Don Davis column: It's worse than they think it is

Minnesotans don't have a clue to what lies ahead. Sure, they heard about a nearly $4.6 billion state deficit, but it remains only a theory in most minds. Most are blissfully ignorant of the situation and what faces them in 2003. "They don...

Minnesotans don't have a clue to what lies ahead.

Sure, they heard about a nearly $4.6 billion state deficit, but it remains only a theory in most minds. Most are blissfully ignorant of the situation and what faces them in 2003.

"They don't know the magnitude," Sen. Keith Langseth, DFL-Glyndon, said.

And they won't know until "we balance this thing," he predicted.

"People have not felt pain yet," he added. "There is going to be a lot of pain ... even if it (the budget) is well balanced."


Even many legislators don't understand the size of the problem they will face. But they will face decisions such as whether to reduce ethanol subsidies farmers receive, limit increases schools expect or chop money sent to cities and counties. And they must decide whether to raise taxes, not a popular decision in a slow economy. In fact, almost no budget decision state officials must make in the coming months will be popular.

At least 45 states face budget problems. Minnesota's isn't the worst -- that honor goes to California, with a nearly $30 billion deficit -- but it is among the 10 worst. The state's budget shortfall dominates nearly everything legislators, the governor elect and other state officials do.

Legislator after legislator being interviewed for previews of the 2003 legislative session had trouble talking about anything but the deficit.

"Everyone is talking about the budget," Rep. Al Juhnke, DFL-Willmar, said.

Well, at least people talking to legislators are talking about it. Groups from all kinds of special interests are meeting with lawmakers. And each one is explaining why it needs money.

This year, however, those groups understand they will not get all they want.

"They know there are going to be some heavy-duty cuts across the countryside here," Juhnke said. "Everyone is in kind of a preservation mode at this time."

If special-interest groups know, the general public does not realize what is about to happen. The reality is that the deficit amounts to about 15 percent of the state budget, by far the worst in state history. That means nearly every Minnesotan will feel some of what Langseth called pain.


Taxpayers should pay attention now, even though little real deficit cutting will begin until Gov.-elect Tim Pawlenty hands his budget proposal to lawmakers on about Feb. 18.

Most Democrats and some Republicans say there must be a state tax increase to banish the deficit. Pawlenty and other Republicans say that only would make things worse.

One kind of tax increase is looking more and more likely -- property taxes. Pawlenty says he wants to change how state aid is divided among local governments, and it appears that less total money overall will be sent down the pipeline. Most people say that means cities, counties and townships will increase property taxes to make up at least part of the difference.

Minnesota's reliance on the unpredictable income tax is what led to the current deficit. A stock market plunge meant Minnesotans did not earn as much as expected from their stocks, and their incomes -- and, thus, income tax -- plummeted.

Langseth said for the state to avoid the ups and downs of tax collections, it may need to look at those few states that do not have a budget problem this year. Those states generally collect sales tax on a broader range of goods than does Minnesota -- including food and clothing. They also rely less on an income tax, or don't have it at all.

States with reasonably healthy budgets also depend much more on the stable property tax.

It is doubtful that a major change in Minnesota's tax structure will come out of the 2003 Legislature. There will be some major -- or shocking -- changes, but we won't know just what they will be until lawmakers and Pawlenty reach a deal later this year.

Davis is The Forum's Capitol correspondent in St. Paul. He can be reached at

Opinion by Donald Davis
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