission on Tuesday, the $1 billion income tax increase that the Democratic-controlled Legislature passed and Pawlenty vetoed in May would have cost the state an estimated 1,000 jobs over the next two years.

— Pioneer Press

In May, Growth & Justice estimated potential state job losses from a proposed new 4^th tier personal income tax rate of 8.5 percent. Our study [PDF] — of a somewhat different tax proposal than the one ultimately passed by the Legislature — put the potential impact of the revenue-raising tax increase at 1,000 to 5,000 fewer jobs (out of about 2.7 million).

Yesterday, Minnesota's own state economist came up with a job loss number at the low end of the range Growth & Justice estimated.

We're gratified to see our work validated by Tom Stinson's estimate. (And let the record show, we so-called "tax-loving liberals" were even more conservative in our portrayal of the potential downside of raising more revenue.)

Stinson affirmed the other side of our case, too.

We declared that "any harm from higher taxes should be weighed against the potentially greater negative effects of spending reductions" and noted that the governor's proposed spending cuts could cost even more jobs in local governments and government service providers. 

Stinson's analysis of Gov. Pawlenty's unallotments puts some solid numbers behind that conclusion as well. In his estimation, the impact of the specific cuts could be three to five times greater than the impact from tax-increase-related measures.

It could be worse. His estimate reportedly did not include indirect job losses, such as when a private contractor loses state business and is forced to lay off employees.

Our assessment, though based on evidence, was still theoretical. Unfortunately for Minnesota, we about to gather more evidence about job loss — from unallotment, starting today.

— Charlie Quimby

Will tax breaks for green investment bring green jobs?

Gov. Tim Pawlenty introduced yesterday his proposed package to encourage green job creation in Minnesota. His "Green Jobs Investment Initiative," extending a variety of tax credits to businesses and investors, has been called "Green JOBZ." 

That nickname is unfortunate.

It's true, part of what he's offering is just JOBZ warmed over — not a concept that will excite JOBZ's many critics. But he's also suggested some other positive steps to encourage private capital investment, expand infrastructure for alternative energy, raise awareness of energy conservation and discourage greenhouse gas emissions.

It's good he's getting out front on the issues of jobs and clean technology development, but he also got out ahead of a legislature-sponsored Green Jobs Task Force that has been laying out how to tackle the green jobs issue. The bipartisan group, which includes legislators, executive branch agencies, business and environmental representatives, had scheduled to bring out a legislative action plan in December and a report in January.

This political maneuvering aside, our question is whether longer-term tax credits will actually have much impact on creating jobs today.

JOBZ's tax breaks were aimed at increasing employment in communities where economic growth was stagnating. It's debatable how many new jobs overall were created. As much as two-thirds were part of planned expansions or simply moved from one place to another.

Green JOBZ faces another hurdle. It's trying stimulate job creation in a relatively young sector that has already received a lot of venture capital scrutiny. Although investment in green industry has been growing, there have also been signs that venture funds have not found enough compelling opportunities to invest in green industry.

A 2007 study by New Energy Finance found that venture capitalists had spent only 73 percent of the funds that had been raised for green technology, and several green tech funds closed their doors that year. More recently, the research group calculated that global investment in clean-energy projects fell by almost 25 percent in the third quarter 2008, and it will likely fall further by year end.

Persuading those investors to put more money into clean technology is a laudable policy goal, but it's a very different challenge from getting a machine shop to locate its new facility in Long Prairie instead of Bloomington.

Gov. Pawlenty's plan offers tax incentives for regional investment funds to invest in Minnesota (only 50 percent of the credits will be targeted for green industry, however). Using tax breaks to boost expected investor returns seems like a good move, but it's also a move any state can duplicate.

Of the more than $13 billion in public and private investment in U.S. clean energy in 2007, nearly $9 billion was made in wind energy, a sector where Minnesota has some advantages. Venture capital funds favored solar energy development, though, with $1 billion of the $2.7 billion they invested in renewable energy technologies. By virtue of geography and technology base, Minnesota will be less competitive for these funds.

Green industry by any name will be good for Minnesota, and it seems churlish to question any well-intentioned effort to grow jobs and lessen our dependence on fossil fuels. But we also should look for the most effective role government can play in encouraging future industry — while addressing jobs today.

For the thousands of Minnesotans who are out of work or underemployed, "offer tax incentives and the jobs will come" won't offer much encouragement. Let's hope the Green Jobs Task Force has more about ideas about creating jobs than Green JOBZ.

Wisconsin benchmarks Minnesota: How do we look?

We constantly hear anecdotal comparisons of Minnesota to surrounding states, usually based on "tax rankings," "business climate" and "business owners are bolting for South Dakota." But how do border states actually compare themselves to Minnesota?

Competitive Wisconsin provides one answer. It recently published its tenth annual benchmark survey comparing Wisconsin to U.S. averages and to its border states, including Minnesota. I found the report handy for its comparison to the U.S. averages on dozens of benchmarks. The benchmarks typically included the most recent year and the five year trend. Comparisons are drawn from various sources and cover different time periods, depending on the available data.

Rather than extract the Minnesota numbers here with all the necessary qualifiers, I've simply noted where we clearly ranked above or below the U.S. averages. (It's a somewhat subjective, not a scientific, sort. For example, I put Minnesota's private new business starts in the worse category, though the five-year growth rate is slightly above average. But the latest year is half a point and 20 percent below average.) You can see the actual data for Minnesota and the other states here [Download pdf].

Where Minnesota ranks worse than average

• Personal per capita income growth
• Median household income growth
• Employment growth
• Violent crime growth rate
• Cost of living
• Science doctorates granted
• State and local tax burden
• Return on Federal tax dollars
• New business starts
• Exports
• Invested venture capital

Where Minnesota ranks better than average

• Percentage of uninsured
• Violent crime per capita
• Home ownership
• Poverty
• Low birth weights
• Math proficiency
• ACT/SAT scores
• High school graduation rate
• Percent of college grads
• Manufacturing jobs
• Energy costs
• Research & development
• Patents
• High tech employment

In other areas, such as unemployment, highway condition, government employees per capita, obesity and smoking, we were more or less average. Change in state's share of farm income was exactly average, but our five-year trend was through the roof. Ethanol? Hard to say, since it's not about us.

One observation. Where we rank better than average, it might be argued, historic investments in education, health care and infrastructure built up an long-term advantage. Indices where we're worse than average seem more sensitive to current trends and might be leading indicators of erosion in areas where we now do pretty well.

— Charlie Quimby

 

The liberal plot to fix our roads

Blogger Drew Emmer is not happy with the transportation bill (he calls it the "transit bill"), media coverage of the legislation or the coalition that supported its passage.

In support of his contention that "special interests" put one over on the taxpayers, he cites a long list of organizations and local government entities that supported the bill. Growth & Justice is one of the baddies.

One clear takeaway from his list: His readers are supposed to think a cabal of labor, environmentalists and the construction industry slipped this one past the guardians of the public purse.

Of course, one might expect the highway industry to support road construction legislation. Nor is it surprising that organizations concerned about employment would look on favorably. Farmers who must get their products to market over rural roads? Another special interest at work.

But calling this bill the work of "special interests" and attributing its passage to an orchestrated effort by groups as diverse as the League of Women Voters, the City of Hutchinson, the Isaak Walton League, the Teamsters and Potato Growers is a bit silly.

The compilation becomes even less credible because it also omits two of the most influential groups who favored passage — the Minnesota Chamber of Commerce and the Itasca Project, which convenes the CEOs of the state's largest companies.

These broad-based business groups are rightly concerned about the region's economic health and competitiveness. They, and many of the other businesses represented on Demmer's special interests list, are widely considered the most important allies of Republicans on economic and tax-and-budget issues.

Any claim of liberal "special" interests starts to lose meaning when the interests represent such a broad expanse of the state's businesses, counties and municipalities, labor groups and nonprofits.

Isn't it just possible we all agreed — beyond our parochial concerns and differing political perspectives — that it was time to invest in the state's transportation infrastructure?

— Charlie Quimby

Not enough gold with that maroon

I was looking up some other demographic information when I found this graphic in a presentation [Download.ppt] from State Economist Tom Stinson and State Demographer Tom Gillaspy.

It shows, with few exceptions, that Minnesota's employment growth has been below the national average — and it's getting relatively worse.

We've heard that, maybe, but this picture in maroon and gold brings it home.

But growth in the employment rate doesn't capture everything — especially when a relatively high percentage of the workforce is already employed.

So, checking out the Twin Cities Compass site Dane mentions in the previous post, I took a look at another key measure — proportion of adults working in the seven-county metro area.

This chart shows a slight closure of our region's lead over the U.S. average in recent years. There are lots of other ways to slice the data, too. You can drill down from there and see the Minneapolis-St. Paul-St. Croix greater 13-county metro ranks first among national metropolitan areas.

So, maybe not as  alarming a trend as it appears in the employment growth chart, but it confirms we're heading in the wrong direction.

One quibble. The time scale on the chart isn't apparent to me here, and other charts on the site are arbitrarily divided into quarters that don't correspond to years. For more volatile trends, I want to be able to isolate easily individual years when changes occur.

[At my other blog, I've posted seven brief profiles of people I know who might fit in one set of these numbers, but not the other.]

— Charlie Quimby