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Common Cents
About Common Cents
• Part of Bush Foundation’s “Prospects and
Possibilities” project to hear from citizens in
Minnesota, North Dakota and South Dakota
• Share information and perspectives about
Minnesota’s fiscal situation
• 30+ workshops around the state
• Findings will be presented to new governor,
legislature and the public
2
Common Cents
About the Citizen’s League
•
•
•
Nonpartisan nonprofit for 60 years
Vision is to create the common ground where
“we the People” can achieve the common good
Principle: People who are affected by a
problem should have the opportunity to define it
and weigh in on how it’s solved
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Common Cents
Why We Are Here
Charge: Give guidance to the Bush Foundation and
public officials on how to address our long-term
budget problems
1) Better understand the trends and challenges
facing Minnesota’s budget
2) Share your vision and values
3) Provide input on your priorities
4) Inform the Bush Foundation’s work
4
Common Cents
Why We Are Here
5) Model meaningful civic discussion on
important issues
--expect disagreement
--mixed views at tables
--feel free to respectfully disagree
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Question #1 – For you personally, what makes
Minnesota an attractive place to live today?
(choose two)
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
8.
9.
Natural resources
A highly educated population
Racial and cultural diversity
Sports/cultural attractions
Good jobs
Ethic of concern for one another
Quality of life in communities
My family and friends
Four seasons
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#2 – The state has had a history of recurring
budget shortfalls. Why do you think that is?
(choose two)
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
The economy
People want more then they’re willing to pay for
Special interests are too influential
Short-term political decisions ignore long-term fiscal problems
Government is inefficient
Tax & spending structure doesn’t match today’s economy.
We haven’t raised adequate taxes
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State General Fund, FY10-11: $31 Billion
Transportation, 1%
Public Safety, 6%
All Other,
8%
Property Tax Aids &
Credits, 10%
K-12 Education, 37%
FY 2012-2013
$6.2 billion shortfall
Higher Education, 9%
Health & Human
Services, 30%
Source: Minnesota Management & Budget
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State Spending in Total, FY 10-11:
$60 Billion
Public Safety, 4%
Property Tax Aids
& Credits, 5%
All Other,
12%
Health & Human
Services, 41%
Transportation,
10%
Higher Education,
5%
K-12 Education,
23%
Does not include capital spending. Source: Minnesota Management & Budget
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Over Next 25 Years, State Spending Will
Outpace Revenue
% Annual Growth Rate (Compounded)
9.0%
8.5%
8.0%
7.0%
6.0%
5.4%
4.8%
5.0%
3.9%
4.0%
2.7%
3.0%
2.0%
1.0%
0.0%
Health Care
Education
All Other
Total Spending
Revenue
Source: Budget Trends Study Commission Report, 2009. Source: Analysis from Minnesota Management & Budget (MMB)
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Why Is This Happening?
1. Minnesota is aging
2. Labor force growth is slowing
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Population 65+ is Increasing Dramatically
Source: Bush Foundation. MNCompass from U.S. Census Bureau and State Demographic
Center Projections.
12
Minnesota Workers Will Have to
Support More Dependents
Source: Budget Trends Study Commission, 2009.
13
Four Options to Balance the Budget
• Spending (service) cuts
• Higher taxes
• Economic growth–grow the tax base
• Make government services more cost-effective
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Common Cents
Spending
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Total MN State and Local Spending
Slightly Less than US Average (2008)
$224.82
$229.31
Total Expenditures
$55.50
$48.29
Health & Human Services
$2.65
$2.42
Natural Resources
$13.47
$17.54
Public Safety
MN
U.S.
Highways
$16.54
$12.40
Higher Education
$18.33
$18.04
$42.95
$45.69
K-12
$-
$50.00
$100.00 $150.00 $200.00 $250.00
Per $1,000 of Personal Income. Source: Bureau of the Census, Survey of Gov’t Finances, 2008.
16
Spending on Medical Care is
Largest Piece of HHS Budget
MN Public Assistance, 1960-2008, 2008 dollars
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
medical care
income maintenance
17
MN Poverty Rate
Below National Average
18
Elderly Population in Need of Long Term
Care Will Grow Significantly
Costs projected to
grow from
$1 billion of state
budget today to
$5 billion by 2035;
MN taxpayers pay
half of these costs.
19
K-12 per Pupil Spending Increased by $2,000
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
Local
$4,000
State
$3,000
$2,000
$1,000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
$0
Shown in 2006 Dollars. Source: Minnesota Department of Finance.
20
Higher Education State Appropriation per Student
Has Decreased While Tuition Has Increased
$10,000
Appropriation per
Student
U of M Tuition
$9,000
$8,000
$8,576
$7,000
$6,000
$5,000
$4,000
$4,811
$4,160
$3,000
$2,942
$2,000
$1,000
$2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
est.
Adjusted for inflation (2000 dollars). Source: Bush Foundation. State Higher Education
Executive Officers.
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$1.5 Billion Spent on
Reducing Property Taxes in 2010
State Spending on Property Tax Aids & Credits, 2000-2010
(in millions; shown in 2000 dollars)
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Minnesota Management & Budget
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#3 – Over the next ten years, where would you
spend LESS state money? (choose up to three)
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
8.
9.
K-12 education
Higher education
Long-term care for the elderly
Income assistance
Health care for the poor
Property tax aids
Public safety
Other
None of the above
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Common Cents
Taxes
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MN State & Local Taxes
11.4% of Household Income (2011 est.)
Minnesota Effective Tax Rates, All State & Local Taxes
14.0%
12.0%
12.4%
13.0%
12.9%
12.0%
12.0%
11.2%
10.0%
11.4%
11.6%
11.3%
11.2%
8.0%
6.0%
4.0%
2.0%
0.0%
1990
1992
1994
1996
1998
Source: Minnesota Department of Revenue, Tax Incidence Study (2009)
2000
2002
2004
2006
2011
(est.)
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Different Taxes Have Different Impacts
Effective Tax Rate by Population Decile, Total State & Local, 2006
Source: Minnesota Department of Finance, Tax Incidence Study, 2009. Table 1-6.
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Total MN Taxes Slightly
Higher than US Average
Total State and Local Taxes (per $1,000 of personal income)
$113.28
$111.72
Total Taxes
$4.77
$4.81
Corporate Income
$21.39
$26.14
Sales
Individual Income
$35.63
$31.03
Property
$30.40
$34.43
$-
$20.00
$40.00
Minnesota
US
$60.00
$80.00
$100.00
$120.00
Source: Bureau of the Census, Survey of Gov’t Finances, 2008.
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#4 – Under what circumstances, if any, would you
personally be willing to pay higher taxes?
(choose up to two)
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
If it’s clear we get more for our money
If the overall tax structure is fair
For certain services only
For certain types of taxes only
I’m willing to pay more given the budget situation
I am not willing; I am taxed enough
Other
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Common Cents
Economic Growth
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Economic Growth =
Labor Force Growth + Productivity Growth
Labor force growth comes from
•Natural growth
•Migration
Productivity growth comes from
•Private investment—technology, machines & processes
•Public investment—roads, bridges
•Technology from research, public & private
•Skills & abilities of workers—education & training
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MN’s Economy Has Historically Done Well
Per Capita Real GDP, MN and US,
1997-2008
31
Migration Will Become the Only Source of
New Workers in Minnesota
Net Labor Force Growth
400,000
350,000
350,000
300,000
250,000
200,000
200,000
150,000
150,000
130,000
115,000
95,000
100,000
50,000
2000-2010
2010-2020
2020-2030
50,000
15,000
(50,000)
Total
Natural
Migration
(45,000)
(100,000)
Source: Minnesota State Demographer (projection revised 2007)
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National Mobility Has Fallen To Its Lowest
Point Ever Recorded
Source: Tom Gillespy, State Demographer. Census Bureau, 2008 CPS and historical
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Avg MN High School Graduation
Rate Better than US Avg
100.0
90.0
83.6%
86.5%
80.0
73.9%
70.0
60.0
71.7%
50.0
United States
40.0
Minnesota
30.0
20.0
10.0
0.0
2000–
01
2001–
02
2002–
03
2003–
04
2004–
05
2005–
06
2006–
07
Source: National Center for Education Statistics (U.S. Department of Education)
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69% of MN Job Openings Will Require PostSecondary Education, 2008-2018
45% of MN's
population age 25-64
had an Associates'
degree or more in
2005-07, compared
to US average of 39%.
Source: The Georgetown University Center on Education and the Workforce
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MN Ranks High in % of Population with
Post-Secondary Education
% of Population with an
Associate Degree or Higher;
3-Year Estimates 2005-2007
18-64 Year Olds
(1) Massachusetts
(2) Connecticut
(3) New Jersey
(4) Minnesota
Peer States
Nation
44.2%
41.0%
40.2%
39.9%
32.8%
33.5%
Source: Minnesota Office of Higher Education. Note: Data collected during calendar years 2005, 2006 and 2007 for
populations of 20,000 of more. Source: U.S. Census Bureau, American Community Survey.
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#5 – In the near term, I would find room in the
state budget for these priorities to achieve more
economic growth: (choose two)
0%
0%
0%
0%
0%
0%
0%
0%
1. Reform the tax structure to encourage investment in
productivity
2. Raise the overall level of K-12 educational achievement
3. Increase % of population with higher education
4. Attract new workers, including immigrants
5. Invest in infrastructure to increase productivity.
6. Invest in research and development to increase
productivity.
7. Job training to increase productivity.
8. None of the above
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Common Cents
Reform
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Reform Can Be
Stalled by the Following
1. Loss of jobs
2. Consolidations that closing places people identify with
(e.g., nursing homes, schools) or replace their elected
officials (e.g., local to regional park districts)
3. Risk of misuse of funds (e.g., military cash cards)
4. Perceived or real diminution of services
5. Possibility of failure
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Main Types of Reform
•
•
•
•
•
Consolidation
Competition
Choice
Eliminate red tape
Incentives
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#6 – How do we best overcome the barriers
to reform? (choose up to two)
0%
0%
1.
2.
3.
0%
0%
4.
0%
5.
0%
6.
We shouldn't; the concerns are legitimate.
Our public leaders need to make the tough choices.
Our public leaders should involve citizens more as they
develop reform proposals.
We need a bi-partisan or nonpartisan approach so that
people have more confidence in the proposal.
Minnesotans need to better understand that public
services can't stay the way they are and still be affordable.
Other
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Common Cents
Group Exercises
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Priorities
Historically, Minnesota has been described in the following
terms. Compared to how things are today, how much
priority should we place on each of these over the next 1015 years? (1=much smaller priority; 3=same as today;
5=much greater)
•
•
•
•
•
•
•
•
High quality of life
Protected natural resources
Strong economy
Well educated
Competent and innovative government
Generous with people in need
Healthy people
Other
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Given your table’s priorities, what strategies do you think
are the most important for the state to pursue to balance
the budget over the next 10-15 years - spending cuts,
reform, increased taxes?
•
•
•
•
•
•
•
•
•
K-12
Higher education
Long-term care for the elderly
Health care for children, poor and disabled
Income support
Property tax credits and aids
Public safety
Other
Across the board
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#7 – What do you think is most important for good
budgetary decision-making as Minnesota moves
forward? (choose two)
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
Community conversations like this
Better public information about spending and outcomes
Lower public expectations about services
We Minnesotans all need to be willing to shoulder some
burden
5. Public officials who are better leaders of difficult change
6. Other
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Common Cents
Demographics
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#8 – What is your gender?
0%
0%
1. Male
2. Female
47
#9 – How old are you?
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
Under 18
19 – 35
36 – 50
51 – 65
65+
48
#10 – What ethnicity best
represents you?
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
American Indian or Alaskan Native
Asian
Black or African American
Hispanic or Latino
Multiracial
White or Caucasian (non-Hispanic)
Other
49
#11 – What political ideology
best represents you?
0%
0%
0%
0%
0%
0%
0%
1.
2.
3.
4.
5.
6.
7.
Conservative
Liberal
Libertarian
Socialist
Moderate
Mix
Other
50
#12 – Do you have any children under
18 living at home?
0%
0%
1. Yes
2. No
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#13 – Which of these statements about
income best represents you?
0%
0%
0%
1. It’s hard to make ends meet each month.
2. I’m reasonably comfortable with my
income—for now.
3. I’m financially comfortable and have few
worries about the future.
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Thank you! www.CitiZing.org
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