Pay As You Go or Else Go Without

02/26/2006

Paul Munnis

To my way of thinking our State should be oriented to a ‘pay as you go’ plan.

It’s not that borrowing using bonding is a bad thing in and of itself but when there is no new revenue stream to retire the bonds then we are just accumulating a deficit that we expect someone else to pay off for us. Those people are now in Jr. High School and they have no input into the process that is putting them into future debt.

The old economic bromide of borrowing expensive dollars and paying them off with cheap dollars just ignores the fact that it takes increased cash flow even of cheap dollars to pay the bills. Minnesota has proven unwilling to increase the revenue streams and thus we need to be more cautious about borrowing.

Minnesota has long delayed needed investment in the infrastructure of our State and the result is that we are paying for decisions made when Pawlenty was given free reign to slash, cut, and gut, the State budget. The GOP attacked our State safety net, transportation, health, and welfare programs. We emptied the state coffers of much of our savings and now there is little to build upon yet our needs are increasing due to rampant neglect while citizens’ real income and real purchasing power is declining.

Suddenly our Governor has discovered that mental health facilities are needed but not there (the funds were raided), that our roads are crumbling and commuters are in grid-lock (the spending was deferred or shifted to use Interstate routes as if they were city roads all thru the Twin Cities thus producing gridlock), that health care is now in crisis (the GOP gutted those programs), and that Education is in trouble (the State borrowed the funds owed to our schools and is now having to pay the money back rather then spending it to increase employment in Minnesota). The GOP budgets without taking into account inflation so money has to be found just to cover the rising cost of government.

When the DFL warned this approach was a mistake Pawlenty and the GOP laughed at us and continued their merry party resulting in indigestion for the GOP. The GOP fix is to now borrow money to rebuild what they have raided and to stick the bill to future generations. This is wrong and it should be restrained.

The GOP program trimming and funding grab should have produced large savings so that we would have the cash-flow to invest in growth but the GOP has spent the money even as our taxes in the aggregate have risen. The GOP is not doing responsible budgeting and we all know it.

So here we are—wanting to borrow yet without a plan to raise the revenue needed to pay off any new borrowing. That is not responsible.

There is no free ride (especially on Minnesota roads). There is a virtual toll to be paid. Tomorrows taxpayers have to pay the toll for today’s travelers and it is just not right or fair to them.

We have tremendous needs accumulating in areas of health, job creation, education, transportation, jails, pandemics, re-equipping our National Guard units, and the list just goes on an on. Borrowing to solve every problem is simply ridiculous. We need to keep our borrowing power intact for use in genuine emergencies because right now we are facing a lot of threats that are increasingly hard to predict or to budget for. The developing pandemic of Aviary Flu is one example.

We know the GOP rejects raising State taxes and will not develop new revenue streams for our State. We know that tiger will not change its stripes anytime soon and so the GOP needs to be restrained from new spending until they retire incurred debt and restore the bond ratings for Minnesota.

Under Pawlenty our bond rating quality has dropped and it’s because of the GOP ‘spend and borrow’ approach to governing without any new revenue streams to pay for the borrowing. Bond underwriters see that as increased risk to them and thus we see it as public risk by inference.

It’s a simple enough equation: “Pay me now or pay me later,” and the GOP has chosen “later.”