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The revised budget forecast predicted that the state will have a budget deficit of nearly $6.4 billion for the 2010-2011 budget cycle.  The federal stimulus funds will reduce the overall deficit to around $4.5 billion, but if Minnesota doesn’t make some permanent changes to our budget, the state will face an even greater shortfall of more than $5 billion in 2012-2013 and into the future.

Gov. Tim Pawlenty recently released his revised plan to solve the current budget deficit. Unfortunately, his budget is more of the same, with deep cuts to health care and aid to local governments.  The Governor’s own staff acknowledged that the proposed cuts to local government aid (LGA) will translate into more than $626 million in permanent property tax increases for all homeowners, businesses, and renters in the next three years.  So, as the Governor touts his proposal as solving the budget deficit without raising taxes, he ignores increases to property owners.  Property taxes will go up—by more than $626 million—because his budget proposal relies on this new revenue.

The average property tax on Minnesota homes has increased by more than 60% from 2003 to 2009.  The primary cause of these increases has been cuts in state aid to local governments.  In constant current-year dollars, total state aid to all Minnesota local governments has been cut by $2.3 billion from 2002 to 2008.  Over the same period, local property taxes statewide increased $2.7 billion. 

Cities and counties across the state have struggled to make up for the loss of state aid since 2003 through cuts in public services, reductions in infrastructure and, unfortunately, property tax increases.  As a result, the quality of public services you receive and the level of taxes you pay now are largely dependent on where you live.  Years of deep state aid cuts have forced local governments to cut essential services, such as police, fire, and first responders. Today, many cities in Minnesota cannot afford these fundamental services without increasing the burden to property tax payers.

Pawlenty’s perennial solution to every budget crisis has been to cut support for local services, such as police and fire.  This year, Pawlenty’s solution to our current budget deficit is to repeat this toxic pattern.  We know from past mistakes that this solution will only exacerbate our problems and property taxes will increase yet again. 

It’s disingenuous for the Governor to keep saying he is balancing the budget without increasing taxes.  Property taxes affect families’ pocketbooks just as much as other taxes.  It’s time to put some integrity back into state budgeting.  It’s time to recognize this huge shortfall can only be solved by sharing the pain: we need significant cuts in state spending and responsible revenue increases that don’t rely on property tax payers.

The burden of dealing with state budget deficits has fallen disproportionately on local governments and local property tax payers in recent years.  Communities have already made sacrifices in order to make ends meet, and the Governor choosing to use LGA reductions to balance the budget simply isn’t equitable to taxpayers.

 Week in Review March 27 2009