Friday, July 15, 2011

Miller Time

Bureaucracy and over-regulation are threatening Minnesotans' supply of Miller Lite, Blue Moon, and 37 other MillerCoors brands of beer. The headlines report that MillerCoors failed to renew their three-year brand license before the government shutdown, but deeper reporting reveals that the State of Minnesota simply failed to cash their check before Gov. Mark Dayton shut down state government. The fees involved for a three-year renewal total only $1170 ($30 per brand). In an epitome of bureaucratic irony, by forcing MillerCoors to pull its product from sale, the state of Minnesota cuts off its nose (liquor tax revenues) to spite its face.

This situation fits into an ongoing discussion by Bob Davis and Tom Emmer on their morning radio show. They have been questioning the very existence of licensing fees like this. Why does the state collect brand license fees at all? Minnesota law surrounding the labeling of alcoholic beverages seems to overlap or duplicate federal law. If such a product is legal to sell in the United States, shouldn't it be legal in the Minnesota? What is the benefit of Minnesota brand label registration to the consumer, really? Besides that, at $30 for three years, the state might even lose money on every license it sells.

Some permit and license requirements protect consumers and the public, but others appear to be solely administrative processes that give the state government a piece of the action in private business transactions while adding zero value. (Anyone remember the Stamp Act?) If you're wondering what business owners mean by "regulatory burden," it's when government makes it more difficult to make a buck, and in this case, even to render a tribute unto Caesar.

Tuesday, July 12, 2011

The 5% solution

A couple of years ago, my employer, Hewlett-Packard, cut everyone's salary 5% and stopped matching employee 401(k) contributions. Well, not everyone's salary was cut by an equal amount. Hourly worker wages were cut around 2% I believe, and management got a 10-15% cut. Nobody liked it, but our salaries were eventually restored this year (not retroactively), and we decided that a pay cut was better than a layoff. (Thousands of our co-workers were laid off.)

Governor Dayton and the Legislature are said to be about $1.6 billion apart between their budgets. That is less than 5% of the record $34 billion budget, much closer to Dayton's levels of funding than the GOP originally proposed and without the tax cuts and reforms that conservatives demanded in the last election. The State of Minnesota does not have a revenue problem, it has a spending problem. If new sources of revenue are found, new ways to spend the money will be found. Contrary to the fuzzy math of the unions and special interests, getting less of an increase than you asked for is not a "cut." Less of an increase is certainly better than a layoff, or a shutdown.

You can't always get what you want, and the Legislature has given the governor quite a lot of what he wanted. It's time for governor Dayton to sign the budget and get Minnesota, the only state in the union in government shutdown, back to work.

Sunday, July 10, 2011

Why a shutdown?

Contrary to the impressions left by media reports and DFL statements, the GOP-controlled legislature sent several budget compromise proposals to Governor Dayton in an attempt to avoid a state government shutdown. Rep. Sarah Anderson (R-Plymouth) provided this summary in an e-mail to constituents:
May:  Knowing Governor Dayton wanted more revenue, Republicans proposed a balanced budget containing a 6 percent increase in state spending.  This proposal would have avoided a special session and a government shutdown.  STATUS:  Vetoed by Governor Dayton
June 6:  Republican leaders offered to accept 50 percent of Governor Dayton's budget.  This compromise proposal would have adopted the Governor's funding numbers for schools, courts, and public safety.  STATUS:  Rejected by Governor Dayton
June 16:  Republican leaders dropped request for tax cuts - a key provision for us.  This compromise proposal also included increasing spending for higher education, transportation, and more.  The compromise also renewed our offer to accept Governor Dayton's numbers for schools, courts, and public safety.  STATUS:  Rejected by Governor Dayton
June 30:  Republican leaders offered to add $10 million to the University of Minnesota and issue appropriation bonds.  Governor Dayton wanted to shift school aid payments from 70/30 to 50/50.  GOP leaders said no to Governor Dayton's 50/50 school aid payment shift, but did move a little on that split to generate $700 million in revenue for the Governor.  Republican leaders then offered to increase per student aid to cover borrowing costs.  STATUS:  Rejected by Governor Dayton
Republicans have passed the largest budget in state history without raising taxes, without the tax cuts that conservatives have demanded, with funding for many of the governor's priorities, and even giving a little toward the governor's 50/50 shift proposal, which would tighten the financial screws on school districts once again (especially charter schools). Governor Dayton, the CEO of Minnesota's divided government, should put his "tax the rich" mantra on hold for his reelection, and reopen the state for business.

UPDATE: Senate Majority Leader Amy Koch (R-Buffalo) stated on the July 5 edition of Capitol Report (Senate Media Services) that the Governor's last budget proposal is still $1.6 billion higher than the Republicans' last proposal, itself the highest general fund budget in state history. She also pointed out that despite many divided state governments nationwide (different parties controlling the legislature and the governor's office), Minnesota was the only state in the union that shut down its government this year.