Growth & Justice Blog

Voters again reject anti-government TABOR formulas

Overlooked  in much of the analysis in this off-year election results were the latest defeats of anti-government "TABOR" (an acronym derived from "Taxpayers Bill of Rights,'' a frequently used title for such efforts) initiatives in two states, Washington and Maine. TABOR formulas are designed to impose arbitrary limits on growth of taxes and appropriations, and most mainstream policy experts dismiss them as unwise and inflexible.    

As the national Center for Budget and Policy Priorities noted :    

Yesterday’s votes in Maine and Washington show clearly that TABOR’s crippling and arbitrary spending limits remain unpopular around the country. Anti-government groups have made serious efforts to enact TABORs in 20 states since 2004 — and they have failed every time. While these groups will likely target other states in 2010, there is little reason to believe they will have more success.

Minnesota has escaped these TABOR initiatives, although efforts to get them on the ballot as constitutional questions have been mounted. Unfortuneately, too many of our elected officials, including Gov. Tim Pawlenty, unwisely got themselves cornered  into signing "no new taxes'' pledges earlier in the decade and Minnesota has been in a state of fiscal  paralysis every since. 

It's reassuring to see that ordinary voters in most states do not fall for the enticing promises of simplistic and arbitrary limits on public resources.  

— Dane Smith

Less Government? We Tried That. It's Not Working.

The Star Tribune's front-page story today finds that "less government'' is the overwhelming consensus "vision'' for Republican gubernatorial candidates. Peggy Lee and most Minnesotans want to know: Is that all there is?   

Leaving aside that this mantra sounds more like hard-right, activist-energizing radio talk than inclusive vision casting — and has to be extremely disappointing to hundreds of thousands of moderate and progressive Republican voters — we need some context here.   

The Price of Government, an official state Minnesota Management and Budget measure, shows that we DO have less government over the last decade, ever since the no-new-taxes religion, like some southern invasive species, got a hold on the North Star State. (See page 13 of the PowerPoint presented at the capitol last week by State Economist Tom Stinson and State Demographer Tom Gillaspy).

The bar graphs clearly show that our governments are using about two percentage points less (15.5 percent in 2008 compared to about 17.5 percent through the 1990s) of our personal income share than those governments were spending when the economy was actually doing better. Huge income tax cuts in 1999 and 2000 left us with chronic  budget crises, and the promised payoff in sustained, tide-rising economic growth didn't materialize, either.  

Wealth concentration at the top got worse, bridge and road conditions deteriorated, public school course offerings were cut, and thousands of working low-income folks lost their health care. And our economy is slumping and beginning to underperform the national average on some key indicators.  

We surely could use some more judicious restructuring and redesign of how we do our government work. But the basic things government provides are essential for our shared prosperity and quality of life.  

NOTE: The Price of Government measure is one of the most comprehensive of all the measures we have to describe the size and role of government. It counts state and local government revenues as a percentage of total income and therefore accounts for inflation, population growth and economic growth. It was instituted at the behest and with the approval of business groups in the late 1980s.

— Dane Smith

What's the Matter with Alaska?

SEWARD, AK — So the very conservative Alaska Legislature, too often prone to bashing government and the federal government in particular, did the right thing last week and overrode former Gov. Sarah Palin’s veto of some $28 million in federal stimulus money. This provoked the erstwhile governor to say on her Facebook page that she had vetoed the energy assistance part of the stimulus because it would "further tie Alaska to the federal government."    

Nosirree, wouldn’t want that, even though the federal government has been very, very, very good for Alaska and Alaskans throughout 50 years as a state, and long before that, going back to the federal purchase of the Great Land in 1867.     

Despite this fairly obvious reality, far too many Alaskans are infected with a libertarian self-righteousness and a contempt for government in general. The vastness of the place feeds an illusion of individuality and self-reliant independence, but no state is a bigger per capita net beneficiary of federal spending, and this despite the state’s preponderance of revenue from royalties on oil extraction. Per-capita federal spending in Alaska amounted to more than $12,200 per person in fiscal 2003.

This government action has mostly been for good.

[View from the state-run Alaska Railroad]

The government built the Alaskan Highway and the Alaska Railroad (taking over the latter from a failing private effort a century ago), without which habitation and economic development would have been impossible. The state government now runs the railroad at public expense and it’s a pretty impressive operation. For decades, the state's lifeblood has come from federal investment in defense and military installations and natural resource stewardship, plus construction of all manner of infrastructure from airports to harbors to sewer service.  

Growing up in Anchorage in the 1950s and 1960s, I remember having to fill out a "federal impact statement" every September. Since statehood (I remember the bonfire in Anchorage when Congress approved it), this largesse has flowed to the state far out of proportion to its population.

And the pipeline is still open. Remember the infamous Bridge to Nowhere, which became the emblem for earmark abuse, was destined for Ketchikan, Alaska.

Alaska might actually benefit from a less dictatorial federal bureaucracy and from placing a little more of its land and resources in private hands. But its long-term economic health also depends primarily on the appeal of its magnificent public wilderness to tourists from around the world.

The captains of industry do not have a sterling record of preserving and investing in that resource. A fascinating account by Alfred O. Quinn, "Iron Rails to Alaskan Copper," documents how the Guggenheim interests extracted $200 million worth of copper from Alaska between 1912 and 1938, and then deserted the state when profits declined. Native tribes and communities in Prince William Sound are still waiting for delivery on the promise to make them "whole" after the Exxon Valdez spill 20 years ago. 

The federal government doesn’t work that way, thankfully. It’s here for good and does good for the most part.

As a proud former Alaskan, I’m also proud of my federal government’s responsible and far-sighted tending of this great land and its people, no matter how obtuse some of them are about the good their government does.

 — Dane Smith

The public is the loser in "economic war between the states"

Via Clawback, we see a new study by the Public Policy Institute of California that finds that the state's enterprise zones have no overall effect on job growth. That's in line with findings in other states, including Minnesota, that offering tax credits and other incentives to businesses may raise employment in certain areas, but not within the region, because companies move from zone to zone to take advantage of the incentives.

The same might be said about what Federal Reserve economist Art Rolnick has called "the economic war between the states."

It is a war in which states are actively competing with one another for businesses by offering subsidies and preferential taxes. Economists find that there is a role for competition among states when it takes the form of a general tax-and-spend policy. Such competition leads states to provide a more efficient allocation of public and private goods. But when that competition takes the form of preferential treatment for specific businesses, not only is it not “admirable,” it interferes with interstate commerce and undermines the national economic union by misallocating resources and causing states to provide too few public goods.

Still, states hungry for jobs are willing to pay "front money" to untethered corporations, even while shortchanging other services that would make their states more attractive in the long term. In another post, Clawback provides recent examples of how states can shuffle federal stimulus money to pay these incentives.

Cynics might say: what should we expect? Federalism means it is okay for large, footloose corporations to play states and cities like a fiddle so that small businesses and working families get stuck with higher taxes and lousier public services. (And home rule means it is okay for companies to do the same thing to cities and suburbs, fueling sprawl and stretching local tax bases so thin they become unsustainable.)

Says Growth & Justice Policy Fellow for Infrastructure & Economic Development, Matt Kane:

The public sector should pursue economic development policies that result in broad benefits for residents and businesses in the region, especially benefits that will continue to have a positive impact even if specific businesses close or move. 

— Charlie Quimby

Hollowing out the public sector affects public safety

Our continuing and increasingly dubious experiment with starving the public sector in Minnesota is producing almost daily reports of questionable budget cuts.   A Star Tribune front-page story on disappearing lifeguards at public beaches is the latest manifestation of our increasingly penurious fiscal policy.    Anti-government conservatives like to claim that much or most of government investment is unnecesssary or superfluous, and that all we really need are military forces, courts and police to protect property.   But it turns out that a relentless ratcheting down of public investment affects public safety in myriad ways:  crumbling bridges, less attention to mesothelioma incidence in northern Minnesota miners, Local Government Aid cuts that force police and emergency service layoffs, hospital reimbursement cuts that hamper emergency rooms in the midst of an ongoing swine flu pandemic, and on and on.    Public safety is a primary responsibility of our entirely legitimate and mostly effective state-and-local government systems.    Most of the things those governments do eventually have something to do with public safety and providing for the "General Welfare," an often overlooked primary goal that is spelled out in the United States Constitution.    And these systems can't be funded without fair and ample tax revenues.

Dane Smith

Consumer demand isn't the only reason to put public records online

The Sunshine Week 2009 Survey of State Government Information found that for 20 types of records it deemed of broad interest to the public, Minnesota made 13 available for free online [Download list by type], putting the state slightly above average. Texas was the only state that provided all 20 types of information and Mississippi ranked last, with four.

The Star Tribune's headline on a story about the survey — "Survey: 65 percent of Minnesota government records online" — is misleading, since the sponsors certainly did not measure all types of records, and 100 percent of all records would hardly be a desirable goal. As Doug Neville, a spokesman for the Minnesota Department of Public Safety, said, "If we were to take everything we do and put it online, it would be harder to find that information."

Most Minnesota consumers might not feel left in the dark by the state's failure to post gas pump overcharge records or by the lack of a state database of consumer complaints. Availability of child care center inspection reports may be of intense interest to a few taxpayers and of no value to many others.

But taxpayers should care that we can't yet access an online database of state expenditures — or, as a previous study by Good Jobs First found, that Minnesota ranked “dead last” on public disclosure of state contracts. Since we have to make choices about where to invest public resources and staff time, it should be in the comprehensive systems that make government more accountable overall. 

We're getting there, but as I wrote when the Good Jobs First study came out:

Making information more accessible to the public is only a small aspect of developing a culture of fiscal discipline and accountability. The really hard work, which no state does very well, is ensuring that public dollars are spent to achieve specific outcomes and holding government bodies accountable for what we expect them to achieve.

Sunshine Week is not the end of sunshine activities in Minnesota. The Minnesota Coalition on Government Information will be the host for the 2009 Freedom of Information Summit in Minneapolis June 5 and 6.

— Charlie Quimby

Click on "10000strong.org" for Martin Luther King Day

This is about here and now.   At Growth & Justice, we try to focus relentlessly on the long-term and the strategic, on the thinking and research and advocacy that will expand and improve our public investments for a more shared prosperity.   And we don't focus so much on the immediate, the obligation to take care of more urgent injustices.   Few human needs are as immediate and pressing as hunger, and by all accounts this problem is spreading in Minnesota during a time of deep economic travail.    Here's something I'm doing right now, and I urge you to do so also.   Click on 10000strong.org, watch the powerful and compelling video,  and do what the good people tell you to do, or as much as you can.   It's an effort, led by Second Harvest Heartland, one of Minnesota's premier non-profits, to enlist at least 10,000 people  in the Land of 10,000 Lakes to alleviate hunger now and, eventually to end it in our state.  It's a most appropriate thing to do on Martin Luther King Day and Inauguration Day. 

Dane Smith

John Brandl's legacy: good intentions AND rigorous expectations

At John Brandl's rather wonderful funeral Monday, former St. Paul Mayor George Latimer said it just right when he described the legislator/policy analyst/professor as the embodiment of the idea that "principled leadership and politics are not incompatible,'' and that "loving-kindness is not incompatible with intellectual rigor.''   Hundreds of friends and admirers of the former state senator filled the Basilica of St. Mary to pay their respects.    The occasion was sad of course, but remarkably uplifting and forward-looking, as was an extraordinary living memorial earlier this summer at the Humphrey Institute,  attended by many friends after it was learned that Brandl was dying of stomach cancer.    Brandl's parting words to us were that he loved us, and we'll never forget that he asked us to say it back to him.   Obituaries and articles in the St. Paul Pioneer Press and the Star Tribune over the last few weeks provided instructive summaries of his powerful legacy in Minnesota's  policy-and-politics world. 

Those of us who knew John personally were always impressed by his unfailing kindness and warmth.   But the essence of Brandl's work might be summed up best in a phrase in the title of his best known book, "Money and Good Intentions are Not Enough.''  Brandl was a progressive and was described by his eulogists as an unapolegetic champion of the New Deal, a believer in government's responsibility to take care of people and to broaden prosperity.   But he also believed with equal intensity that results matter, that hard evidence of effectiveness ought to be applied to public sector interventions in the economy and our society,  and he had a profound respect for markets and free enterprise.   He pounded on the necessity of cost-benefit analysis.   It's hard to imagine a better role model for a practically progressive think tank, and his spirit and intellect will always be important inspirations for us at Growth & Justice.

Dane Smith

 

Eventually, we'll all be minorities. But will we all be ready to succeed?

The importance of our education investment work and the need to focus on minority populations was reinforced in two news items this week in the Twin Cities' largest daily newspapers.

The first, "Nice ACT scores, but ready for college?", in the Aug. 13 Star Tribune, notes that while Minnesota seniors are posting higher scores than seniors in other states, there are significant concerns that “minority students continue to score much lower than white students in the state.”

Scores for black students were more than five points below the average scores for white students. And scores for black, Hispanic, Asian, and Native American were all below the national average for all students. In addition, college readiness scores are particularly poor for Minnesota’s black students.

Minnesota Department of Education Deputy Commissioner Chas Anderson said that while those numbers are disappointing “we need to see it as an opportunity to make changes in the system and how we serve those students,” including early intervention with students who fall behind instead of waiting until high school to address the problem.

The second item, “Eventually, each one of us will be a minority,” appeared on the front page of the Aug. 14 Pioneer Press. The message was that by 2042 all Americans will be minorities, and policymakers must start adapting now, “especially in education.”

Why education? “If we don’t invest in education and training African-American kids, immigrants, and Latino kids, we won’t have a middle class," said Mark Sawyer of the Center for the Study of Race, Ethnicity, and Politics in Los Angeles. “We’ll have a very, very poor disposable class that’s largely black or brown.”

Through our Smart Investments in Minnesota's Students project, Growth & Justice is making the case that we must invest cost-effectively in our students to maintain a strong economy and expand prosperity for a changing population. Our very clear and  ambitious goal is to increase by 50 percent the rate of students who achieve a higher education credential by 2020.

We have identified cost-effective interventions from birth to college, and in the coming months, we will be advocating for a statewide investment strategy that will advance Minnesota toward that goal.

— Ellen Perrault, Growth & Justice communications and outreach coordinator

We know what's cost-effective. Now what?

Using cost-effectiveness to justify a future-oriented public investment is gaining currency.

Growth & Justice has sponsored research into Smart Investments in Minnesota's Students and is readying a major report. The Wilder Foundation last week held a conference for non-profit executives, "Return on Investment: The Dollars and Cents of a Nonprofit Program's Worth." And yesterday Minnesota Organization on Adolescent Pregnancy, Prevention and Parenting (MOAPPP) sponsored a talk by Brookings Institution fellow Julia Isaacs, who spoke on "Cost-Effective Investments in Children."

Policy advocates in a wide range of fields are looking for ways to measure cost-effectiveness in an era when public budgets are tight and demand for accountability is growing. Having evidence of a return on investment, it's believed, will help them move their issues closer to the front of the funding line.

Isaacs, a former analyst for the Congressional Budget Office and Health and Human Services Department, says cost-effectiveness does resonate on the Hill. But viewing a specific policy through an economics lens also has limitations, especially when applied to education or children and families, where the payoffs take place over a long period and are distributed across a variety of beneficiaries.

First, there's the challenge of actually testing a program in a way that reliably measures its outcomes. This costs money upfront for a study designed to filter out other effects, conducted long enough to capture results adequately and replicated in different settings.

Second, determining economic impact requires a different set of analytic skills and, significantly, more money.

Third, positive influences on quality of life, health and other "normative" public goods may not be captured in measurements of cost-avoidance or economic growth.

And finally, there's the political hurdle. Evidence of cost-effectiveness may not play well if it goes against conventional wisdom or threatens entrenched interests. Paybacks may be long-term — beyond the tenure of the average elected official or the attention span of a taxpayer — and may not return directly to the funder. (For example, a cut to WIC supplemental nutrition program would show up as a savings to the federal budget, but the resulting increased costs would fall mainly on state and local governments.) And if a government entity doesn't have the revenue to invest in a cost-effective program in the first place...

During discussion after Isaacs' presentation, former Hennepin County Administrator Sandy Vargas, now president and CEO of the Minneapolis Foundation, described an instance in which county commissioners reluctantly had to shelve a home nurse program they knew would save money over the long term, because they couldn't find the new money to fund it.

Isaacs cautioned against the temptation in times of austerity to do lite or sound-alike versions of proven interventions — cutting some steps, using less skilled workers or otherwise diluting programs. The cost-benefit ratios may not hold at the lower investment.

Isaacs' paper [Download pdf] — which identified four areas of investment that merit expanded federal funding based on their cost/benefits — addressed stages of child development from prenatal care to the teenage years and measured benefits that included lower health care costs, reduced crime and incarceration, improved educational attainment and increased lifetime earnings.

Although MOAPPP's focus is teen pregnancy and many in the audience came from health and social services, I sensed a clear understanding that public investment becomes more effective when it is viewed holistically, across disciplines and institutions. And there was an appetite for a more integrated, strategic view of how government can support positive outcomes for individuals, families and communities.

As research continues to identify more cost-effective interventions, the public is more likely to support  greater investment. Policymakers will need to develop a new framework for evaluating investment options, and choices will still have to be made among competing needs and different solutions. But isn't that a good problem to have?

— Charlie Quimby