Driving County Roads

An on line journal sharing my views. The content reflects my background as a rural person employed in agriculture and as a retired elected official of local government.

Sunday, August 08, 2010

GET READY "RESET"

I recently heard Jay Kiedrowski, Senior Fellow, Humphrey Institute speak on the economy of Minnesota. He comes with high credentials, not the least of which is being a member of the Minnesota State Budget Trends Study Commission. This group reports to the legislature about the state of the state. His news is sober, his news is simple, our economy-hence our citizens are going to have to come to grips with a "reset". The reasons are many.
  • Many jobs have been lost forever and will never come back.
  • In addition to losing jobs, the state has experienced a drop in the total wages and salaries paid which means less income for the state to use to support state and local programs. (This is the first time this has happened since the 1930's.)
  • In the past, the state has grown by adding more bodies to the work force. In the future out growth will depend on the increase of productivity of each worker.
  • The volatility of the income tax will make long term planning difficult. Revenue growth will not keep up with demands. The tax system needs to be overhauled.
  • A high school education is not enough to support a family and too many of our youth have not completed high school.
  • Folks who are over 65 are making up the larger/soon largest portion of our population.
  • As the over 65 group increases in numbers there are fewer and fewer to take their place in the workforce. And fewer yet who are qualified and are trained.
  • There are fewer people working who must support the needs of people who are not working.
  • The work force will become dependent on immigrants.
  • The housing and foreclosure problems lead to a smaller tax capacity. Local units of government are challenged to deliver the services citizens demand depending on a diminishing property tax base.
  • The population is becoming older and more diverse.
  • The rich are getting richer and the poor are getting poorer.
  • The middle class (which built America) is suffering.
  • The state government will continue to struggle, even though the price of government has diminished. (The price of government today is 15.5 cents. That means that 15.5 cents of every dollar earned goes for government. In 1991 it was 18 cents out of every dollar.)
  • The United States is the second lowest nation in the world (Korea is lowest) when you look at the percent of gross domestic product used to support government. Denmark is the highest.

Following his presentation, audience members asked Kiedrowski for his suggestions. He indicated that the state must take a balanced approach to deal with this reset. The first thing would be to reverse the state income tax reductions made in 1998. I often recall the good advice shared by our late County Auditor, Bob Bruns. He always talked about the day the bubble will burst and that the county needs to be prepared with a rainy day fund. The county is doing the best we can, however, we all could use lots of sunny days. end

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