Sturdevant Column: That deficit is a demon, and Emmer doesn’t want to face it

08/29/2010

By LORI STURDEVANT,
Star Tribune
August 28, 2010


Maybe long gubernatorial campaigns, like grief, cycle through attitudinal stages. Republican candidate Tom Emmer's attitude last week appeared to be denial.

In three early morning debates in as many bleary-eyed days, Emmer denied that there's a red-ink tsunami ahead in the state's 2012-13 budget.

In fact, the three-term state rep from Delano asserted, the state is going to have $2 billion more to spend in the next two-year budget period than it's spending in the current one. That's a 7 percent increase, he allowed -- and that ought to be sufficient for any sensible Minnesotan.

He made clear that he believes that category excludes his principal opponents, DFLer Mark Dayton and the Independence Party's Tom Horner, who have been credulous enough to accept the Pawlenty administration's projection of a $5.8 billion gap between current-law spending and expected revenue in 2012-13.

Hmm, thought I. Sounds like this could be a case study for the Minnesota campaign handbook I keep imagining I'll someday write: "How to Confuse Voters with Numbers."

Emmer's numbers aren't wrong. They're just misleadingly incomplete.

For help telling the rest of the story, I turned to Bill Marx, the nonpartisan chief fiscal analyst of the Minnesota House and a veteran parser of poli-speech. His analysis:

Emmer is correct to this extent: State general fund spending in 2010-11 is pegged to wind up next June 30 at $30.7 billion. State revenues are forecast to reach $32.9 billion, or 7 percent more, in 2012-13, according to the fund balance analysis issued by Minnesota Management and Budget in June.

But this biennium's $30.7 billion general fund outlay is buying more than $34 billion worth of government services. A one-time discount is in play.

It has two sources. One: the 2009 federal stimulus bill provided $2.1 billion that offset state general fund spending on human services, education and public safety.

(The feds recently offered Minnesota $430 million more. But $263 million of that is Medicaid money that requires a governor's signature before it's sent. Minnesota's resident Republican presidential prospect said last week that he's "open" to putting his name on a funding request for something some in his party might construe as "government health care." But as of this writing, he has not done so.)

Two: K-12 school districts were sent a $1.9 billion state IOU for the last school year and the one that's just starting.

School districts (gullible ones) could borrow against those IOUs and keep spending as if their money would really be coming to them in 2012, as the law says it will.

It's only beginning to dawn on some school officials that lawmakers may have signed those IOUs with their fingers crossed behind their backs.

Add the federal money and the school IOU totals to 2010-11 general fund spending, and the sum is $34.6 billion. That's $1.7 billion, or 5 percent, more than the expected state tax receipts in 2012-13.

So $1.7 billion is the real deficit? I asked Marx.

Not quite, he said. State budget forecasts project the cost of current state programs tomorrow. Since 2002, cost-of-living inflation has been excluded from the projections. (That bit of lawmaking legerdemain could be another chapter in my book.) But the cost consequences of a population that's getting larger, older and poorer are factored in. So is the expiration of about $1 billion in one-time cuts that were employed to balance the state budget this year. And so is the repayment of a $1.3 billion portion of the school IOU.

Counting all of those things is what brought Minnesota Management and Budget to a $5.8 billion deficit in 2012-13, Marx said. A candidate who says otherwise is "being subjective," he said. (Marx is a master of diplomacy as well as state finances.)

A candidate who says otherwise is also grasping for an excuse to not tell voters how he plans to cope with the state's budget mess if he's elected. Emmer alone among the major candidates is stonewalling about his intentions.

The five stages of grief, as famously identified by psychiatrist Elisabeth Kubler-Ross, begin with denial. They go on to anger, bargaining, depression and, finally, acceptance.

I don't know how many stages there are in a gubernatorial candidate's thinking between denial and acceptance. But for Minnesota's sake, I hope Emmer progresses through them quickly.

Lori Sturdevant is a Star Tribune editorial writer and columnist. She is .(JavaScript must be enabled to view this email address).