Why is state government spending a critical issue?

For every dollar they earn, Minnesotans will pay around 16 cents for state and local taxes next year. That will raise around $35 billion for the state’s general fund budget – a 9.8 percent increase over last year. Budget forecasts predict reduced economic activity in the state putting the state’s budget into a deficit. This does not mean it is time to raise taxes to compensate; instead, the challenge must be to continue to get more out of the taxes that are already being paid and make the tough decisions to spend smarter.

Discipline is critical – TwinWest believes there should be no increase in total state government spending greater than the rate of inflation and real growth. As the state prepares to go through some lean times just as it did several budget cycles ago, government again needs to reduce spending, reform ineffective systems, restructure the approach to providing services, and use reserves – just as businesses have done and continue to do.

Now facing a projected budget deficit, government officials and the Legislature must review their priorities and use this opportunity to make smart investments in the state’s future that will serve to grow and expand the state’s economy.

What solutions does TwinWest advocate in managing state government spending?

• The creation of new programs drives spending and should not be allowed unless the new program is accompanied by a proposal to cut existing non-performing programs to offset the current and future costs of the new program.

• Projects considered for bonding should have statewide or regional significance, substantial local support, and a lack of alternative funding.

• No supplemental spending bills should be allowed in the even year of the biennium except for emergency purposes.

• Fiscal notes should accompany all proposed spending bills and financial implications of mandates should be disclosed.

• Unfunded mandates are another form of government spending that should be avoided.

• Accounting shifts should not be used to balance the budget.

• Sunset provisions should accompany all spending bills.

• TwinWest supports government reform efforts designed to reduce the cost of state government and increase efficiencies, such as the Drive to Excellence initiative.