Estate Tax Exemption Spotlights Minnesota Republicans’ Twisted Priorities

In the first year that Minnesota Republicans took full control of the Minnesota Legislature, they elevated Minnesota’s millionaire heirs and heiresses to the very top of their fiscal priority list.  Representative Greg Davids (R-Preston) says the wealthiest Minnesotans should be able to “keep more of what their mothers and fathers and grandfathers and grandmothers have earned,” so Republicans significantly increased the’ estate tax exemption for millionaires.

To be clear, we’re talking about filthy rich grandfathers and grandmothers,  After all, only the very wealthiest Minnesota estates pay any estate tax.   According to the Minnesota Public Radio:

“Up until now, your estate would have to be worth more than $1.8 million before the Minnesota estate tax kicked in, but that changed during this year’s legislative session.

The tax bill passed by the Republican-controlled Legislature and reluctantly signed by DFL Gov. Mark Dayton increases the taxable estate value from $1.8 million to $3 million over the next three years. The top tax rate remains at 16 percent.

Minnesota is among 14 states that impose their own estate tax. Farms and family-owned businesses worth up to $5 million are already exempt.”

So, we’re not talking about the four-, five- or even six-figure inheritance you might get from Aunt Gertie.

All of this is being proposed by Republicans at at time when wealth inequality has reached grotesque proportions, as illustrated by this stunning video:

This is how intergenerational privilege perpetuates: Millionaire heirs and heiresses – having done nothing more than winning the birth lottery by being born into a wealthy family — are exempted from taxation, including for wealth that has already avoided taxation because it is unrealized capital gains.

And on it goes, generation after generation. This is how we get the Donald Trumps and Donald Trump, Jr.’s of the world, entitled scions born inches from home plate crowing about their home run.

To state the obvious, because it apparently is no longer obvious to everyone, this is not in keeping with the American value of “all men are created equal,” which used to be all the rage in America. America was founded in defiance of the British system of aristocracy, which gave power to a small, wealthy privileged “ruling class.”  Abolishing aristocratic forms of inheritance was a primary way the founding fathers went about furthering American equality.

While today’s Republican Tea Partiers don Revolutionary War-era tri-corner hats while asserting that the estate tax is “Marxist,” the truth is that the estate tax has been strongly supported by a number of founding fathers.

Remember Thomas Jefferson, the guy who penned “all men are created equal,”  America’s “immortal declaration?” He promoted the egalitarian values of America’s founding fathers by arguing against the passing of property from one generation to the next:

“The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural.“

Jefferson was hardly alone in this opinion. Similar sentiments were expressed by Adam Smith, the hero of conservative free market advocates, as well as Republican Party icon Theodore Roosevelt.

“The absence of effective state, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.  The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is passed by men of relatively small means. Therefore, I believe in … a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.”

You might guess that someone like Bill Gates, Sr. would be all-in when it comes to increasing the estate tax exemption. But he eloquently explains why the wealthy people need to pay back the community that supported them:

“No one accumulates a fortune without the help of our society’s investments. How much wealth would exist without America’s unique property rights protections, public infrastructure, and academic institutions? We should celebrate the estate tax as an ‘economic opportunity recycling’ program, where previous generations made investments for us and now it’s our turn to pass on the gift. Strengthening the estate tax is important to our democracy.

Consider all of the other alternative ways Minnesota Republicans could have used the $357 million that they are giving to Minnesota’s wealthiest heirs and heiresses over the next two bienniums. They could have used it to improve our transportation or broadband infrastructure,  help vulnerable children access early learning programs to close our dangerous achievement gaps, or expand clean energy capacity.  Those kinds of investments would have paid benefits for all Minnesotans far into the future.

Instead, Republicans made their top priority lavishing more enormous tax breaks on the small number of ultra-wealthy Minnesotans who least need help.

Governor Dayton has already signed the Republicans’ estate tax exemption, so at this point he has little if any negotiation leverage. But if Democrats take control of state government in 2018, this should be one of the first policies they reverse in 2019.  In the meantime, at every campaign stop they should spotlight this outrageous Republican giveaway to the wealthy elite.

It’s Good To Be Zygi

In 2011, taxpayers gave billionaire Minnesota Vikings owner Zygmunt “Zygi” Wilf quite a gift, an even bigger gift than some realized at the time.

Taxpayers invested about half a billion public dollars to help Mr. Wilf construct his $1.1 billion business headquarters, U.S. Bank Stadium.  The State contributed $348 million, and another $150 million came from a Minneapolis hospitality tax. (While it’s often reported that Mr. Wilf paid the remainder, much of the remainder was paid by private interests — the NFL, personal seat license holders, and U.S. Bank.)

This was an extraordinary taxpayer subsidy for any business owner, much less a controversial one worth $5.3 billion who has been found liable by a New Jersey court for breaking civil state racketeering laws.

But Mr. Wilf’s gift from taxpayers went well beyond that $498 million.  State leaders also allowed the billionaire to keep 100% of the increased business value that he has realized since his publicly subsidized business headquarters was authorized.  It turns out, that’s quite an increase.  According to a Forbes magazine estimate, in 2011, the year before the approval of the stadium, Wilf’s business was worth $796 million.  The most recent Forbes estimate puts the value at a breathtaking $2.2 billion.

That’s a tidy little increase of about $1.4 billion, with a “b,” over just six years.

Not all of that $1.4 billion gain is due to the new $1.1 billion stadium and its income-generating capacity, but much of it is.  It’s now clear that if the billionaire owner had financed his business’s building the old fashioned way — without taxpayers footing half of his bill — he would easily have recouped the full amount of his business investment, and then some.  Clearly, Mr. Wilf did not need us.

In 2011, many predicted that Minnesota taxpayers would be making a very rich man substantially richer.  But it’s still breathtaking to watch the money flooding in.  Skol Zygi.

This is Not Mark Dayton’s Finest Hour

TCursor_and_Constitutional_fight_escalates_between_Dayton__Legislature_-_StarTribune_comhis is going to sound awfully school marmy, but I expected more from you, Mark Dayton.

I’m speaking, of course, of the spat over Dayton’s defunding of the legislative branch of government in retaliation for the Republicans planting a legislative stink bomb in their unwise tax cut bill.

Admittedly, poor Mark Dayton suffers from my high expectations. During his career of public service, he’s usually been a thoughtful and mature leader who has shown great respect for our constitutional democracy.  For that reason, I just expect a lot more from him than I do from Republican state legislators, who have, in recent years, had more of a track record of recklessness and immaturity.

So, I’m disappointed with Dayton’s gamesmanship in this case, because it is probably unconstitutional and certainly childish. Mind you, this criticism is coming from someone who hates the Republicans’ tax and budget cuts, and dislikes many of their policy changes, but is also all too aware that, heavy sigh, elections have consequences.  That means that the party that won control of both chambers of Legislature in 2016 unfortunately gets to win a lot.

Someone who respects our guiding principle of separation of powers should never use their executive power to defund a coequal branch of government. Regardless of what the courts decide about the strict constitutionality of Dayton’s fiscal trickery, the question of “should” still ought  to matter to defenders of democratic principles, not just the question of “can.”

When it comes to the playground “they started it” defense that Dayton and his DFL allies are using, I can’t disagree on factual grounds.  At the same time, I’m with old Mahatma Ghandi on this one: “An eye for an eye only ends up making the whole world blind.”

In these dangerously politically polarized times, “adults in the room” are in desperately short supply. I’m grateful that Governor Dayton has played that thankless adult role many times during his career. Unfortunately, this time, our frustrated Governor has joined Republican legislators on the puerile path, just when we needed him most.

Is Minnesota GOP Sabotaging The Individual Health Insurance Market By Rejecting MinnesotaCare-for-All Option?

Minnesota Republican legislators spent their 2016 election campaigns expressing grave concerns about whether private health insurance companies in the individual market* have sufficient competitive pressure to keep prices down, and whether Minnesotans who live outside of the Twin Cities metropolitan region will have at least one solid coverage option available to them in coming years.

Those are legitimate concerns shared by both parties. But after Republicans won control of the Minnesota House and Senate, they have been unwilling to do one very important thing that that could achieve those two goals. They have been unwilling to give those Minnesotans the option of buying into MinnesotaCare health coverage.

Cursor_and_minnesotacare_for_all_-_Google_Search

Governor Dayton’s proposed “MinnesotaCare-for-All option” would allow any individual market consumer to buy into the state government-run health plan that has served over 120,000 Minnesotans since 2006. An unsubsidized version of MinnesotaCare would be an available option for all Minnesotans.

In other words, MinnesotaCare for all would be a Minnesota-specific “public option” that would always be there for Minnesotans. MinnesotaCare wouldn’t be able to abandon individual market consumers the way corporate insurance companies can and do. Moreover, MinnesotaCare’s presence in the marketplace will pressure private insurers to offer more competitive prices, because MinnesotaCare’s prices don’t have to account for corporate salaries and profits.   Representing the buying power of about a million public plan consumers, the large MinnesotaCare plan should also have leverage to negotiate consumer-friendly reimbursement rates with health care providers, which helps keep premium costs more affordable.

In fact, Governor Dayton’s office estimates that Minnesota families who purchase MinnesotaCare coverage would pay on average about $838 per person less in 2018 than they pay for private coverage in 2017.  To secure those long-term annual savings for Minnesota families, a one-time taxpayer investment of $12 million – a relatively tiny drop in the State’s $39 billion annual budget — would be required to establish the option. In subsequent years, no additional taxpayer funds would be needed to keep the lower costs flowing to Minnesotans. The MinnesotaCare-for-All option would be self-sustainable.

If you believe that government-run operations are always less efficient and customer-friendly than corporations, here’s your chance to prove it. If that’s true, comparison shopping Minnesotans will “vote with their feet” by rejecting it en masse. But if it’s not true, Minnesotans in the individual market will finally have the peace of mind that comes with knowing that at least one coverage option will always be there for them and their loved ones.

Given that 71% of Americans support having a similar Medicare-for-All option, a MinnesotaCare-for-All option is likely popular with Minnesotans.  Still, Republican state legislators killed the proposal this year.

Minnesota Republicans can’t have it both ways. They can’t reject the MinnesotaCare-for-All option and then turn around blame others if competition is insufficient in some parts of Minnesota, or if corporate insurers’ prices prove to be unaffordable to many Minnesotans. No one can know for sure if this idea will work, but if Republicans are unwilling to give things like this a try to help vulnerable consumers, then Minnesota voters should hold them accountable for their obstructionism.

*(Note: The “individual market” is made up of the 10 percent of Minnesotans who a) can’t get insurance through their employer and b) whose incomes are not low enough to quality for either of Minnesota’s two publicly subsidized health insurance plans — Medical Assistance (Minnesota’s version of Medicare) for very low-income citizens or MinnesotaCare a subsidized option for the working poor. Last year, about 250,000 consumers bought coverage in Minnesota’s individual market.)

With a Budget Surplus, GOP’s Across-the-Board Cuts Is Not “Kitchen Table Budgeting

Cursor_and_kitchen_table_budgeting_-_Google_SearchRepublicans — ever eager to show they are in touch with the values of ordinary Minnesotans — are very fond of drawing analogies between household budgeting and government budgeting. Former Governor Tim Pawlenty was especially keen on talking about the virtues of “kitchen table budgeting.”

In front of the camera’s, Pawlenty would play the well-rehearsed role of Stern Daddy, saying things like, “when Minnesota families are sitting around the kitchen table making their budgets, they make the tough cuts to balance their budget, and the Legislature needs to what those Minnesota families do.”

Actual Kitchen Table Budgeting

There are a lot of things that are silly about the Republicans’ “kitchen table budgeting” analogy, foremost among them that many families don’t balance their family budgets.   The dirty little secret is that we ordinary families are not quite as financially virtuous as the pandering pols make us out to be.  This from Bloomberg news:

Household borrowing surged in March at the fastest pace since November 2001 as financing for automobiles picked up and Americans’ outstanding credit-card debt soared.

The $29.7 billion increase, or an annualized 10 percent, exceeded the highest estimate in a Bloomberg survey and followed a revised $14.1 billion gain the prior month, Federal Reserve figures showed Friday. Revolving credit, which includes credit-card spending, posted the biggest annualized advance since July 2000.

Political rhetoric aside, the data show that families are borrowing at record rates rather than balancing their budgets.  So ordinary families may not be the right role models for our leaders.

Across-the-Board Cuts?

This year, Republicans in the Minnesota Legislature are proposing to slash state government spending, by 10 percent across-the-board.  This is not the way ordinary families budget at the kitchen table: “Okay sweetie, here are all the bills. Just lop off 10% of what we pay next year for the mortgage, car, RV, boat, snowmobile, cabin, cable, cell phone, utilities, health insurance, groceries, medicines, vacation fund, the college fund, the retirement fund, rainy day fund…”

Instead, families set priorities and cut accordingly. They say things like, “Well, we gotta keep the household running smoothly, and have a household safety net in case of an emergency, so we can’t cut these things.  Sending the kids to college is really important to us, so we can’t skimp there. But I guess we can do without a vacation, a car for the teenager, and premium cable.”  In other words, they reflect on their values, set spending priorities accordingly and cut spending surgically, not across-the-board.

Non-Crisis Family Budgeting

Cursor_and_Price_of_Government_as_of_End_of_2014_Legislative_SessionMore to the point, families typically don’t cut the family budget — across the board or otherwise — when the family finances are stable or improving. I promise you, this is not heard at very many kitchen tables: “Okay sweetie, we’re financially comfortable and stable right now, but let’s cut the household budget deeply anyway!”

The State of Minnesota is not in a crisis.  Our finances are currently sound, with a $1.65 billion budget surplus for the next two years. In contrast to the Pawlenty-era, when budget shortfalls were the norm, Governor Dayton required the wealthy to pay their fair share of taxes, and the state has been on solid fiscal footing ever since. Moreover, the “price-of-government” — Minnesota state and local government revenues as percentage of personal income — is currently relatively low.

So, why cut state spending at all? Did we suddenly come to the realization that Minnesotans need 10 percent less education?  Compared to the past, do we really think Minnesotans need 10 percent less roads, transit, human services, public health protection, environmental protection, economic development, and public safety? If not, then why in the world would we slash all of those vital services by 10 percent, at a time when we have a large budget surplus and the price of government is lower than historic averages.

After all, it’s certainly not what Minnesotans would do at the kitchen table.

Improving Minneota’s Health Insurance Market With A “MinnesotaCare for All” Option

For Minnesotans who can’t get health insurance from an employer, Minnesota Republican legislators have been demanding improvements.

where-mn-get-insurance-donut-graphic-254x300_jpg__254×300_Out on the campaign stump, Republicans say they want more health plan options than are currently available. They want health insurance companies to feel more competitive pressure to keep a lid on premiums. They want consumers to have a broad network of health care providers available to them. They want assurances that there will always be at least one solid coverage option available to every Minnesotan, even when health insurance companies decide to pull out of the marketplace, as they have in recent years. Those are all good goals.

To achieve them, Republican state legislators should work with Governor Dayton to give Minnesotans a MinnesotaCare for All option.

Background

Currently in Minnesota, those who can’t get health insurance from an employer can get coverage from one of three sources:

  • TOP TIER. For Minnesotans who can afford premium costs, they can purchase coverage from nonprofit health plans – UCare, HealthPartners, Medica, and Blue Cross. (As part of the federal Affordable Care Act, about 60% of those buying from these companies through the MNsure online shopping tool are offsetting premium costs with federal tax credits, which this year are averaging over $7600 per year.)
  • MIDDLE TIER. For Minnesotans who can afford some, but not all, of the premium cost, they can purchase MinnesotaCare at a subsidized rate that varies depending on household income.
  • LOWER TIER. For the poorest Minnesotans who can’t afford any of the premium cost, they can get Medical Assistance at no cost to them. Medical Assistance is Minnesota’s version of the federal Medicaid program.

MinnesotaCare for All Option

Governor Dayton proposes to give those in the top tier an additional option.  He wants to give those consumers the option of buying into that middle tier — the public MinnesotaCare program.

Adding a MinnesotaCare for All option would achieve what Republicans say they want – more options for consumers, more marketplace competition to drive down prices, a guarantee that at least one plan option will always be available to Minnesotans, and consumer access to a broad network of Minnesota health care providers statewide.

A fact sheet from the Governor’s office elaborates on the consumer benefit:

Purchasing quality health coverage through MinnesotaCare is less expensive than buying coverage directly from a private insurer, because it leverages the buying power of more than 1 million Minnesotans enrolled in public plans.

Minnesotans who purchase MinnesotaCare would get high-quality health coverage for approximately $469 per month, on average. That is more than 12 percent ($69) less than the average statewide premium of $538 for private insurance in 2017.

Under the Governor’s proposal, families would spend on average $838 per person less in 2018 than in 2017 on their health insurance premiums.

After a one-time startup investment ($12 million), the cost of Governor Dayton’s plan would be funded entirely by the premiums of Minnesotans who choose to buy MinnesotaCare coverage. If the Legislature enacted this proposal by April 1, Minnesotans could purchase MinnesotaCare coverage as early as the 2018 open enrollment period.

Having this MinnesotaCare option would likely be very popular with Minnesotans.  After all, a national poll found that an overwhelming 71 percent of Americans support a similar Medicare for All option, while only 13 percent oppose the idea.

Let Consumers Choose

Why would Republicans not want this for Minnesota consumers? If the Governor’s claims about the MinnesotaCare option turn out to be accurate, many of the Republicans’ stated goals for the individual market would be achieved.

At the same time, if the Governor’s MinnesotaCare-related claims about lower prices and better health care network turn out to be inaccurate or inflated, Minnesotans will surely reject the MinnesotaCare option. If it is to their advantage, consumers will choose a nonprofit health insurance company, or a for-profit health maintenance organization (HMO), which the Governor recently agreed to authorize as part of a compromise with Republican legislators.

With the addition of the MinnesotaCare option, private, nonprofit and public options all would be available to Minnesotans who are shopping and comparing via MNsure. Then the politicians could get out of the way, and let the consumers choose the option that works best for them.

Will Minnesotans Elect Another Grumpy Gus Governor?

grumpy_governorsA steady stream of candidates for the 2018 gubernatorial race will soon be emerging. Often “past is prologue” in politics, so we might want to consider the type of leader Minnesotans have preferred in our recent past.

Over the last quarter century, Minnesota general election voters have chosen Mark Dayton, Tim Pawlenty, Jesse Ventura and Arne Carlson to govern their state. While there are many differences between those men, I would submit that the psychographic common denominators for those successful gubernatorial candidates are:

  • They were all a bit cantankerous
  • They all stressed fiscal management
  • All but Ventura were policy wonks

(They also were all white dudes, but that’s a different post.)

Surly Fiscal Manager seems to have been the job title that Minnesota general election voters have tended to have in mind.  They chose a Grumpy Gus in green eyeshades to manage state government. Their most recent pick — a former State Auditor who has never been known for being cuddly or a stemwinder on the stump — certainly fits that profile.

Meanwhile, the narrow group of DFL caucus fetishists tend to swoon for politicians who have a very different kind of profile. They get energized by partisan cheerleaders/jeerleaders who pledge fealty to unions and other lefty interest groups and  propose significant expansion of government services.  While DFL caucus goers gravitate toward a firery cheerleader – “the next Wellstone” — general election voters seek a comptroller, someone to hold the extremists at bay and ensure state expenditures and revenues are prudently managed.  That may have been why Mark Dayton decided in 2009 to bypass the DFL caucuses and go to the much broader base of primary voters.

There are no ironclad political rules that will never be broken, and this is just a trend, not an ironclad rule.  But this tendency of general election voters does seem like something that should be pondered by DFL kingmakers.

Is South Dakota About To Lead An Anti-Gerrymandering Revolution?

I adore my home state of South Dakota, but I rarely find myself calling for my adopted state of Minnesota to copy South Dakota policies. On a whole range of issues from progressive state income taxes to a higher minimum wage to LGBT rights to dedicated conservation spending to teacher pay to Medicare coverage, I wish the Rushmore state’s policies would become more like Minnesota’s, not vice versa.

But if a majority of South Dakota voters embrace Amendment T at the polls this November, I may soon be feeling some serious SoDak envy.

gerrymander_-_Google_SearchOnce every ten years, all states redraw state and congressional legislative district lines, so that the new boundaries reflect population changes that have occurred in the prior decade. In both Minnesota and South Dakota, elected state legislators draw those district map lines, and the decision-making is dominated by leaders of the party or parties in power.

South Dakota’s pending Amendment T calls for a very different approach. If a majority of South Dakota voters support Amendment T this fall, redrawing of legislative district lines would be done by a multi-partisan commission made up of three Republicans, three Democrats and three independents.  None of the nine commission members could be elected officials.

South_Dakota_Amendment_TThe basic rationale behind Amendment T is this: Elected officials have a direct stake in how those district boundaries are drawn, so giving them the power to draw the maps can easily lead to either the perception or reality of self-serving shenanigans.

As we all know, redistricting shenanigans are common. Guided by increasingly high tech tools and lowbrow ethics, elected officials regularly produce contorted district maps that draw snickers and gasps from citizens.   Often, the judicial branch needs to intervene in an attempt to restore partisan or racial fairness to the maps that the politicians’ produce.

Gerrymandering and Polarization

There are all kinds of problems created by the elected officials’ self-serving gerrymandering.  Legislators in control of the process draw lines to ensure that the gerrymanderer’s party has a majority in as many districts as possible. This leads to many “safe districts,” where one party dominates.  In safe districts, the primary election is effectively the only election that matters. General elections become meaningless, because the winner of the primary elections routinely cruises to an easy victory.

In this way, disproportionately partisan primary voters, who some times make up as little as 5 percent of the overall electorate, effectively become kingmakers who decide who serves in legislative bodies. Meanwhile, minority party and independent voters effectively have almost no say in the choice of lawmakers, even though they usually combine to make up more than 50% of the electorate.

In other words, gerrymandering has given America government of, for and by 5 percent of the people.

Because these primary election kingmakers tend to be from the far ends of the ideological spectrum, gerrymandering has contributed to the polarization of our politics. It has created an environment in which elected officials live in fear that they will be punished in primary elections if they dare to compromise with the other party. As a result, bipartisan compromise has become increasingly extinct in many legislative bodies.

Gerrymandering and Distrust

Beyond political polarization, perhaps the worst thing about politician-driven redistricting is that it makes citizens cynical about their democracy.  Whether you believe problems are real or merely perceived, the fact that elected officials are at the center of redistricting controversies creates deep citizen-leader distrust.  When citizens become convinced that elections are being rigged by elected officials so that the politicians can preserve their personal power, citizens lose faith and pride in their representative democracy. When we lose that, we lose our American heart and soul.

So Minnesota, let’s commit to creating — either via a new state law or by referring a constitutional amendment to voters –our own multi-partisan redistricting commission that removes elected officials from the process. Let’s govern more like South Dakota!

Did I really just say that?

Every Vikings Ticket Carries a $72 Taxpayer Subsidy?

Cursor_and_vikings_suites_-_Google_SearchAre Minnesota Vikings season ticket holders effectively government-dependent welfare queens?  After all, a state legislator’s analysis finds that every Vikings ticket benefits from a taxpayer subsidy of over $72.

If that analysis is correct, it would mean that over the next decade a season ticket-holding family of four will be benefiting from about $29,000 in subsidies from Minnesota taxpayers.  Over the three-decade life of the stadium, the 24 corporate benefactors sipping chablis in the Valhalla Suite will be benefiting from a government subsidy of about $521,000.

And we’re worried about poverty-stricken families on Food Stamps? 

Those figures are based on an analysis done by Minnesota State Senator John Marty (DFL-Roseville).  Senator Marty calculates that the entire taxpayer burden for subsidizing our new People’s/U.S. Bank Stadium is over $1.4 billion.  I’m not a public finance expert, but Senator Marty is a bright guy with access to public finance experts, and he seems to have done a lot of homework to develop this estimate.  He shows his homework in the spreadsheet provided below.

For purposes of the estimate, Senator Marty assumes that the Vikings will sell about 19.5 million tickets over the next 30 years.  While other non-Vikings events will also be held in the facility, Marty’s analysis only looks at Vikings tickets.

From there, it’s a simple calculation: $1.4 billion in subsidy÷19.5 million tickets=$72 subsidy per ticket.

Cursor_and_Subsidy_per_ticket_-_calculated_May_15_2012_pdf__page_2_of_2_Critics may quibble with the specifics of the Marty analysis.  But specifics aside, the undeniable fact remains that Minnesota taxpayers are on the hook for an enormous subsidy that looks to be much larger than the $498 million figure typically quoted during legislative debates.

Cursor_and_Subsidy_per_ticket_-_calculated_May_15_2012_pdf__page_1_of_2_

Is Zygi Claus As Generous As Local News Coverage Makes Him Out To Be?

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Billionaire Vikings owner Zygi Wilf is Minnesota’s Santa Claus. That’s essentially the message local news and sports coverage has hammered into Minnesotans’ heads over the last couple of years.

There has been a steady string of positive headlines promoting the Wilf’s stadium-related generosity: Twin Cities Business magazine: “Wilfs Commit $19.5 million More to New Vikings Stadium.”  Minnesota Public Radio:  “Vikings add 19.7 million to stadium contribution.”  WCCO-TV:  “Vikings, Wilfs To Commit to Additional $14M To New Stadium.”  The Saint Paul Pioneer Press:  “Vikings’ Zygi Wilf to increase stadium contribution.”  The Star Tribune:  “Vikings pony up $49 million for stadium accessories.”

Legendary Star Tribune sports columnist Sid Hartman regularly preaches about how fortunate we Minnesotans are to have the Wilfs lavishing us with additional stadium-related toys out of the goodness of their hearts.  For instance, under the homer headline “Vikings Stadium Will Be Spectacular,” a typical Hartman column tells Minnesotans to “take your hat off to the Wilf family,” and then essentially turns his column over to Vikings executive Lester Bagley’s pro-Wilf spin:

“The Wilf family has put in an additional $95 million since the bill passed the Legislature, because a lot of teams and communities get to this point and they start to cut things [and] we don’t want to cut things. We want to add things and make sure this is the best stadium in the league.

The Legislature had us agree to $477 million in team/private dollars and since the bill passed, on top of that $477 million, the Wilfs have agreed to contribute an additional $95 million and counting.”

In addition to his newspaper columns, Mr. Hartman even more frequently carries the same kind of Wilf cheerleading to the powerful radio airwaves of WCCO-AM.  KFAN-FM and 1500-ESPN also do their fair share to promote Zygi’s stadium contributions to their listeners.

The cumulative effect of all of this has been to paint a portrait of jolly old Zygi Claus and Lester the Elf continually delivering millions of dollars of new stadium toys to Minnesota’s football loving girls and boys.

I don’t blame reporters for those headlines.  The budget increases happened, and reporters need to cover developments like that. Moreover, I’m glad that the Wilfs are paying the extra costs.  It’s better than the alternative.

But as Mr. Wilf prepares to cut the ribbon for his new business asset later this summer, and have even more adoration heaped upon him by Mr. Hartman and others, it’s important to look at the broader context.

Others Paying “Owner’s Share”

Remember that the owner has had lots of help paying the so-called “owner’s share” of the stadium. The Vikings are getting hundreds of millions of dollars from a number of outside sources, such as a NFL loan program, seat licenses paid by fans, and enormous naming rights payments coming from U.S. Bank customers.  As Minnesota Public Radio reported:

“If the team gets the NFL loan, sells naming rights and charges for personal seat licenses according to these estimates, it would have about $115 million of the original $427 million pledge yet to pay. Compared to the upfront price tag on the stadium of $975 million, the amount left is about 12 cents on the dollar.”

Note that this April 2012 MPR analysis was done prior to the Wilf’s increasing their stadium contributions by an additional $95 million or so.   It also was done without solid numbers related to these three types of funding sources.

But details aside, the larger point remains:  What the owner is actually paying is only a small fraction of what is described in news coverage as “the owner’s share.”

Star Tribune sports columnist and 1500ESPN radio analyst Patrick Reusse also wrote an excellent 1500ESPN blog post asserting that about $450 million of the Wilf’s share will be paid by someone other than the Wilfs.  Reusse’s analysis was titled “Quite a Bonanza For Our Stadium Martyr.”  However, the radio station appears to have removed the post.

“Worst Deal From Sports Team”

Mr. Wilf is the generous one?  Really?  Minnesota taxpayers are bearing a heavy burden for the stadium, because the Wilfs insisted on it, during a decade worth of legislative warfare.  In naming the Twin Cities one of “5 cities getting the worst deals from sports teams,” MarketWatch asks:

“How do you get taxpayers to chip in $500 million on a more than $1 billion stadium when only one city, Indianapolis ($620 million), has ever paid that much?”

MarketWatch also notes that Minneapolitans “will end up paying $678 million over its 30-year payment plan once interest, operations and construction costs are factored in.”

I’m not informed enough about every stadium deal in the nation to say whether MarketWatch is correct that Minnesotans got one of the worst deals ever.  But it is important to understand that Minnesota taxpayers are being extraordinarily generous to the Vikings owners, not the other way around.

Wilfs Are Takers, Not Givers

By any reasonable analysis, the Wilfs are the big takers in this scenario.  They are not, as much of the news and sports coverage has implied or asserted, the big givers.  After all, this luxurious new taxpayer subsidized stadium won’t make taxpayers’ wealthier, but it is already making the Wilf’s much wealthier.

Forbes magazine estimates that the Vikings franchise, which reportedly was purchased by the Wilfs for about $600 million in 2005, was worth $796 million in 2011, the year before the stadium subsidy was approved.  By 2015, after the taxpayer subsidy was approved by the Minnesota Legislature and Governor Dayton, Forbes estimates the value of the Wilf’s business had spiked to $1.59 billion.

That’s a remarkably quick appreciation going to Zygi Claus’s bottom line in the post-stadium approval era.  Add what the owners will be pocketing due to large increases in stadium-related revenue in the coming years, and it’s pretty clear that the Wilfs are making out like bandits.

Precise analysis is pretty much impossible on this subject, because executives are not nearly as forthcoming about details related to the loan, seat licenses and naming rights as they are about contributions. However, this is roughly what it looks like to me:  Zygi Claus is investing something in the neighborhood of $200 million to see his business valuation increase by at least $800 million, and probably quite a bit more over time.

None of this is illegal, or all that unusual.  But it also is not Santa Claus.

How Hard Will Governor Dayton Fight For His #1 Priority?

Dayton_early_education_-_Google_SearchGovernor Dayton has been very clear that early education investment is his Administration’s top priority. But you’d never know it by looking at the budget proposals coming out of the Minnesota Legislature so far this year.

This Governor sounds very serious about making early education his legacy. Early in his term, the Dayton Administration brought two proven early education programs statewide — Early Learning Scholarships and the Parent Aware program. Last year, he continually demanded larger investments in early education, and  expressed bitter disappointment when the investment wasn’t as large as he had wanted.

Since then, he has repeatedly made it very clear that more early education investment is needed. Last summer, just a few weeks after the special session ended, the Governor told reporters:

“We’re going to keep making that the priority of my administration, and anything else is going to have to take second place and not precede it.”

He then went on to make a pledge that caught the attention of a lot of reporters and legislators who would like to spend their summer away from the Capitol this year.

“I will not sign a tax bill that does not have an equitable amount in it overall for early childhood and for continuing the progress that we’re made here.”

This winter, the Governor hasn’t let up. On February 28th, the Pioneer Press reported:

In a news conference last week, Dayton said that when it comes to closing student achievement gaps, addressing early learning “is the most important thing we can do.”

There’s compelling evidence to back up the Governor’s prioritization of early education. Research by economists at the Federal Reserve Bank of Minneapolis found that helping low-income children access high quality early education programs can yield up to $16 in societal returns for every $1 spent. The returns mostly comes in the form of a lifetime of taxpayer expenses foregone, such as future taxpayer bills for remedial education, social services, income supports, health care, law enforcement and prisons.

The part that many miss about this oft-cited research is that the investment must meet two important criteria in order for the returns to materialize. First, the investment has to be directed at low-income children. Second, it has to be in providing access to high quality programs, the types of places that actually get kids ready for school. Investing in children whose family can already afford good programs, or in lower quality programs, doesn’t yield the big returns.

In other words, how lawmakers invest matters, not just what amount they invest.

How Much Is An “Equitable Amount?”

Still, with 89% of low-income pre-schoolers unable to obtain Early Learning Scholarships due to insufficient funding, and Minnesota having some of the worst achievement gaps in the nation, the size of the investment definitely matters. And with just a few days left in the session, the DFL Governor doesn’t seem to be getting much DFL legislative support for his top priority.

The DFL-controlled Senate is proposing to invest only 3.9% of the $900 million surplus on their Governor’s number one priority.  That is less than half what the Governor recommends. Meanwhile, the GOP-controlled Minnesota House is proposing to spend just 0.5% of the surplus on early education, less than one-twentieth of what the Governor proposes.

In his budget recommendations, the Governor proposed spending 10.9% of the budget surplus ($98.4 million) on early care and education. Even that amount is not a particularly large sum for something the Governor has identified as “the priority of my administration,” but it is by far the most robust investment that has been proposed this year.

Somewhere in the vast gap between the House’s proposed 0.2% of the surplus and the Administration’s proposed 10.9% of the surplus is what the man in possession of the veto will consider an “equitable amount” for early education programs. If the Governor fights for his number one priority the way he did last year, reporters and legislators may not want to make their summer vacation plans quite yet.

– Loveland

Disclosure: I’m a communications consultant who contracts with a nonprofit organization that agrees with some but not all of Governor Dayton’s early education proposals, and some but not all of the bipartisan Legislature’s early education proposals. This post reflects my personal views, not necessarily that organization’s views.

Tim Pawlenty: “Health Care Policy All-Star?”

Former Minnesota Governor Tim Pawlenty is being featured as a “health policy all-star” by the University of Minnesota’s Humphrey School of Public Affairs. No, I’m not kidding.

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The University event is celebrating the accomplishments of a 2008 Healthcare Transformation Task Force that happened during the Pawlenty years.   Governor Pawlenty is the keynote speaker.  The invitation portrays the Pawlenty years as a time when there was less intense partisan disagreement. Again, not kidding.

Health care policy has generated intense partisan disagreement over the past 5 years. The acrimony has been a sharp departure from Minnesota’s long tradition of collaboration among Democrats and Republicans and across the business, non-profit, and public sectors.

I’m not all that familiar with the Task Force’s work, but I’m sure it made excellent health care policy contributions.  It’s very worthwhile to recognize and reflect on that work, and I applaud the University’s Humphrey School for doing that.  If you’re interested in health care policy, I’d encourage you to attend the event.

But perhaps the Humphrey School should also invite the community to reflect on some of the big picture differences between health care in Minnesota under the Pawlenty-era policies versus health care in the post-Pawlenty era.  Minnesotans should reflect on the dramatic health care improvements that have happened despite Governor Pawlenty, rather than because of him.

The Good Old Days

Ah 2008, those certainly were the good old days of Pawlenty era health care in Minnesota, back when the rate of health uninsurance was 9.0 percent. In contrast, in the post-Pawlenty era, the rate of uninsurance under Governor Dayton has declined to 4.9 percent, the lowest point in Minnesota history.

This happened largely due of the success of the ACA reforms that Governor Pawlenty persistently and bitterly opposed.  For example, in 2011 Governor Pawlenty revved up a Conservative Political Action Committee (CPAC) audience with this simplistic barn burner:

The individual mandate in ObamaCare is a page right out of the Jimmy Carter playbook. The left simply doesn’t understand. The individual mandate reflects completely backwards thinking. They, the bureaucrats, don’t tell us what to do. We, the people, tell the government what to do!

We’re blessed to live in the freest and most prosperous nation in the history of the world. Our freedom is the very air we breathe. We must repeal Obamacare!

Do you see how much less “intensely partisan” health care policy was five years ago under Governor Pawlenty?

hqdefault_jpg__480×360_Oh and then there was that super nonpartisan time when Governor Pawlenty, who was preparing to run against President Obama, enacted an executive order to ban Minnesota from accepting any Obamacare-related Medicaid funding to provide health care coverage for 35,000 of Minnesota’s most vulnerable citizens. As the Star Tribune reported at the time, even Pawlenty-friendly health industry groups reacted to the highly partisan and punitive Pawlenty ban with unified expression of strong disapproval.

In a rare and unusually sharp statement, heads of Minnesota’s most influential medical associations said Pawlenty’s step contradicts his earlier embrace of state health care legislation. “The governor’s decision just doesn’t make sense for Minnesotans,” the Minnesota Council of Health Plans, the Minnesota Hospital Association and the Minnesota Medical Association said in a joint statement late Tuesday.

The Post-Pawlenty Health Policy Era

When Governor Dayton took office, he promptly reversed this Pawlenty ban to ensure that 35,000 low-income Minnesotans could get health care coverage.  Governor Dayton took a lot of heat for that decision, but this move started the process of driving down the state’s uninsured rate, a trend that has continued throughout the Dayton era.

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In more ways than many citizens realize, Minnesota has benefited enormously from the ACA reforms that Pawlenty politicized and obstructed.  According to the federal Department of Health and Human Services:

  • 64,514 Minnesotans have gained Medicaid or CHIP coverage
  • 1,465,000 Minnesotans with private health insurance gained preventive service coverage with no cost-sharing
  • Over 2 million Minnesotans are free from worrying about lifetime limits on coverage
  • As many as 2,318,738 non-elderly Minnesotans have some type of pre-existing health condition, and no longer can have coverage denied because of that condition

Yes, those Pawlenty years, when the Governor was fighting to keep Minnesotans from enjoying all of these ACA benefits, certainly were the good old days of health care policy.  “Health care policy all-star” indeed!

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Note:  This post also was published as part of MinnPost’s weekly Blog Cabin feature.

How DFL Legislators With Only 29% Voter Approval Could Win in November

Minnesota_Legislature_-_Google_SearchDFL state legislators are an awfully unpopular bunch. According to an August 2015 Public Policy Polling (PPP) survey of registered Minnesota voters, only 29% have a favorable view of DFL state legislators, while 49% disapprove. Not many candidates with 29% approval ratings get reelected.

Still, DFL legislators may manage to do well in the November general election, due to at least five factors.

More DFLers voting. First, DFL turnout should be much higher in this presidential election year than it was in the 2014 midterm election. Historically, presidential year electorates tend to be more favorable to Democrats than mid-term year electorates. That historical trend is somewhat in question this year, with Democratic front-runner Hillary Clinton proving to be particularly uninspiring to her base in the primary season and Republican front-runner Donald Trump proving to be particularly inspiring to his base. But traditionally presidential elections have high Democratic turnouts, and Trump-fearing Democrats – particularly women, communities of color and new immigrants – have a particularly compelling reason to vote in 2016.  That should give a big boost to Democratic state legislative candidates.

No catastrophes. Second, DFL legislators haven’t imploded. So far, there are no big DFL-centered scandals, like Phonegate or leadership sex scandals. There also is no particularly controversial issue, like a large tax increase on the masses. The construction of the Senate Office Building probably still has some demagogic appeal, but that doesn’t seem like a significant political albatross at this stage.

Happy days are here again. Third, it’s the economy, stupid. Fortunately for DFL legislators, Minnesota’s economy is quite strong. Seasonally adjusted unemployment is only 3.7%, while the national rate is 5.6%. Under Republican Governor Tim Pawlenty, Minnesota had a steady stream of budget shortfalls.  Under DFL Governor Mark Dayton, Minnesota has enjoyed budget surpluses the last several years, while 19 states still have had budget deficits despite a relatively strong national economy. Republicans promised Minnesota voters that DFL proposals to increase taxes for the wealthiest and the minimum wage for the poorest would surely decimate Minnesota’s economy. That simply did not happen, robbing conservatives of their most compelling criticism of Democrats – that they can’t manage the economy.

Bully pulpit in DFL hands. Fourth, DFLers control the Governor’s bully pulpit.   A relatively popular Governor Mark Dayton (47% approval) can use the bullhorn and large audiences that come with his position to make the case for DFL achievements and legislators. So can other popular prominent statewide elected DFLers, such as Senators Al Franken (48% approval) and Amy Klobuchar (55% approval).   Governor Dayton is certainly no Tim Pawlenty out on the stump, but he is in a strong position to help drive a strong unified message about DFL legislators’ accomplishments.

Republicans are even less popular. Finally, and most importantly, DFL legislators’ 29% approval rating looks pretty awful, until you put it alongside GOP legislators’18% approval rating. Then it looks nearly stellar.  To put that 18% approval rating in context, a disgraced President Richard Nixon had a 24% approval rating when he was forced to resign due to the Watergate scandal. With 63% of Minnesota voters disapproving of the job being done by Republican legislators, the slightly less disrespected DFL legislators would seem to have a shot at winning some elections this fall.

Note:  This post was also featured in MinnPost’s Blog Cabin.

About That “Soaking” Of Minnesota’s Rich

For a long time, we’ve been hearing about how Governor Mark Dayton and DFL legislators “soaked the rich” back in 2013. That’s become the conventional wisdom at both the state and national levels, from both liberals and conservatives.

For example, at the national level, Patrick Caldwell from liberal Mother Jones magazine reported that Dayton ran on a “soak-the-rich platform of massively hiking income taxes on the wealthiest people in the state.”

Locally, conservative columnists Joe Soucheray and Katherine Kersten have long been beating the “soak the rich” rhetoricial drum, as has the conservative Pioneer Press editorial board:

“What’s the plan? Tax the rich, then tax the rich again, then tax the rich again?”

Finally, the Chair of the Minnesota House Tax Committee, Greg Davids, is among many conservative state legislators who have used “soak-the-rich” rhetoric to full effect.

Is the “Soak” Rhetoric True?

But did Governor Dayton’s 2013 tax increase on individuals earning over $150,000 and couples earning over $250,000 actually “soak” them in any meaningful way. This chart, derived from the Minnesota Department of Revenue’s 2015 Tax Incidence Study, calls that conventional wisdom into question:

MN_Soak_the_Rich_chart

This chart shows that the highest earning Minnesotans will only be paying a slightly higher proportion of their income in state and local taxes in 2017 than they did in 2012, under the rates in place before the 2013 tax increase. In 2012, the highest income Minnesotans were paying 10.5 percent of their income in state and local taxes. By 2017, the projection is that the highest income Minnesotans will see their state and local tax burden inch up to 10.7 percent.  This 0.2 percent increase hardly represents punitive “soaking.”

On a somewhat related issue, the chart also shows that the 10 percent of Minnesotans with the highest incomes look to be paying a much smaller share of their income in state and local taxes (10.7 percent) than the decile with the lowest incomes  (26.4 percent). However, on this point, the report contains an important caveat about the first decile data (page 17):

“…effective tax rates in the first decile are overstated by an unknown but possibly significant amount.”

But back to my original and primary point, which is not impacted by this caveat:  Despite all of the wailing and gnashing about the alleged mistreatment of the highest income Minnesotans, the impact of the Dayton-era tax increase on top earners’ overall state and local tax will be negligible.  Higher taxes on top earners didn’t cause the massive job losses that conservatives promised — Minnesota currently has the fifth lowest unemployment in the nation — and they didn’t soak anyone.

Don’t Forget About Local Taxes

How is it that Minnesota’s top earners are paying higher taxes, yet still are paying a lower share of state and local taxes than any other income grouping? Part of the reason is that the top 10 percent will only be paying only 2.2 percent of their income in local taxes in 2017, which is much less than the 3.1 percent share of local taxes that will be paid by the average Minnesotans, and less still than the share of local taxes paid by the lowest-income Minnesotans.

Impact_of_local_taxes_on_tax_burden_by_decileThis is a point that is frequently missed, or intentionally ignored, by people who focus solely on state tax burdens, without also taking local tax burdens into consideration.

So, did Mark Dayton really “soak-the-rich” when he increased taxes by $2.1 billion in 2013?   Inflated rhetoric aside, it turns out that the Dayton tax increase was more akin to a light misting than the predicted soaking.

Note:  This post was also published in MinnPost.

Who Negotiated That Stadium Deal Again?

Vikings PR people like to tell Minnesotans that the team’s owner, billionaire Zygi Wilf, is paying about 60 percent of the ever-growing $1.2 billion stadium cost.  The truth, as Star Tribune/1500ESPN columnist Patrick Reusse pointed out back in May 2012, is that something like $450 million of the Wilf’s share will be paid by people other than the Wilfs. For instance, season ticket holders will be making exorbitant seat license payments to the Wilfs, the National Football League will be paying a subsidized “loan” to the Wilfs, and U.S. Bank will be making naming rights payments to the Wilfs.  All of this will offset the Wilf’s stadium costs by about $450 million.

Taking all of that into consideration, Mr. Wilf looks to be shelling out more in the neighborhood of  $250 million of his own money, or 21% of the cost of the $1.2 billion total, not the 60 percent the Vikings claim.  It’s difficult for an outsider to come up with precise numbers, but that seems like a pretty fair, pardon the pun, ballpark estimate.

Meanwhile, state and local taxpayers are paying about half a billion dollars for the Vikings’ stadium, or about 40 percent percent of the stadium cost.  In other words, taxpayers are paying significantly more than the billionaire owner.

Despite being the majority investor, taxpayers have no say in the name of the stadium, and will be getting 0 percent of the estimated $10 million per year of corporate naming rights payments that U.S. Bank will be paying over the next two decades.  The billionaire Wilfs will be getting 100 percent of the $220 million in naming rights payments.

Formerly_People_s_Stadium

mao_tiananmen_squareIt’s bad enough that U.S. Bank looks to be getting more corporate visibility than Chairman Mao demanded for himself at Tiananmen Square. To add insult to aesthetic injury, taxpayers aren’t getting a single penny for putting up with U.S. Bank’s excessive corporate graffiti.

And so ladies and gentlemen, I give you U.S. Bank Stadium, formerly billed to skeptical taxpayers as the “people’s stadium.”  State leaders should be doing some retrospective soul-searching about how they got so thoroughly fleeced by the Wilfs on this deal.

Dear DFLers: This is Minnesota, Not MinneSweden

These are very heady times for Minnesota DFLers. Governor Mark Dayton and DFL legislators had the courage to raise taxes, increase long-term investments, and raise the minimum wage.  In the process, Minnesota Republicans were proven wrong, because the economic sky did not fall as they predicted it would.   In fact, liberally governed Minnesota, with an unemployment rate of just 3.7 percent, has one of the stronger economies in the nation.

And the subsequent coverage from the liberal echo chamber has been positively intoxicating for DFLers:

“This Billionaire Governor Taxed the Rich and Increased the Minimum Wage — Now, His State’s Economy Is One of the Best in the Country” (Huffington Post)

“The Unnatural: How Mark Dayton Bested Scott Walker—and Became the Most Successful Governor in the Country”  (Mother Jones)

“What happens when you tax the rich and raise the minimum wage? Meet one of USA’s best economies” (Daily Kos)

Comparative_Economic_Systems__SwedenHigh as a kite from these clippings and the vindication they represent, DFLers run the risk of over-stepping, of pushing Minnesotans further than it they are comfortable going. As much as DFL politicians fantasize about bringing the social welfare model of a Scandinavian nation to a state populated with so many Scandinavian immigrants, a recent survey in the Star Tribune provides a harsh reminder that Minnesota, politically speaking, is not MinneSweden.

In the wake of a $2 billion budget surplus, only one out of five (19 percent) Minnesotans wants to “spend most to improve services.” Among the Independent voters that DFLers need to persuade in order to win elections and legislative power, only one out of four (24 percent) supports spending the entire surplus.

At the same time, two times as many Minnesotans support the predictable Republican proposal to “refund most to taxpayers” (38 percent support). Their refund proposal is also the most popular option among the Independent voters that Republicans need to win over in order to have electoral success in 2016.

The Star Tribune also reported that their survey found that Minnesotans are not too wild about the gas tax increase the DFLers propose.  A slim majority (52 percent) oppose “Governor Dayton’s proposal to raise the wholesale tax on gasoline to increase spending on road and bridge projects?”  A healthier majority (62 percent) of Minnesota’s’s Independents oppose the gas tax increase.

I happen to agree with the DFL on the merits.  Minnesota has a lot of hard work to do in order to remain competitive into the future, so I personally support investing almost all of the budget surplus, with a healthy amount for the rainy day fund, and a gas tax increase. However at the same time, I’m enough of a realist to recognize that sustainable progressive change won’t happen if Daily Kos-drunk DFLers overstep and lose the confidence of swing voters in the process.

DFLers who want to win back the trust of a majority of the Minnesota electorate would be wise to enact a mix of sensibly targeted investments, a resilient rainy day fund and targeted tax relief.  That kind of pragmatic, balanced approach won’t turn into St. Paul into Stockholm, but it might just put more DFLers in power, so that the DFL can ensure Republicans don’t turn Minnesota into South Dakota or Wisconsin.

Making Standardized Tests A Less Evil Necessary Evil

standardized_testsFor a lot of years, whenever I thought about standardized tests, I only thought about how much I sucked at them. The difference between my strong grades and my weak standardized test scores was dramatic.  My low standardized test scores cost me early academic opportunities, scholarship money and self-confidence.

But now that I’ve been professionally successful for a few decades, I’ve been thinking about those tests in a different way.

The primary reason I was lousy at standardized tests was that I was always running out of time, and being forced to randomly fill in answers at the last moment. More to the point, I was running out of time was because I couldn’t stop thinking about things unrelated to standardized test problem-solving.

While reading through questions, I’d continually think about all kinds of extraneous things:

  • “Why did the test makers word it that way? Wouldn’t it have been more clear if they had said…(composing in head)?”
  • “What is it about me that makes me a crappy test taker?
  • “Why do test makers think that particular kind of question is a reasonable indicator of future success?  Are they right?”
  • “Why do they need to time tests?  Is life like Jeopardy where you have to buzz in the fastest?”
  • “Why a #2 pencil?  What do the numbers even mean?  Is there a good reason for that, or is it a control thing?  Would they really throw me out I snuck in a rebel pencil?”

Why? What? How? You don’t need to be Stanley Kaplan to understand how this kind of frivolous intellectual meandering hurts standardized test performance. Every moment I was diverting thoughts to those kinds of questions is obviously a moment I wasn’t solving problems.

But I couldn’t stop myself. Today they might say I had inattentive type Attention Deficit Disorder. In those days teachers said I was “dreamy” or “spacey,” and they were correct.  I was more successful in the classroom, where time was much less of an issue and different things were evaluated, but my off-topic musing was devastating when it came to tightly timed standardized tests.

Weakness Becomes Strength

But in later years, I’ve had an epiphany of sorts about all of this: It occured to me that the thought processes I was using when I should have been focused on the standardized test is precisely the kind of thought processes that has made me successful on a professional level.   I get hired because people say I’m analytical, creative, unconventional, curious about a wide variety of subjects, a persuasive writer, and can put myself into others’ heads.

In other words, if I had been better at the things that made me a poor standardized test taker, I might have stunk at my chosen career.

Ban Standardized Tests?

The realization that standardized tests weren’t entirely correct in their verdict about me doesn’t make me want to ban standard tests.  Many poor test takers seem to go there, but I don’t.

A world without standardized tests certainly would have been good for me, but I don’t think it would be good for society collectively.  Standardized tests are necessary for holding administrators, teachers and students accountable, and for helping administrators, teachers and students understand specific weaknesses and strengths, so they can use that knowledge to improve. These tests are far from perfect, but relying solely on random anecdotal evidence presented by people with self-interested agendas is much worse.

Last week, Governor Dayton announced that he was recommending a reduction in the number of standardized tests used in the k-12 system, from 21 to 14.   I haven’t studied the issue nearly enough to be qualified to judge the specifics of his recommendation.  But whatever the optimal number of tests, I am glad that most of the standardized tests that I detest will continue to be used.

We don’t need to do away with standardized tests.  What we need is for counselors, teachers and parents to be doing more to help kids understand what test results do and don’t mean. We need lower scorers to understand that, while the ACT, SAT and GRE will close some doors, research indicates that they still can be academically successful.

As scores are being shared, students should be told this broader truth:  Lots of people with great test scores struggle mightily in their careers, while lots of people with poor test scores excel. More importantly, students should study why both of those things happen.  They should study the role effort, creativity, and passion will play in making their post-standardized test lives.    We need to explain the ways in which adults routinely turn their disadvantages into advantages, and how the skills and knowledge evaluated on standardized tests aren’t necessarily the skills and knowledge needed to succeed in many fields.

The problem with standardized tests is not that they exist.  They problem is that we do too little to help dazed and confused test takers put their scores into proper perspective. If we were just a little more deliberate and thoughtful about helping students gain a deeper understanding of what their test scores do and don’t mean, we could make this necessary evil slightly less evil.

Note:  This post was also republished in MinnPost.

Dirty Job Dayton Dusts Himself Off

Dayton_dirty_2Governor Mark Dayton is Minnesota’s political version of Mike Rowe, the star of the Discovery Channel television show “Dirty Jobs.” Rowe’s show is all about him taking on difficult, disrespected and grotesque jobs that others avoid, such as being a sewer inspector, road kill scavenger, worm dung farmer, shark repellent tester, maggot farmer, and sea lamprey exterminator.  Who knew that worm dung needed farming?

Dirty Job Dayton

Governor Mark Dayton may not be farming worm dung, but consider just a few of the filthy tasks Dirty Job Dayton has already embraced in his five year’s in office.

Taxing Most Powerful Minnesotans.  Before Dayton, non-partisan analyses were showing that the wealthiest Minnesotans were not paying their fair share of taxes.  So Dayton ran for Governor unabashedly championing tax increases on the state’s most wealthy citizens, which earned him some very powerful enemies. At the time, progressive political consultants considered advocating almost any kind of tax increase political suicide for candidates. But Dayton ran on a platform of large tax increases, won a razar thin victory at the polls, and then promptly passed the tax increases into law as promised.

Implementing Unpopular Obamacare.  Dayton wasn’t done there. One of his very first acts of Governor was to champion Obamacare, which many politicians were extremely nervous about at the time. In contrast to his fellow Governors in neighboring Wisconsin, Iowa and South Dakota, Dayton embraced Obamacare’s Medicare expansion to cover 35,000 of the most vulnerable Minnesotans.   The Governor had Obamacare protesters shouting him down in his announcement news conference, but he let them have their say and stuck to his principles without looking back.  As a result of taking on a number of controversial Obamacare implementation tasks, Minnesota now has the second best rate of health insurance coverage of any state (95%).

Resolving Vikings Stadium Quagmire.  Then there was the Vikings Stadium debate that had been festering for almost a decade before Dayton came to office. Despite polls showing that subsidizing the stadium was unpopular, Dayton provided active backing for legislation to publicly subsidize the Vikings Stadium.  While noting that he is “not one to defend the economics of the NFL,” he plugged his nose and embraced a job he didn’t welcome, but felt was necessary to keep the Vikings in Minnesota and boost a then-suffering construction sector.

Cutting Coveted Social Safety Net.  Early in Dayton’s tenure as Governor, he even made significant cuts in state safety net programs, which is one of the very worst jobs any progressive can ever get.  Faced with a large budget shortfall, he proposed cutting $950 million in planned spending, told agencies to cut their budgets by up to 10 percent, and cut the state workforce by 6 percent.  That work had to leave even Dirty Job Dayton feeing grimy.

Love these positions or hate them — and Dayton himself didn’t relish many of them — no one can accuse Dayton of political timidity.

Dirtiest Job Yet

But this winter, Dirty Job Dayton finally met his Waterloo. With no political allies in sight, he attempted to push through salary increases for state agency commissioners, who are making less than their peers in many other states.   Dayton said he “knew there would be negative reaction,” but, as is his habit, he plugged his nose and pushed forward anyway.

How did that go for him?  Well, in the last few weeks Dayton learned that attempting to raise bureaucrats’ pay makes shark repellent testing look like a walk in the park.

Fresh off that experience, one might expect that Dayton would now stick to clean, safe, and easy jobs for the remainder of his time in office.  But if you believe that, you obviously don’t know Dirty Job Dayton very well.

Next Up:  Slinging Asphalt

After the salary increase shellacking Dayton endured, he has already found a new thankless task to champion – fixing Minnesota’s deteriorating roads and bridges.  While Republicans want a modest short-term fix funded out of the current budget surplus, that would be much too easy for Dirty Job Dayton. Dayton is attempting to put in place an ambitious decade-long $11 billion solution. Such a long-term fix necessitates a 16 cent per gallon (at current prices) increase in the gas tax. Not surprisingly, the polls are looking a little rough at the moment.

But Dirty Job Dayton doesn’t care. Like Mike Rowe, if the assignment stinks, scares, or stings, he’s in!

What Happened To GOPers Looking To The Market To Set Prices?

price_is_based_on_what_the_market_will_bear_-_Google_SearchOne of the things that you can usually expect Republicans to be consistent about is faith in market forces. They’re continually reminding us that we should trust market forces to allocate resources, as opposed to having politicians arbitrarily setting prices and picking winners and losers.

In the personnel marketplace, this means that if salaries are set below what the rest of the marketplace is bearing, we can expect to attract a smaller pool of talent willing to work at the below-market price. In a market economy, the theory goes, you get what you pay for. If you offer less salary, you attract less talent. If you attract less talent, you get worse personnel.  If you get worse personnel, you get incompetent enterprises and poor outcomes.

For Republicans, this trust in markets is a not just any old belief. This really is their core, their bedrock. But it all goes out the window when there is a juicy demagogic opportunity in front of them.

For a politician, the most tempting political opportunity of them all is the chance to get self-righteous about a government pay increase.   For demagogues, a government pay increase is as delicious a target as there is. One doesn’t have to be a particularly skilled, bright or courageous politician to score political points this issue. Jihadi John probably could get a standing ovation from Americans if he proclaimed his support for lower government employee salaries.

But again, political opportunism aside, what happened to Republicans’ bedbrock belief in trusting the market price? The Star Tribune has reported on the market price for state government Commissioners and found:

Before smaller raises in 2013 and 2014, agency heads had seen no increase since 2000. A recent analysis by Minnesota Management and Budget showed that before the raises, 14 of 15 commissioners were paid at or below the 50th percentile compared to commissioners in other states; eight were below the 25th percentile. The raises push Minnesota salaries above the median.

Dayton noted in his letter that mid-level managers at many Minnesota companies earn more than his commissioners, who after the increases are earning between $140,000 and $155,000 a year. DHS Commissioner Lucinda Jesson, for instance, manages a $17.7 billion budget and will now make about $155,000.

Dayton also pointed out that even after the raise, the state education commissioner is still earning about 80 percent of the yearly salary of superintendents at a number of larger Minnesota school districts. Education Commissioner Brenda Cassellius had been making $119,000 before the raise. By contrast, the head of Minneapolis schools earns about $190,000.

In other words, senior executives in Minnesota state government had been earning well below the market price being paid peers from other jurisdictions and states. Moreover, I would argue that Commissioners in Minnesota should be paid well above the 50th percentile, since Minnesota is a relatively high income state, ranking 11th highest in the nation.

What do Republicans – stalwart champions for trusting the market to determine prices – think about this market snapshot? The Star Tribune reports:

Republicans scoffed at the argument that Dayton would struggle to attract and retain talented commissioners without the pay increase. Plenty of talented people would serve as Dayton’s commissioners, “at the old price,” said Rep. Greg Davids, R-Preston.

In this case, Republicans effectively are insisting that we ignore the market prices, and instead let politicians set the price and pick winners and losers.

Why the inconsistency?  The marketplace argument gets pushed aside in this case for three primary reasons.

First, with legislators earning a ridiculously low salary of $31,140 per year, everything looks extravagant. As I’ve argued before, legislators need a large pay raise to attract a better talent pool, and until they get it, legislators are going to be tempted to pay government employees below what the market is bearing, simply out of jealousy and spite.  When they are being paid less than the average sewage worker, I can’t blame them for being bitter, but their own demagoguery is what prevents the problem from getting the problem fixed.  In any event, legislators’ low pay is an important undercurrent in this debate.

The second reason market arguments gets ignored by Republicans in this debate is that many honestly have no problem making government less competent. At their core, Repulbicans want government to become smaller. Lower paid commissioners lead to less talented commissioners, which leads to less competent government, which leads to less faith in government, which leads to more political support for shrinking government. Score!

The final reason market arguments get pushed aside by Republicans in this debate is the most obvious.  There are cheap political points to be scored. You can bank on the fact that the pay increase will be showing up in endless campaign ads during the 2016 elections.  And when you’re only making $31,000 per year, sometimes the adrenalin rush that comes from scoring cheap political points is the best pay available.

– Loveland

Note:  This post was featured in MinnPost’s Blog Cabin.