Coalition of Minnesota
Businesses
80 South 8th Street #3530
Minneapolis, MN 55402
Phone: 612-334-3114
Fax: 612-334-3086
www.MNbusiness.com
Associated Builders and Contractors — Minnesota
Insurance Federation of Minnesota
Minnesota Bankers Association
Minnesota Beverage Association
Minnesota Business Partnership
Minnesota Chamber of Commerce
Minnesota Retailers Association
Minnesota Trucking Association
NAIOP Commercial Real Estate Development Association
Saint Paul Area Chamber of Commerce
TwinWest Chamber of Commerce |
SPEND SMART – IT’S THE ONLY OPTION
Why spend smarter? Because we have to.
The global recession has caused a tremendous pain for people throughout Minnesota and across the country. Trillions of dollars in wealth – home equity, retirement funds, stock market investments –disappeared. Unemployment is up. Consumer spending is down. And, consequently, budgets at all levels of government are struggling.
Economists expect the recession to end later this year, but it’s likely to be slow, rocky recovery. The boom times we enjoyed over the past 25 years won’t return any time soon. Consumers will remain cautious - particularly baby boomers, whose spending habits pulled us out previous recessions. Approaching retirement, boomers will focus on replenishing savings accounts and retirement funds, not buying houses, consumer and durable goods.
In addition, with many of the largest and fastest growing markets are on the other side of the world, Minnesota faces intense competition for business investment and job creation. Being competitive requires a reasonable tax burden – and a well-educated workforce, 21st century infrastructure and a high quality of life. Throw in rapidly rising health care costs and a massive federal deficit, and it’s clear that structural reforms are essential.
Put simply: Simply spending more, year after year, isn’t an option. To create jobs and have a strong economy, we need to spend smarter.
SPEND SMART PRINCIPLES
1. Support job growth.
People look to the private sector for jobs and opportunity. They want government to help businesses grow and expand - not make it harder and more expensive. A strong economy creating private-sector jobs is the foundation for Minnesota’s high quality of life.
2. Live within our means.
Lawmakers should identify available revenue then decide how much to spend - not the other way around.
3. Prioritize.
Minnesota has real needs - including higher student achievement, improved infrastructure, and affordable, quality health care. Families set priorities then take care of first things first. Government should do the same.
4. Make sure you get what you pay for.
Minnesotans support programs that work. But not every program is successful. And too often we don’t even have the tools to measure success or cost effectiveness.
5. Innovate.
Look for better, faster, more effective, less expensive ways to do things. Don’t say it can’t be done. Government - like everyone else - is constantly innovating and evolving. The challenge is to lead, not follow. The more innovative our public sector is, the stronger our state will be.
Grow jobs and we’ll grow tax revenues.
Tax jobs and they’ll grow elsewhere.
- The state should increase funding for local government aid and take over more of the cost of k-12 education to reduce property taxes.
- The state should limit the ability of local governments to increase property taxes.
- Local officials should reduce and/or prioritize local spending.
- The state should reduce the property tax burden on homeowners by increasing the share of the property tax paid by businesses.
Property Tax Background: Minnesota's property tax system involves both state and local decisions. Each year local assessors determine a property’s value. The state establishes class rates which distribute property tax burden among different property types. Local governments determine how much they plan to spend and how much will be raised through the property tax. They state provides some local governments with state aid which might impact their tax and spending decisions.
In 2001 and 2002, the state assumed more responsibility for funding k-12 education. Because of that shift to more state funding, net property taxes payable fell from $5.0 billion in 2001 to $4.6 billion in 2002, according to the Minnesota Taxpayers Association. Since then, property taxes have climbed to an estimated $5.6 billion for 2006, according to the Minnesota Department of Finance Price of Government Report.
In 2006, home property was 60% of the taxable market value while homes paid 48% of the property taxes. On the other hand, business property was 12% of the taxable market value but paid 30% of the property taxes. This shows the impact of the state established class rates which distribute property tax burden among different types of property.
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85% of Minnesota’s workforce is employed in the private sector –the 9th highest percentage in the nation.
Source: U.S. Bureau of Labor Statistics/U.S. States in Profile |
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