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Common Cents About Common Cents Funded by the Bush Foundation Share information and perspectives about Minnesota’s fiscal situation 50+ workshops around the state State budget balancing Tax reform 2

Common Cents About the Citizens League Nonpartisan nonprofit for 60 years Vision is to create the common ground where “we the People” can achieve the common good Principle: People who are affected by a problem should have the opportunity to define it and weigh in on how it’s solved 3

Common Cents Why We Are Here 1)Better understand the trends and challenges facing Minnesota’s budget 2)Share your vision and values 3)Provide input on your priorities 4)Inform the Bush Foundation’s work 4

Common Cents Why We Are Here 5) Model meaningful civic discussion on important issues --expect disagreement --mixed views at tables --feel free to respectfully disagree 5

Q1. The state has had a history of recurring budget shortfalls. Why do you think that is? (choose up to two) 6 1.The economy 2.People want more than they’re willing to pay for 3.Special interests are too influential 4.Short-term political decisions ignore long-term fiscal problems 5.Government is inefficient 6.Tax & spending structure doesn’t match today’s economy 7.We haven't raised adequate taxes

Common Cents State Budget Shortfalls : $0 Projected : $1.1-$2.6 billion 7

8 The Budget: Is it a shortfall or an increase? Both !

State General Fund, FY : $35 Billion 9 Source: Minnesota Management & Budget

Over Next 25 Years, State Spending Will Outpace Revenue 10 Source: Budget Trends Study Commission Report, Source: Analysis from Minnesota Management & Budget (MMB)

11 Why Is This Happening? 1. Minnesota is aging 2. Labor force growth is slowing

Population 65+ is Increasing Dramatically 12 Source: Bush Foundation. MNCompass from U.S. Census Bureau and State Demographic Center Projections.

Minnesota Workers Will Have to Support More Dependents 13 Source: Budget Trends Study Commission, 2009.

14 Spending (service) cuts Higher taxes Redesign government services so they are more cost- effective Economic growth–grow the tax base Temporary measures like accounting changes or borrowing Five Options to Balance the Budget

Spending 15 Common Cents

Total MN State and Local Spending Slightly Less than US Average (2008) 16 Per $1,000 of Personal Income. Source: Bureau of the Census, Survey of Gov’t Finances, 2008.

Spending on Medical Care is Largest Piece of HHS Budget 17

Elderly Population in Need of Long Term Care Will Grow Significantly 18 Costs projected to grow from $1 billion of state budget today to $5 billion by 2035; MN taxpayers pay half of these costs.

K-12 per Pupil Spending Increased by $2, Shown in 2006 Dollars. Source: Minnesota Department of Finance.

Q2. Over the next ten years, where would you spend LESS state money? (choose up to three) 20 1.K-12 education 2.Higher education 3.Health care for the low income Minnesotans 4.Long-term care 5.Property tax credits and aids 6.Capital improvements 7.Economic development 8.Across-the-board cuts in state employees/agencies 9.Public safety 10. None of the above

Common Cents Taxes and Revenues 21

Total MN Taxes Slightly Higher than US Average (2008) 22 Total State and Local Taxes (per $1,000 of personal income) Source: Bureau of the Census, Survey of Gov’t Finances, 2008.

MN State & Local Taxes 11.5% of Household Income (2013 est.) 23

The Picture Is Different by Income Levels 24 Source: Minnesota Department of Revenue, Tax Incidence Study, Table 1-5.

Q3. Under what circumstances, if any, would you personally be willing to pay higher taxes? (choose up to two) 25 1.If it’s clear we get more for our money 2.If the overall tax structure is fair 3.For certain services only 4.For certain types of taxes only 5.I’m willing to pay more given the budget situation 6.I am not willing; I am taxed enough 7.Other

Common Cents Redesign 26

Reform Often Involves Tough Choices 1.Loss of jobs 2.Consolidations that closing places people identify with (e.g., nursing homes, schools) or replace their elected officials (e.g., local to regional park districts) 3.Risk of misuse of funds (e.g., military cash cards) 4.Perceived or real diminution of services 5.Possibility of failure 27

Q4. Let’s say a reform proposal saves money and/or improves services in the aggregate. In principle, which, if any, of these possible negative consequences would concern you the most? (choose up to two) 28 1.Loss of jobs 2.Reduced services or benefits for some 3.Reduced pay and/or benefits for employees 4.Less convenience 5.Less local representation 6.Misuse of funds 7.Failure 8.Other 9.None – we need to be willing to accept such consequences.

Common Cents Group Exercises 29

Common Cents 30 Your charge: To Reach Consensus at your table on how to balance the budget by eliminating the $3 billion shortfall Remember: Minnesota has a budget that is not balanced over the long-run Ideas: You can use any that were discussed, or create your own Tools: 20 poker chips; worksheet

31 Budget Balancing- The Deal

Common Cents 32 Demographics

Q6. What is your gender? 33 1.Male 2.Female

Q7. How old are you? 34 1.Under

Q8. What ethnicity best represents you? 35 1.American Indian or Alaskan Native 2.Asian 3.Black or African American 4.Hispanic or Latino 5.Multiracial 6.White or Caucasian (non-Hispanic) 7.Other

Q9. What best describes your political leanings? 36 1.Conservative 2.Liberal 3.Libertarian 4.Socialist 5.Moderate 6.Mix 7.Other

Q10. Do you have any children under 18 at home? 37 1.Yes 2.No

Q11. Which of these statements about income best represents you? 38 1.It’s hard to make ends meet each month. 2.I’m reasonably comfortable with my income – for now. 3.I’m financially comfortable and have few worries about the future.

39 Thank you!