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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

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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 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

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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)

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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)

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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

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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

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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

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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)

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Why Is This Happening?

1.Minnesota is aging2.Labor force growth is slowing

Population 65+ is Increasing Dramatically

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Source: Bush Foundation. MNCompass from U.S. Census Bureau and State Demographic Center Projections.

Minnesota Workers Will Have to Support More Dependents

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Source: Budget Trends Study Commission, 2009.

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• Spending (service) cuts

• Higher taxes

• Economic growth–grow the tax base

• Make government services more cost-effective

Four Options to Balance the Budget

Spending

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Common Cents

Total MN State and Local SpendingSlightly Less than US Average (2008)

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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

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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

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Elderly Population in Need of Long Term Care Will Grow Significantly

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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

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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

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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

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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)

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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

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MN State & Local Taxes 11.4% of Household Income (2011 est.)

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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

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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

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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)

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0%

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0%

0%

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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

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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

MN’s Economy Has Historically Done Well

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Per Capita Real GDP, MN and US, 1997-2008

Migration Will Become the Only Source of New Workers in Minnesota

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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

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Source: Tom Gillespy, State Demographer. Census Bureau, 2008 CPS and historical

Avg MN High School Graduation Rate Better than US Avg

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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

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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

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% 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)

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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

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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)

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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

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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

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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)

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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

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Demographics

#8 – What is your gender?

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0%

0% 1. Male

2. Female

#9 – How old are you?

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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?

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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?

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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?

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0%

0% 1. Yes

2. No

#13 – Which of these statements about income best represents you?

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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

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