The Minnesota Watchdog Email Update March 10, 2017


Quote of the Week: “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.

The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to complacency; From complacency to apathy; From apathy to dependence; From dependence back into bondage.”
– Primarily attributed to Alexander Fraser Tytler

Thus far, things have been relatively quiet overall, especially regarding the major spending bills, which will be unveiled in the coming days and weeks, starting with the release of “budget targets,” which are instructions from House and Senate leadership to their finance chairs regarding how much money they have to spend in the program area.

These targets will set the stage for the defining issue this session: how much government will spend, and therefore, how much government will grow.

With a record number of bills introduced, it has been hard to get a read regarding where the Republican-led House and Senate will take Minnesota government.

On the one hand, this publication is encouraged by the many bills introduced to reduce government spending and recognize that tax relief is more than needed, especially after Governor Dayton’s tax and spend orgy of recent times.

Taxpayers especially need to pay attention to the budget target given to the Tax committees in each body, which will tell citizens how much of the bulging $1.6 billion budget surplus will be allocated to tax cuts.

We also be watching the other budget targets to see how much additional money is given to programmatic spending areas, thereby growing government.

That is especially true in the areas of Health and Human Services and Education, two of the whales in terms of government spending.

The Republican brand ultimately rests on limited government and enhanced individual liberty.

The primary way this commitment is displayed is by lawmaking that honors those core values.

Bills contrary to these bedrock principles sully the brand, position the GOP as merely “DFL-Lite,” and will ultimately doom the party to minority status.

Just as importantly, Watchdog need to pay careful attention to bills that impose or raise fees, offer market-distorting subsidies, or grow government by adding to the state employee count.
It’s rather troubling to read through bill introductions and see numerous bills that do precisely these things.

For example, there are over 500 bills that have been introduced this session that contain a reference to “fees.”

To be sure, many of these bills cut fees or were introduced by Democrats, who have no issue raising fees on taxpayers.

For example, there is a bill to raise the “fee” on electric vehicles by $125, with no corresponding cut to make the bill revenue neutral.

There’s another bill to raise fees when a car is purchased.

Is the cost imposed by government to purchase a car or truck not enough?

Perhaps the most egregious example of fees run amok is a bill to impose a whopping $21 MILLION “fee” on drug manufacturers for certain medicines they sell in Minnesota.

Republicans rightly ran, front and center, on a message that healthcare is too expensive.

Raising the cost of healthcare by $21 million shreds that core message.

And guess who will pay that $21 million? If you guessed sick people who use those medicines, you would be correct.

In addition to the 2016 electoral message, Republicans have railed for many years against the healthcare provider tax, rightly dubbed the “sick tax.”

What we have here in this bill is a “sick fee.”

This bill is especially offensive in this budgetary environment.

The Health and Human Services budget already eats over 28% of the general fund.

Moreover, the state is sitting on a massive budget surplus.

A sick fee is simply out of line.

The Watchdog and our friends at the Taxpayer’s League of Minnesota will be watching for fees in general and this bill in particular.

Stay tuned.

The second area to watch is market-distorting subsidies, which often equate to little more than corporate welfare.

Here, two examples are instructive.

The first is “workforce housing.” Not to be confused with “affordable housing,” workforce housing is a government subsidy to build housing for workers in particular regions of the state under the rationale that somehow capitalism is broken in these corners of Minnesota and the classic supply-demand curves can’t reach equilibrium without taxpayer dollars.

The plea goes something like this: Business XYZ is going great guns, expanding like mad.

he only trouble is that they can’t find workers because housing is so expensive the workers can’t afford to pay for the basic human necessity of shelter.

Instead of a failure of capitalism, this issue appears to be one of low wages.

The inability of workers to locate close to these employers is a market signal that wages should rise.

Thus, the workforce housing monies become little more than a subsidy to companies that don’t want to pay more for labor inputs, even though the market is signaling for them to do so.

Thus, it’s a form of corporate welfare.

Moreover, there’s the philosophical issue of using taxpayer dollars to artificially depress wages.

The economic data over the last 25 years clearly shows that in real terms, blue collar wages haven’t even kept up with inflation.

These workers don’t need a housing hand out. They need a good job at a fair, market-driven wage.

A second issue is rural broadband, the public policy of providing heavy government subsidies to bring Internet to rural homes and businesses.

Good public policy or boondoggle?

The jury is still out on that big question, but many smaller and important issues apply here.

First, government is rarely more efficient than the marketplace. Some technology experts have questioned the decision to bring land-line cable to these homes. In many areas around the world, including the Third World, wireless Internet services have eliminated the need for the heavy infrastructure of land lines.

Second, some Republican legislators are reporting to the Watchdog that while cable is being brought to homes and businesses, many are electing not to hook up. It’s one thing to bring the horse to water, but is the horse drinking? Based on our sources, it isn’t happening as much as predicted.

Third, those same sources are reporting that many broadband grants are being used to hire companies on “no bid” contracts.

A review of state statutes shows that there is no requirement that grantees go out for competitive bids in doing the work to bring broadband to homes and businesses.

To be clear, there aren’t allegations that this practice is resulting in illegal or unethical behavior.

The point is that competitive bidding forces those contractors to sharpen their pencils and ensure that taxpayers are getting the best value for the dollar.

For good reason, most government contracts require a “request for proposal” process whereby projects bids are solicited to create competition in the process.

Why that isn’t required for broadband is puzzling to say the least.

Finally, there are a number bills out there that increase the head count in state government.
In Minnesota, two of three largest employers are government.

Over the next 10 weeks, the Watchdog will be closely monitoring all legislation to determine how that legislation comports with the twin values of limited government and enhanced liberty.