1
Jan 05, 2016
1
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
3
Common CentsWhy 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
5
Question #1 – For you personally, what makes Minnesota an attractive place to live today?
(choose two)
6
0%
0%
0%
0%
0%
0%
0%
0%
0% 1. Natural resources
2. A highly educated population
3. Racial and cultural diversity
4. Sports/cultural attractions
5. Good jobs
6. Ethic of concern for one another
7. Quality of life in communities
8. My family and friends
9. Four seasons
#2 – The state has had a history of recurring budget shortfalls. Why do you think that is?
(choose two)
7
0%
0%
0%
0%
0%
0%
0% 1. The economy
2. People want more then they’re willing to pay for
3. Special interests are too influential
4. Short-term political decisions ignore long-term fiscal problems
5. Government is inefficient
6. Tax & spending structure doesn’t match today’s economy.
7. We haven’t raised adequate taxes
State General Fund, FY10-11: $31 Billion
8
K-12 Education; 37%
Health & Human Services; 30%
Higher Education; 9%
Property Tax Aids & Credits; 10%
Public Safety; 6%Transportation; 1%
All Other; 8%
FY 2012-2013$6.2 billion shortfall
Source: Minnesota Management & Budget
State Spending in Total, FY 10-11: $60 Billion
9
Does not include capital spending. Source: Minnesota Management & Budget
Health & Human Ser-vices; 41%
K-12 Educa-tion; 23%
Higher Education; 5%
Transportation; 10%
Property Tax Aids & Credits; 5%
Public Safety; 4%
All Other; 12%
Over Next 25 Years, State Spending Will Outpace Revenue
10
Health Care Education All Other Total Spending Revenue0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0% 8.5%
4.8%
2.7%
5.4%
3.9%
% Annual Growth Rate (Compounded)
Source: Budget Trends Study Commission Report, 2009. Source: Analysis from Minnesota Management & Budget (MMB)
11
Why Is This Happening?
1.Minnesota is aging2.Labor force growth is slowing
Population 65+ is Increasing Dramatically
12
Source: Bush Foundation. MNCompass from U.S. Census Bureau and State Demographic Center Projections.
Minnesota Workers Will Have to Support More Dependents
13
Source: Budget Trends Study Commission, 2009.
14
• Spending (service) cuts
• Higher taxes
• Economic growth–grow the tax base
• Make government services more cost-effective
Four Options to Balance the Budget
Spending
15
Common Cents
Total MN State and Local SpendingSlightly Less than US Average (2008)
16
Per $1,000 of Personal Income. Source: Bureau of the Census, Survey of Gov’t Finances, 2008.
K-12
Higher Education
Highways
Public Safety
Natural Resources
Health & Human Services
Total Expenditures
$- $50.00 $100.00 $150.00 $200.00 $250.00
$45.69
$18.04
$12.40
$17.54
$2.42
$48.29
$229.31
$42.95
$18.33
$16.54
$13.47
$2.65
$55.50
$224.82
MNU.S.
Spending on Medical Care is Largest Piece of HHS Budget
17
19601962
19641966
19681970
19721974
19761978
19801982
19841986
19881990
19921994
19961998
20002002
20042006
20080
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
MN Public Assistance, 1960-2008, 2008 dollars
medical care income maintenance
MN Poverty Rate Below National Average
18
Elderly Population in Need of Long Term Care Will Grow Significantly
19
Costs projected to grow from $1 billion of state budget today to$5 billion by 2035; MN taxpayers pay half of these costs.
K-12 per Pupil Spending Increased by $2,000
20
19911993
19951997
19992001
20032005
20072009
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
LocalState
Shown in 2006 Dollars. Source: Minnesota Department of Finance.
Higher Education State Appropriation per Student Has Decreased While Tuition Has Increased
21
Adjusted for inflation (2000 dollars). Source: Bush Foundation. State Higher Education Executive Officers.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 est.
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$4,811
$2,942
$4,160
$8,576 Appropriation per Student
U of M Tuition
$1.5 Billion Spent on Reducing Property Taxes in 2010
22
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
State Spending on Property Tax Aids & Credits, 2000-2010 (in millions; shown in 2000 dollars)
Source: Minnesota Management & Budget
#3 – Over the next ten years, where would you spend LESS state money? (choose up to three)
23
0%
0%
0%
0%
0%
0%
0%
0%
0% 1. K-12 education
2. Higher education
3. Long-term care for the elderly
4. Income assistance
5. Health care for the poor
6. Property tax aids
7. Public safety
8. Other
9. None of the above
Common Cents
Taxes
24
MN State & Local Taxes 11.4% of Household Income (2011 est.)
25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2011 (est.)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
12.0%12.4% 13.0% 12.9%
12.0%
11.2% 11.3%11.6%
11.2%
11.4%
Minnesota Effective Tax Rates, All State & Local Taxes
Source: Minnesota Department of Revenue, Tax Incidence Study (2009)
Different Taxes Have Different Impacts
26
Source: Minnesota Department of Finance, Tax Incidence Study, 2009. Table 1-6.
Effective Tax Rate by Population Decile, Total State & Local, 2006
Total MN Taxes Slightly Higher than US Average
27
Total State and Local Taxes (per $1,000 of personal income)
Property
Individual Income
Sales
Corporate Income
Total Taxes
$- $20.00 $40.00 $60.00 $80.00 $100.00 $120.00
$34.43
$31.03
$26.14
$4.81
$111.72
$30.40
$35.63
$21.39
$4.77
$113.28
MinnesotaUS
Source: Bureau of the Census, Survey of Gov’t Finances, 2008.
#4 – Under what circumstances, if any, would you personally be willing to pay higher taxes?
(choose up to two)
28
0%
0%
0%
0%
0%
0%
0% 1. If it’s clear we get more for our money
2. If the overall tax structure is fair
3. For certain services only
4. For certain types of taxes only
5. I’m willing to pay more given the budget situation
6. I am not willing; I am taxed enough
7. Other
Common Cents
Economic Growth
29
30
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
MN’s Economy Has Historically Done Well
31
Per Capita Real GDP, MN and US, 1997-2008
Migration Will Become the Only Source of New Workers in Minnesota
32
Total Natural Migration
(100,000)
(50,000)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000 350,000
200,000
150,000 130,000
15,000
115,000
50,000
(45,000)
95,000
2000-20102010-20202020-2030
Net Labor Force Growth
Source: Minnesota State Demographer (projection revised 2007)
National Mobility Has Fallen To Its Lowest Point Ever Recorded
33
Source: Tom Gillespy, State Demographer. Census Bureau, 2008 CPS and historical
Avg MN High School Graduation Rate Better than US Avg
34
Source: National Center for Education Statistics (U.S. Department of Education)
2000–01
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
71.7%
73.9%
83.6% 86.5%
United StatesMinnesota
69% of MN Job Openings Will Require Post-Secondary Education, 2008-2018
35
Source: The Georgetown University Center on Education and the Workforce
45% of MN's population age 25-64 had an Associates' degree or more in 2005-07, compared to US average of 39%.
MN Ranks High in % of Population with Post-Secondary Education
36
% of Population with an Associate Degree or Higher; 3-Year Estimates 2005-2007
18-64 Year Olds(1) Massachusetts 44.2%(2) Connecticut 41.0%(3) New Jersey 40.2%(4) Minnesota 39.9%Peer States 32.8%Nation 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.
#5 – In the near term, I would find room in the state budget for these priorities to achieve more
economic growth: (choose two)
37
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
Common Cents
Reform
38
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
39
Main Types of Reform
• Consolidation• Competition• Choice• Eliminate red tape• Incentives
40
#6 – How do we best overcome the barriers to reform? (choose up to two)
41
0%
0%
0%
0%
0%
0% 1. We shouldn't; the concerns are legitimate.
2. Our public leaders need to make the tough choices.
3. Our public leaders should involve citizens more as they develop reform proposals.
4. We need a bi-partisan or nonpartisan approach so that people have more confidence in the proposal.
5. Minnesotans need to better understand that public services can't stay the way they are and still be affordable.
6. Other
Common Cents
Group Exercises
42
PrioritiesHistorically, 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 10-
15 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
43
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
44
#7 – What do you think is most important for good budgetary decision-making as Minnesota moves
forward? (choose two)
45
0%
0%
0%
0%
0%
0% 1. Community conversations like this
2. Better public information about spending and outcomes
3. Lower public expectations about services
4. We Minnesotans all need to be willing to shoulder some burden
5. Public officials who are better leaders of difficult change
6. Other
Common Cents
46
Demographics
#8 – What is your gender?
47
0%
0% 1. Male
2. Female
#9 – How old are you?
48
0%
0%
0%
0%
0% 1. Under 18
2. 19 – 35
3. 36 – 50
4. 51 – 65
5. 65+
#10 – What ethnicity best represents you?
49
0%
0%
0%
0%
0%
0%
0% 1. American Indian or Alaskan Native
2. Asian
3. Black or African American
4. Hispanic or Latino
5. Multiracial
6. White or Caucasian (non-Hispanic)
7. Other
#11 – What political ideologybest represents you?
50
0%
0%
0%
0%
0%
0%
0% 1. Conservative
2. Liberal
3. Libertarian
4. Socialist
5. Moderate
6. Mix
7. Other
#12 – Do you have any children under 18 living at home?
51
0%
0% 1. Yes
2. No
#13 – Which of these statements about income best represents you?
52
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.
Thank you! www.CitiZing.org
53