Column: State must overcome more economic woes

In just a few days, lawmakers will return to the state Capitol to begin the 2010 legislative session. Among the hot topics will be our capital investment bill - and the inevitable debate as to how much we should borrow to fund statewide construction projects - as well as whether Minnesota should help the Vikings build a new football stadium.

But the issue that will dominate the bulk of our time will be the same one we have struggled with for the past several years: Balancing our state’s budget.

Once again, the big news from the Capitol is that Minnesota’s incoming revenues are not keeping pace with projected spending, which is why our state faces yet another operating shortfall. State economists now predict our state will face a $1.2 billion shortfall this year and a $5.4 billion deficit during the next budget cycle.

The reason: Declining jobs, lower wages, and decreasing tax revenues. In fact, all of these factors are working hand in hand towards devastating our economy.

According to state economists, this latest recession - the Great Recession as they call it - is Minnesota’s worst in 60 years. Thousands have lost their jobs, and many others have had their wages and salaries reduced.

In their November budget forecast, they found that state income tax revenues were down $827 million. Sales taxes were $32 million off pace, and other tax rates were a combined $351 million lower.

Meanwhile, state spending is expected to receive yet another double digit funding increase, despite the fact that less money is being collected.

If these statistics don’t spell out the need for spending reform at the state Capitol, nothing will.

In theory, there are two ways to solve this shortfall: raise taxes or cut spending. I’d add one more to the mix - job creation.

If we can create a healthier business climate in Minnesota, this would allow our companies and small businesses to expand and create more job opportunities for our unemployed workers. This would increase the number of people paying income taxes, and beef up state coffers.

That scenario can only happen by giving businesses the flexibility and the incentive to grow, and that means removing the mandates and the high tax burden in this state.

There’s no doubt that we’ll have to institute some spending cuts in our budget, but in my opinion we should avoid tax increases. Until our revenues increase, we need to spend accordingly.

This is not rocket science; this is Economics 101, or in other terms, typical family budgeting.

Let’s be realistic. More people are losing their jobs, and those keeping their jobs are seeing their pay stay flat or go down. We shouldn’t make things worse for them by raising their taxes.

We do not have to look any further than the special election in Massachusetts to understand that common sense will prevail. The people of Massachusetts overwhelmingly supported a candidate that was opposed to the current health care bill simply because it is too expensive and does not address the most important concerns.

Everyone agrees that reform is needed, but adding a trillion dollars to our deficit is not a realistic solution. Asking the government to do what every citizen in this state has had to do in these tough financial times - manage spending - is good common sense.

Please let me know what you think. You can write me at 241 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd, St. Paul, MN 55155. You can call me at (651) 296-8635 or e-mail me at: rep.tim.kelly@house.mn.

Tim Kelly, R-Red Wing, can be reached at (651) 380-4345 or rep.tim.kelly@house.mn.

Tags: tim kelly, opinion, columns, legislature