2013 | Barataria - The work of Erik Hare

The parties are over, and we got through the New Year and the Inaugural. Everyone in Washington is back at work and ready to make great things happen.

Not so fast. A lot has happened since the start of 2009, a convenient time to look back over the economy for a lot of reasons. It was the start of Obama’s presidency, but more importantly it was when the financial collapse triggered by the fall of Lehman Brothers really hit the economy in general. It was the start of final phase of this Depression. So how are we doing?

It’s worth looking back if for no other reason than to make a few predictions – or at least know what to look for in 2013. Let’s break it down.

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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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