Growth & Justice Blog

A different tone in this year's tax committee hearings, and a clear consensus for more and fairer revenue

I've heard infinite versions of "don't tax me''  or "taxing me or my customers more will destroy my business AND the economy'' in my decades under the dome.   And last week's opposition at a House hearing to ending sales tax exemptions on business services was typical in many respects.   Just because these fears often turn out unfounded _ our economy was performing better, in the 1990s,  when taxes were higher  _ doesn't mean these specific concerns shouldn't be heeded.   

But I don't recall ever hearing as many tax opponents acknowledge, as they made their sincere case against losing tax exemptions on their own business, that our communities do need more revenue for public investment and for dealing with demographic challenges.    Time after time I heard these business owners or their association leaders, who are also citizens,  say that they supported or understood the need for more revenue, just "please, not on me or my customers, this time.''  And when all the opponents got through testifying, alternating one-for-one with those who favored the governor's plan, there were still more testifiers left who favored the reasonable increases in Dayton's plan, and the badly needed investments on the budget side, from early childhood education to transportation to workforce training.   I didn't hear nearly as many angry diatribes against government and taxes in general as I've heard in previous years.

That consensus for more revenue comes through in the Star Tribune's Sunday poll, showing  once again that a majority favor restoring higher income tax rates on the highest income margins, while opinion is evely divided on expanding the sales tax base to more consumer services.   A clear majority opposes ending the exemptions for so-called "business-to-business'' services.

This consensus for "reasonably more'' actually is not new.   Polls show support for revenue sufficiency was strong all through the 12 years of rule by one governor whose slogan was  "give it all back'' and another whose central theme was "no new taxes,'' and  legislative majorities that took the same hard and uncompromising line in 2011-2012.   Especially after budget crises began recurring regularly in 2001 and beyond, polls consistently showed that most Minnesotans thought revenue increases ought to be at least part of the solution for budget shortfalls.  That happened also to be the position of almost all former governors in all three parties through that period.    And in almost every reputable poll I've seen, most Minnesotans think those who have been reaping almost all the benefits of increased productivity in recent years, and who have been paying a smaller percentage of their big increases  in state-local taxes, ought to contribute reasonably more.

 

Dane Smith   

 

 

A week for reflection and commitment to justice and broader prosperity (and yes, taxes and public investments help do that)

We have this week a confluence of events that ought to lift our hopes and sharpen our resolve to reduce racial and economic inequality in our state and nation,  and to build a more inclusive prosperity.

The hope comes from the momentous coincidence today of Martin Luther King's official birthday observance and a re-inauguration, after a convincing re-election,  of the first African-American president of the United States.    Michelle Obama, a descendant of slaves, is the First Lady of a White House that once was occupied by white slave-holders, and actually built by slaves.   This is a remarkable country, capable of extraordinary self-correction, powerful and wealthy because it is governed by its own people, and stronger yet when ALL its people are empowered.  We can  expect President Obama will build on the theme in his inauguration speech that we all do better when we ALL do better.    While the Obamas have succeeded spectacularly, far too many people of color are still left behind, and economic disparities continue to grow between top incomes and families of all races in the middle-income brackets.

In Minnesota, attention swivels on Tuesday to the release of both a two-year state budget proposal and a major tax system overhual from Gov. Mark Dayton.    Minnesota's prosperity rests on an innovative business leadership, to be sure, but also on a  foundation of public investment, in the form of high-quality public education,  physical public works infrastructure, public health and natural resource protection.   We need to invest more and more effectively in those things, including early childhood education and post-secondary training,  and Gov. Dayton can be expected to emphasize that this broader prosperity and better government is the end we seek, while taxes merely are one of the  means.   Minnesotans understand these fundamentals and have long been distinguished by a commitment to public good, as well as private gain.   Let's try to keep this in our heads as we all get ready to argue over the details.

Dane Smith

 

 

Top priority for transitway development should be employers and jobs

You are a policymaker and you have a tough choice between two big development proposals for the same site on a key light rail line or transitway. All other things being equal, which do you choose: a major employer or a large housing complex?

If overall accessibility improvement and employer access to labor is the goal, take the employer, says new research presented this week at the 23rd Annual Transportation Research Conference in St. Paul this week.

The research report by University of Minnesota Humphrey School Assistant Professor Yingling Fan was complex and aimed at planning professionals. But the bottom-line key finding was straightforward: "Locating new jobs near transitways produces larger increases in accessibility than locating new housing near transitways.'' Getting these fundamentals right are important because by 2030 we likely will have an integrated network of 14 transitways up and running in the Twin Cities, ranging from light rail to commuter rail to express bus lines. Few public investments are more important for business growth than transporation infractructure.

Fan's research was sponsored by the McKnight Foundation, the Jay & Rose Phillips Family Foundation and the Surdna Foundation. Abstracts from the conference provide rich state-of-the-art thinking on a wide array of transportation investment issues.

Dane Smith 

St. Paul resident and son inspecting Central Corridor construction in downtown St. Paul (Metropolitan Council photo)

What if Ayn Rand had to dig her own two-holer?

(Note: We hereby introduce Chuck Brown - a former business manager, a former city council member for the southern Minnesota town of Olivia, and a novelist – as a guest blogger for Growth & Justice.)

Conservative columnist Jason Lewis’ professed love for Ayn Rand and her novel, Atlas Shrugged, (Star Tribune, Apr. 17) struck a chord with me, but probably not one he intended.

Rand has long been deified by those who use the worship of individualism and capitalism (see this NY Times summary of her influence on right-wing business leaders) to deny the notion of common good and the enormous value of that which we do collectively, i.e. through our good governments. But Lewis, like Rand, goes even further to suggest that anything done collectively or altruistically results in a loss of freedom. In Lewis’ world “productive thinkers” are to be valued to the extent that we dare not ask any sacrifice of them or seek to limit the windfalls from their achievements. “Productive thinkers” sounds a bit like today’s sainted “job creators” who, we are told, will take their bat and go home, or somewhere else, if the game isn’t played exactly by their rules.

I’m not against productive thought any more than I’m against job creation, though it occurs to me that we can also have productive thoughts and create jobs when we work together, Rand and Lewis notwithstanding. But my chief aim here is to dispute the notion that all collective acts result in a loss of freedom. I’ll begin with some very basic and personal observations.

The first thing I do when I get up in the morning is turn on the lights. The second thing I do…well, I won’t go into detail on the second thing, other than to say that it concludes with a flush. The third thing I do is turn on the water and brush my teeth. Now my point here is that the first three things I do each day involve a good or service that I purchase from government. Most folks may not buy electricity from a municipal utility, as I do, but many of us in rural Minnesota do, and our basic power supply throughout this nation is properly regulated by public agencies. And most of us now are hooked up to clean and efficient "government-run'' water and sewer systems. These are things we have chosen to do collectively, not because we are knee-jerk collectivists, but because it simply made the most sense. It was the best way to get that particular job done in a way that produced value for the largest number of people. Ayn Rand may have found digging her own well and having a two-holer in the backyard to be more to her philosophical liking, but I can’t see how she could claim that I’ve lost freedom by enjoying public works. I might even argue that the convenience of these systems adds freedom, granting me time for things I want to do rather than, say, dig my own two-holer.

Public safety and common good requires that we obey the law and pay taxes, but only criminals risk serious loss of freedom in our democracy. The rest of us enjoy the freedom of an orderly society ensured in large part by taxes and governments and public works. National defense, one of our largest collective "government-run'' endeavors, has as its primary focus the defense of our freedom. Then of course there’s public education, which accounts for about half our state-local tax dollars, and it’s hard to imagine how we might be freer without it. In fact, the sages tell us, education sets us free.

We Americans are exceptionally individualistic, and so Ayn Rand and rugged pioneers and cowboys will always be part of our thinking. But many of our greatest national achievements have been collective efforts, and that’s not likely to change, even in the land of the free.

-Chuck Brown

 

Governments innovate and improve all the time, and sometimes it makes the news

No news is good news, they say.  And in the news business, good news too often is NOT news, or sensational enough to display prominently.  But one distinctive cover page of the Star Tribune’s metro section earlier this month provided a refreshing exception.  The story at the top of the page revealed how nursing homes in the Ecumen chain are improving the quality of their residents’ lives by replacing sedative drugs with massage, music, games, aromatherapy, and other alternatives for pain and anxiety control, in a very encouraging project mostly  funded by a state government grant.  Another article on the page and a large photo described how the Burnsville Police Department is using body cameras instead of more expensive dashboard cameras,  to more quickly settle claims of excessive force and other disputes.  And a third article on the page explained how the city of North St. Paul was planning to save money and improve services by turning its recreational programs over to the neighboring city of Maplewood.  Our new governor and our new Legislature will be leaving no stones unturned in their search for better ways for our governments to do things and to save money.  It’s important to be aware that Minnesota already is blessed with a culture of good government, conscientious public employees and leaders, and a tradition of innovation in the public sector.  Mostly unheralded efforts like the above are occurring every day across the state.  All of us, as the actual bosses of our governments, need to be part of this.  You can add your two cents by contributing your thoughts to the Common Cents project , sponsored by the Citizens League and the Bush Foundation.  Check out their website for an interesting and robust discussion of the further things Minnesota can do with long-term care, with technology improvements and with consolidation and collaboration between governments.

Dane Smith

Michael O'Keefe with budget wisdom

Michael O'Keefe was one of the standouts in  a highly respected state cabinet that came together to help neophyte Gov. Jesse Ventura in 1999, and O'Keefe served ably as commissioner of the Department of Human Services, one of the state's largest and most complex agencies.   He's also had a distinguished career as a foundation CEO  (McKnight) and a college president (Minneapolis College of Art and Design), and he has degrees in mathematics and physics.   So when he talks about state budget crisis realities, one really should pay attention.   Here are some of the standout excerpts from his recent interview with the Civic Caucus on the "Hard Realities of Minnesota's Budget Situation."

•  Address the problem with every tool in sight, but do not dig a deeper hole--O'Keefe described how he was in government for "good years," when they had extra money to spend. "Then we hit a bad year. The budget was good before the Legislature got a hold of it. Governor Ventura had actually put together a very reasonable plan that included some taxes and some cuts, and drew down some  state reserves with a strategy to replace them.
• "Offset medical costs by accepting federal Medicaid assistance, and find efficiencies--In the area of health, O'Keefe advocates taking the federal Medicaid money-over $1billion-"because one of our goals of a state is to have a safety net." The state really screwed up when it cut general assistance medical care, he said. Now minor conditions become chronic or more serious and people will show up at emergency rooms that cost someone--the state, the county, insured people-- much more than if they had received preventative care.
• The health care system will need a crisis to change--He has concerns about the system of care, and its methods of payment. "A third-party-payer marketplace is never going to work unless you have substantial restructuring. We have a system that rewards doctors on volume, on throughput," and on the cleverness of their support staff to classify what it is that went on in the exam room. He described a doctor who told him that whenever he performs a service he cuts and pastes a description for the service directly out of the Medicare guidebook, which guarantees he'll be reimbursed. Instead, O'Keefe said, the state needs more systems like Mayo where doctors are paid salaries.
  
• The state may not need two public post-secondary systems--A participant asked whether the state government really needs two higher education systems. "I don't think so," O'Keefe responded. "Take a look at the administrative over-structure-it's huge." O'Keefe described his hope that new leadership at the University and at MNSCU will be willing to engage in a discussion about reducing the aggregate administrative overhead, admitting that it would be enormously unpopular with their constituents but nevertheless needs to be done."
  
• Post-secondary costs are being driven up faster than inflation--Higher education costs have been rising at double the rate of inflation for 25 years, he said, and that's not sustainable. Part of the cost-driver has been on the administrative side, and part because of increased complication caused by increased requirements of the federal government. "But a huge increase has been a market phenomenon driven by students and families: they want more, and they're willing to pay for it."  Expectations have increased. "You can't sell a dorm room with three beds anymore. What students and their families want is an apartment suite with living area, kitchen, laundry etc. And, they're willing to pay for it. Witness private developers who are putting up such style dorms and making them profitable."  O'Keefe recalled many years ago that The George Washington University was considered "middling" in terms of quality. They brought in a consultant whose recommendation was that they double tuition. They increased it by 40 percent in the face of deep concern that  applications would go down; instead they went up by 60 percent. "People were willing to pay more because of the perception of quality implied by the higher tuition."
• Virtual education has significant, widespread potential--To a question about virtual education, O'Keefe said he thinks it has huge potential to bring students rich experiences without having to first bring them together in person. At the college of Art and Design he described a professor who taught via the internet from South Africa. The students were satisfied, he said, with a balance of internet-conferencing, faxing images to each other, and working face-to-face in groups on campus. "I was very surprised; it resulted in a quality experience." Even so, the application of technology has increased costs: "So far when new technologies have been added they haven't reduced costs, as some had promised. I'd argue you have to change the system of teaching for that to happen."

There's substantially more from O'Keefe on the Civic Caucus website,  including a provocative challenge to rethink  whether Minnesota's spending on prisons and lifetime incarceration of sex offenders can be sustained.   We're proud to have Michael on our board of directors at Growth & Justice and as a significant  influence on our policy thinking.

Dane Smith

Round-up of good news and commentary for practical progressives

Here's a round-up of some particularly good fodder for practical progressives in the news recently:   

• Washington Post columnist Ruth Marcus is continuing to develop as a thoughtful centrist heir to David Broder and she really hit the mark with her recent commentary (headlined in the Star Tribune, "If taxes never go up, we go down''). Marcus nailed Gov. Tim Pawlenty for his recent statement implying that the U.S. has higher taxes than most other nations, pointing out that our overall effective federal tax rate is much lower than it was a decade ago, and lower than all but Mexico, Turkey and South Korea among the 30 major world economies. Marcus skewered conservatives for continuing to claim that tax cuts actually produce more revenue and for their perennial complaint that "whatever level taxes are at, they are too high.'' Just a couple weeks ago, Marcus took on liberals and Democrats for refusing to acknowledge that some entitlement programs might have to be trimmed.
• One of the most refreshing "good that government does'' stories in recent memory landed on the St. Paul Pioneer Press front page over the weekend. An article headlined "Minnesota air pollution:  It's not as bad as you think,'' emphasized the rather astounding good news that since the landmark Clean Air Act of 1970, emissions from industrial polluters and vehicles have been slashed by 62 percent nationally and by half in Minnesota.
• Refuting a lot of conservative anti-Europe propaganda recently, author Steven Hill placed an op-ed in the Star Tribune pointing out that Japan and Europe and their more egalitarian market economies are doing quite well compared to the United States. Hill is the author of "Europe's Promise: Why the European Way is the Best Hope in an Insecure Age.''
• Finally, we think we offered a strong rebuttal to the false claim by some conservatives that government can't create jobs, or more broadly, that government is a net drain on the economy and can only consume wealth. Our Star Tribune "Counterpoint'' piece reviewed a long history of business-building investment and job creation in the U.S. and Minnesota.

— Dane Smith

How Transit Reduces Road Congestion

Here is an important question for metropolitan areas in Minnesota:  Does public transit reduce traffic congestion? Often the answer is “yes,” but sometimes it is “no.”

On the “yes” side, the link between public transportation and easing our collective commuting headache is a notably simple one: Buses and light rail trains can carry more people per vehicle and per foot of roadway than do private automobiles, meaning that as more people travel by transit instead of by car, there should be fewer total vehicles taking up less square footage and clogging up our roads.

However, the actual impacts of transit on gridlock in Minnesota are a bit more complicated for several reasons. 

First, transit can only reduce congestion on a roadway that is already being used by as many vehicles as it can hold. Transit service along an uncongested corridor or during off-peak hours won’t make anybody’s trip much faster.

Second, a particular bus route or rail line is likely to have a much greater impact on people’s commute times when running on or parallel to a major roadway. Twin Cities examples include I-94, I-35W, Lake Street and University Avenue. Traffic congestion on a major roadway is likely to overflow onto other roadways that connect to it, so if a transit route eases gridlock on a major thoroughfare, the benefits will be felt on adjacent and intersecting streets, as well.

Third, public transportation’s positive impacts on traffic flow are wholly dependent upon riders-by-choice – that is, people who could get around in private automobiles if they wanted to but hop on buses or trains instead. All other non-drivers are presumed to walk, bicycle, carpool, or use transit because they don’t have any other option.  Consequently, only a rider-by-choice on transit represents another car, van, truck, or motorcycle removed from traffic.

To reduce traffic congestion, Minnesota’s transit agencies need to fill their buses and trains with as many riders-by-choice as possible.

Most of the time and in most places, traveling by car is faster than transit. Therefore, in most cases, travelers must be convinced to become transit-riders-by-choice for reasons other than speed. These riders-by-choice might be drawn to transit to save money on parking and gasoline, or to relax in comfort on transit vehicles during the rush hour chaos, or to take advantage of convenient transit schedules and transit stop locations.

Unfortunately, riders-by-choice are much fewer in number now then they were a few decades ago, thanks to an automobile culture that encourages urban sprawl. But a transit system often needs to attract only a relatively small number of riders-by-choice in order to have a major impact on traffic congestion because the difference between a congested roadway and an uncongested roadway is often just a very small number of vehicles.

Mitigating traffic congestion is not the only reason for public transit, of course. Personal mobility, improved livability and reduced environmental impacts are other standout benefits. But transit definitely holds promise for easing those morning and evening commutes.

— Nick Flanders

Seifert on burning down the capitol, Bell on fighting cynicism, and how's that "Drill Baby Drill' thing workin' out for ya?

One of the most startling and perceptive quotes uttered by conservatives in recent days _  amid all the reckless talk about taking a nine-iron to our public institutions and the absurd assertion that we can eliminate as much as a third of our public sector budget _ was   Rep. Marty Seifert's frustration over some radicals in his party who "just say they want to burn the capitol to the ground.''    

He was speaking figuratively, of course.

Meanwhile, another conservative known for his intellect and perspective, Metropolitan Council Chairman Peter Bell, is pleading for a little less cynicsm, from conservatives as well as liberals and the media.   Bell offered equal scolding to progressives  who feed cynicism by over-promising what government can do and to conservatives for a "relentless effort to convince the public that the government can do nothing right.''   Bell noted that this falsehood "has taken a huge toll on government's ability to take on any big issues.''

Bell reserved a special place in his piece for the news media's constant questioning of motives.  And on another front, it's interesting how the often cynical news media, which often as not buys in to the anti-government premise, gets all huffy about the need for a stronger and more activist environmental watchdogging when an oil company screw-up threatens the entire Redneck Riviera  and perhaps much of the Atlantic Ocean and the East Coast too.  

The Obama administration has hit the pause button after it acquiesced to demands led by oil companies and conservatives to open up more offshore drilling.    Haven't heard much rom former Alaska Gov. Sarah Palin for her take on the biggest oil disaster since the Exxon Valdez badly scarred her own state.   She has fed the national cynicism with her wisecrack, "How's that hopey-changey thing workin' out for ya?" so maybe a little turnabout is fair play.   As in "Spill, Baby,  Spill!''   Or, "How's  that "Drill, Baby, Drill'' thing workin' out for ya.''

Dane Smith

A shift ahead for highways in the Twin Cities

Transportation investment in the Twin Cities will shift gears in smart ways if the Met Council and Minnesota’s Department of Transportation stick with draft plans they have begun to unveil at a series of outreach sessions.

The shift: Moving away from hugely expensive highway expansion projects — with their limited and localized impacts — and adopting instead new, cost-effective approaches to improve mobility and manage congestion... not end it.

The goal: “Wring every bit of capacity possible out of our metropolitan highway system.”

The reason: “The era of expanding highways to address additional capacity needs is over.”

The outlines for the Metropolitan Highway System Investment Study call for approaches that are realistic, innovative, and focus available funds on opportunities that offer the greatest benefits for the Twin Cities highway system as a whole.

Sounds right on target, but this new emphasis breaks tradition with highway investment plans that have identified big-ticket construction projects as the main way to improve travel and reduce congestion.

The change in tune is impressive, important and pragmatic. An earlier study estimated that building our way out of Twin Cities’ congestion by 2030 would cost $40 billion. That's more than two and a half times the total funding that MnDOT says will be available for statewide highway investments from 2009 to 2028.

To raise $40 billion, Minnesota would need to increase the gas tax by $2 a gallon.

So smart highway spending in the metro area will focus on preserving the roadways we have already; repairing and replacing our bridges; engaging in low-cost, strategic construction projects that will best expand the system’s capacity; and using transit and technology to increase the number of people the roadways can move.

The highway plan will bank on benefits from traffic management techniques, including metered entrances to Twin Cities freeways; better information about traffic tie-ups so drivers can shift to alternate routes; and priced MnPASS freeway lanes than can serve as congestion relief valves and fast transit routes.

Transit is called out as an important component of the plan, and so are land use changes that can reduce the need for roadway travel and foster transit use.

The planners have even shifted their language to reflect an emphasis on moving people and not on moving cars. The new phrase of choice is telling — “people throughput” instead of “vehicle throughput.”

While the new investment study recognizes many of the major challenges and constraints for the Twin Cities highway system, it does not wipe them away, of course. The yawning gap between expected revenues and infrastructure needs means more funding must be considered. Transit remains underfunded, as do fix-it-first investments in our existing system.

But the metro highway investment study reflects many of the smart themes and priorities found in MnDOT’s statewide transportation policy plan, thankfully.

Once the draft Metropolitan Highway System Investment Study is amended and adopted, it will update the Metropolitan Council’s transportation policy plan and in this way set the stage for how that regional government and MnDOT go about investing in the Twin Cities area transportation infrastructure.

It’s progress.

— Matt Kane