Editorial: Residents shouldn’t accept state gimmicks

Published 12:00 am Tuesday, January 4, 2005

Accounting shifts. One-time funding fixes. Financial gimmicks.

Those are familiar phrases to Minnesotans who have watched legislators try to overcome the state’s budget deficit the past few years.

Well, the news about another pending state budget shortfall shows legislators’ efforts in 2002 didn’t exactly work. Worse, debate about the size of the expected shortfall provides a stark example of some of the questionable tactics being used to balance state books.

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Collectively, this news should jolt all legislators into realizing that when they convene today, they must craft a deficit solution that is truly balanced. By that we mean not only does it actually balance the state’s books within the budget period, but it does so by using a variety of resources &045; reserves, user fees, program changes and, yes, some tax increases.

While news of a deficit was expected, debate about its size is capturing the public’s attention.

Officially, the state pegs the amount at $700 million. However, that figure is based on the assumption that inflation will drive up state revenues the next two years.

Here’s the catch &045; and where the 2002 Legislature’s tactics are exposed for all to see.

The state isn’t factoring in inflation when it comes to what it plans to spend in the next two years. If inflation is factored in, the deficit leaps to $1.4 billion.

From the 1990s until 2002, inflation had been factored into setting state budgets. But the Legislature removed it from the state’s expenses equation two years ago, clearly as a way to &045; on paper &045; erase a then $4.2 billion deficit.

Come on. How realistic are legislators if they believe they can count on inflation to bolster the state’s bottom line, but somehow have the state avoid it when paying bills?

While there is a legitimate debate about whether inflation should be a factor in setting a budget, it doesn’t take a CPA to see that counting it only when it helps and ignoring it when it hurts is far from being fiscally responsible.

As Minnesotans gear up for the 2005 session, which begins today, legislative leaders from both parties should hammer out an agreement now as to how they will treat inflation in setting the state’s next budget.

Either count it in expenses and revenues or leave it out of both. As the past two years have proven, the concept of selective retention only compounds the debt Minnesotans owe.

&045; St. Cloud Times