Oh, what a feeling. Toyota
The gavel had hardly hit the desk at the start of the 2010 session, when state legislators began spending more taxpayer dollars. The first order of business in both the House and the Senate was to pass construction-related bonding proposals totaling almost $1 billion.
Like a Toyota with a stuck accelerator, the speed at which the Legislature took off was mesmerizing. There was no discussion of the $1.2 billion budget shortfall, let alone the fact that the state has already exceeded its debt-to-spending ratio of the historic 3 percent limit -- a debt guideline that has been in place for 30 years.
Unlike a panicked Toyota driver whose car is accelerat-ing down the highway, Sen. Keith Langseth, DFL-Glyndon, chairman of the Senate's Capital Investment Committee, showed no concern or trepidation when the Minnesota Senate voted 52-14 to put the state another billion dollars into debt.
The senators ignored the words from the Office of Management & Budget that the Senate's bonding bill could have a "debilitating effect on the state's cash flow position." Nor did the senators heed the warning in a letter from GOP Gov. Tim Pawlenty that their billion-dollar bill was "unaffordable and irresponsible."
Another point that seemed to be missed by the senators speeding to pass a bonding bill: the trifling concern that the state may soon run out of money. Recently, Management and Budget Commissioner Tom Hanson reported that the state was considering a $600 million short-term loan to ensure Minnesota doesn't run out of cash.
This loan would be in addi-tion to the nearly $1 billion the agency has already tapped, which it refers to as "inter-fund borrowing." This is the practice of using funds with cash reserves to pay current bills. And then you have the state's proposal to delay payments to school districts and to place a hold on tax refunds to corporations.
But the senators, unfazed by the fact that the state could soon be unable to pay its bills, passed their billion-dollar bonding bill. Even as senators and House members debate their respective billion-dollar spending proposals, Moody's, one of the three national credit-rating agencies changed their outlook for Minnesota from "stable" to "negative."
This news also seemed to fall on deaf ears, because the Legislature is determined to pass its billion-bonding package with record speed.
Passing a bloated bonding bill this early in the legislative session is of concern for another reason as well: The next state budget forecast is due out in early March, and this update will shed important light on the state's economic picture. The information could and should be critical in determining the state's fiscal future. Waiting two weeks for the budget forecast is only prudent.
However, the spending frenzy seems to have overtaken this current group of lawmakers. The thing is, this budget mess we're in (probably the worst we've ever faced) is about a lot more than a bloated bonding bill-that's just a big example. These spending crazed-lawmakers are forging ahead despite warning signs of impending financial doom. Is it because of their reckless disregard, or just denial of the fiscal facts?
For most legislators, it's a simple case of denial. The choices are difficult and in an election year no one wants to be the bearer of bad news, or to have to cut a favored sacred cow like K-12. For those with reckless disregard, it's like they just can't kick the spending habit and would prefer to blame Gov. Pawlenty and force a budget stalemate in the closing days of session.
Neither scenario is helpful -- and we need help.
The last budget forecast, from November, pegged the budget deficit at $1.2 billion for the current biennium and predicts a $5.4 billion shortfall for the next budget period. This represents a shortfall of 15 percent of general fund spending, a whopping gap considering that almost all funding delays and shifts have already been used to resolve last year's budget problems.
So instead of passing legislation that only exacerbates the state's budget problems, legislators should first turn their attention to reducing current spending; then, they need to focus on slowing the growth in state programs; finally -- and at least -- they should avoid adding to the problem.
Before we end up like the Toyota in the ditch, i.e., just like the state of California, Minnesota lawmakers need to take their foot off the spending accelerator. Slow the legislative pace, see what the March forecast holds, and certainly avoid making the budget situation worse.
Phil Krinkie is a former Republican state representative from Lino Lakes and the president of the Taxpayers League of Minnesota.