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Monthly Archives: December 2012

Light a Single Candle

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Winter Solstice arrives right on schedule this Friday, 21 December, at 11:12 UTC – 5:12 in the morning here by mythical Central Time.  It’s being celebrated as the end of the world, probably not because anyone believes that’s going to happen.  No Mayan actually predicted such an event, but it is the end of their 13 Baktun cycle.  My guess is that the Mayans would have used this as an excuse to celebrate too, although their idea of a “party” often involved horrific acts of violence.  It’s a staple of the day.

What really happens is that this is the moment when the North Pole is pointing directly away from the sun and starts its wobble back.  The exact moment of change in the orbit is also the moment when the long nights change the least, in keeping with the nature of cycles.  Light defines the season for us even more than dark notions of destruction because it is the light that will return.  That is more worthy of a party to me.

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Emptiness at the Core

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As we digest the news from the Newtown, Connecticut shooting there is not a parent who is not ravaged deep in their soul at the horror of this event.  The reaction so far tells us that this one is different – that this rampage will be the one that finally changes things.  I have thought of many things that I want to say to add to the discussion, but all of them feel inadequate.

Let me try to find just a little to add.

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Where does Minnesota’s Money Go?

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Heading into the new Legislative session at the start of the new year, we can expect that things are going to be different.  The DFL is in control of the House, Senate, and Governor’s office for the first time since 1990 – and comes in with a lot of pent-up demand from their own interest groups.  Attention tends to focus on social issues such as universal marriage, but we predict here that most of the time will be focused on the budget.

As discussed here, there is a structural imbalance of $1B per year obscured by a 2002 law that restricts how the forecasters are allowed to figure the state’s budget (though this is not without controversy – see the comments).  We can predict that this will be plugged primarily by flattening out tax rates and making the highest earners pay a similar rate to most of the state, 12.1%-12.3% of defined, taxable income.  And we have determined that, on balance, Minnesota is a remarkably average state in terms of its total size (represented by combined state plus local income) and net tax burden.

But what about expenditures?  How does Minnesota compare with the rest of the nation?

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It’s All Good (except the bad stuff)

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The economy added 118k jobs in November, if you go by the ADP report, or 146k jobs if you go by the noisier official number.  Let’s call it 118k because we’ve consistently touted the value of the ADP report.  By any measure, it was a lot more than was expected, given the landfall of hurricane Sandy at the end of October.

Now that the election is over, there is growing optimism that the economy is indeed … growing.  It’s not a lot, but it’s there.  And that’s where we stand as we move into the next phase of the political season – the part defined by getting down to work and making use of the mandate given by voters.  That mandate is clearly defined by a divided Congress and a Democratic President who are at odds over how to either avoid the Fiscal Cliff or, perhaps, go over it.

Even if the election didn’t tell us much, the economy is.  We’d be wise to listen to it.

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Where does Minnesota Stand?

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The Minnesota Legislative session is less than a month away.  With the DFL in control of the House, Senate, and Governor’s office for the first time since 1990 we can expect that, at the very least, everything will operate differently than it has in a long time.  This is a good time to look around and back to a complete understanding of the state of the state budget.  The most contentious parts have always been taxes, so we should start with them.

As noted before, there is a structural deficit of $1B per year that is hidden by some awful gimmicks.  Fixing that gap will likely be easy, but it begs for more fundamental reform that Governor Dayton is eager to implement.  Before we get too far into it, two obvious questions stand out – where does Minnesota government income stand in relation to other states as well as where we have been historically?

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