Volatility is bad for Minnesota!

I am not talking about stocks, rather, the surplus & deficits here in Minnesota.

I have been watching my stock portfolio go up and down over the past few months. Up 400 points....Down 300 points.....Up 200 points.....UGH! That is just a highlight of a few days this week if you have had the stomach to watch the market.

Watching the Minnesota budget projections over the past decade have resulted in the same experience. Down 4 billion... Up 2 billion... Down 1 billion. As the old saying goes: "A billion here; a billion there, and soon your talking about real money ."

The results of the massive swings in budget numbers illustrates what is occurring right now in the stock market. Overreaction, uncertainty, and not much good occurring in the short-run. The only cure in this type of market or government environment is for someone to show LEADERSHIP.

Instead, leadership, has been replaced by the "Rainy-Day Fund" down at the capital. Taxpayers should be upset about what the "Rainy-Day Fund" has morphed into over the past decade. It has become a way to shirk responsibility, avoid talking about real issues, and Minnesotans are the real losers because legislators are continually "fixing" what can, in large part, be solved with LEADERSHIP.

A number of the Governor's commissions have begun to concern me. Commissions have a place, and pulling the "hot button" issues out of a politically charged process is appropriate at times. However, I just posted the real disappointing Health Care Task Force recommendations racing through the Minnesota Legislature on my blog. I worry about the State Budget Trends Study Commission, and what might be coming at taxpayers without much advanced warning.

The quote: “The opposite of courage in our society is not cowardice, it is conformity.” really starts to ring true in the Mayor's mind after reading a quote from a member of that commission.

I am disappointed because I think the commission in some respects has taken the place of bold leadership. The commission, as posted below, admits they are not going to show leadership by "recommending specific funding levels". Instead they are going to practice conformity and present what appears to be tax and spending shifts. Neutral always equals nowhere!!

We obviously do not have a report yet, and I will be pleased to have been proved incorrect.

In the hubbub of the closing days of the 2007 session, you may have missed that the legislature created a State Budget Trends Study Commission, made up of economics experts of various sorts and tasked with figuring out the key factors that cause instability in Minnesota’s state budget. By January 15, 2009, they will recommend changes to Minnesota’s tax and budget system to reduce that budget volatility. This could mean an expanded sales tax, for example. It’s a very important topic with far-reaching implications. I should note that the Commission has made it clear it wants to stay away from recommending specific funding levels for programs - they will leave that to the state legislature.

Katherine Blauvelt: Minnesota Budget Bites

If we are going to reduce the year to year volatility in our budget process we must address the most volatile areas from a tax and spend perspective. Look at the 2002 Minnesota Department of Finance Report. It is certainly comparable to today, so we know what the problems are and can reasonably deduct how to correct them. I understand that it will result in a political fight, but again, we have a winning issue once it is explained CLEARLY and REPEATEDLY.

I even agree with former DFL appointed Commissioner Jay Kiedrowski below:

He (Pawlenty) needs to lead the Legislature to put in place the recommended permanent tax and spending reforms to reduce the volatility of state finances. Many of our current legislators have been in office through the ups and downs and should be willing to address this volatility.

Let's end the seemingly perpetual budget forecast revisions. Let's get off Minnesota's financial roller coaster. Let's focus on more-important public issues.

Jay Kiedrowski: Commissioner of finance under DFL Gov. Rudy Perpich

Let's stop the state's fiscal roller coaster

We need to have a tax structure that does not rely on corporate taxes. Having a more competitive corporate tax structure would make the Minnesota financial "pie" bigger. I think Democrats are to static when they talk about taxes and spending and maybe we need to explain basic economics to them first.

Second, we should reform the welfare and health care systems during this same period (with free market reforms) so that permanent savings can be used to reduce the temptation for tax increases or shifts to our small businesses and families. I understand the political challenge this point presents.