ZBB is Not for Me!

While every good politician loves the idea of 'zero based budgeting, (ZBB)' it has incredible public relations potential, and it sounds nice and saleable to the general public. It mostly and imaginary and wholly unattainable concept to expect State Government to actually be a able to accomplish. Here are some simplistic talking points:

- Minnesota's budget is too large and too complicated for politicians to use ZBB. Minnesota's general fund budget is $34 Billion and $58 Billion all funds. BTW that's roughly $11,500 per capita.

- ZBB is impractical for large bureaucratic institutions. There are way to many programs, expenses, and justifying expense by expense would be more excruciating than watching a Coleman v. Franken recount...I mean watching paint dry...I mean you know what I mean!

-ZBB is against human nature. Everybody wants to know what a particular agency was appropriated last year. Simply D's want to give them more and R's. want to give them no more. Moreover the risk of ZBB is that if you really don't know what they got in the past you could give too much thereby exacerbating the budget conundrum!

-ZBB would take too long. I mean let's be honest here folks. It already takes R's and D's 6 months or more with many special sessions and one government shutdown to pass a budget without the added time that ZBB would require. True ZBB could take MN politicians years to complete!

-ZBB is just a political ploy to convince the public of politicians goodwill and good intentions before they find a nice easy way to let Minnesotan's down gently to the simple fact that "cuts alone won't fix this budget crisis."

I do say it's very much against the traditional Democratic model to have DFLers committing to ZBB so early. On the other side of the coin ZBB comes naturally to Republicans who would prefer this approach even in boom times. To me that shows an incredible amount of discipline and strategy on the part of the DFL, one that cannot last.

I figure that long about the February Forecast, right at the point where Mr. Stinson annouces that the economy is X million dollars worse, many DFL leaders will confirm via press conference, press release, or their own media that the worsening economic conditions highlight the need for both cuts and increased revenues (taxes). Some undisciplined DFLers might call for tax increases much earlier but for now they are singing with one voice.

R's will continue to sing with one voice as well:
- "Minnesota Government needs to live within its means."
- "The State budget GF budget has more than doubled in ten years."
- "Raising taxes is the last thing to do in a failing economy."
- "Minnesota tax code is not conducive to locating your business here."
- "Minnesota is the 12th highest taxed state in the nation and climbing."

Who's right? Well that depends on your prospective. Minnesota's Legislative and Government Affairs world is always a very large gray area. In the end, who is right is answered by who 'wins the day' with many days to come.

Expected Thursday: Minnesota State Budget Forecast

The Minnesota Management and Budget Office will release the perennial November Forecast for the first time ever since its the creation, this week Thursday. In June 2008, the Minnesota Department of Finance was combined with the Minnesota Department of Employee Relations (DOER); in a cost saving measure. The new Department is served by one Commissioner, Tom Hanson, a Governor Tim Pawlenty appointee, and is under one central mission:

“Our mission is to increase state government’s capacity to manage and utilize financial, human, information and analytical resources in order to provide exceptional service and value for Minnesota’s citizens.”

Regardless, of the name of the Department the economic news is likely to show a widening projected deficit. Current conjecture puts the state deficit for fiscal years 2010-2011, which begins July 1, 2009, somewhere between $1-$5 billion dollars short.

The 2008 February Forecast called for projected spending to outstrip projected revenues by a deficit of $1.086 billion and adjusting for inflation, which the current formula doesn’t do, it actually adds another $1.04 billion to the deficit. The previous forecast cited declines in individual income tax revenues, corporate tax revenues, and contracting sales tax revenue. These trends undoubtedly will re-surface and continue exacerbate Minnesota’s budget outlook. The big question is how much?

After the new numbers emerge the Governor is required to deliver a budget to the legislature before the end of January in each odd numbered year. It is important to remember the Governor’s budget is only a recommendation but practically speaking it represents the typical starting point from which the legislature starts the budget process. Also important to note that Minnesota law does not explicitly require a balanced budget rather, it derives from the limits on borrowing contained in the constitution. The state may issue debt only for specified purposes. Borrowing money to pay for a deficit at the end of the biennium is not one of these purposes. Thus the budget must be in balance at the end of the biennium Minn. Const. art. XI, sec 5.

A growing list of legislative priorities such has Education, Energy, Environment, Health Care, Housing, Human Services, Transportation, and many others combined with decreasing financial means may prompt a very divisive and politically charged legislative session. Suffice to say the newly increased Democratic majorities in both bodies of legislature will certainly have their own agenda; juxtapose that with Republican Governor Tim Pawlenty’s prerogatives and they certainly will have their (budget) work cut out for them this year.

Don't tax small business out of picture

To all those who think raising taxes on individuals making over $250,000 a year is a good idea. Stop for a minute. Put down your pre-conceived ideas and read this news article. If you are truly honest with yourself you will at least see both sides of this issue.

Don't tax small business out of picture
Tom Salonek, Star Tribune, November 30, 2008
http://www.startribune.com/templates/Print_This_Story?sid=35234499