A number of issues continue to percolate as we make our way through the legislative interim and prepare for the Feb. 25 start of the 2014 session. Here is a rundown of some recent developments:
REPUBLICAN BUDGET FINISHES WITH FLOURISH
The biennial budget Republicans passed in 2011 generated $3.4 billion in revenue above projections – without raising taxes – before the books closed on the biennium June 30.
State officials recently announced another $636 million would go toward paying down delayed payments to our state’s public schools. The balance owed to schools is down to just $238 million, the amount Democrat legislators withheld from our schools in 2010.
Our economy was making progress under Republican budgeting and now it will be interesting to see what transpires after the billions of dollars in taxes Democrats passed earlier this year.
Recent gaffes make you wonder who is in charge at the Capitol these days. Gov. Mark Dayton admits to tax bill “mistakes” slipped into this year’s tax bill. Then you have a serious lack of due diligence in the Vikings negotiations and the failed electronic pull-tab experiment to fund the stadium. There also is MNsure’s rocky road leading up to last week’s launch, and the tax surprise for homeowners with short-sales on underwater homes due to the removal of the tax exemption.
Another example of bungled leadership involves an unpopular Dayton/Democrat/union push to unionize childcare providers. Fortunately, a judge recently brought their ill-advised plans to a halt for a second time.
The first time, a judge ruled Dayton overstepped his authority by ignoring strong public objection and unilaterally calling for a vote on whether to unionize. Citizens continued to object to this union drive, but Democrats in the Legislature went ahead and passed a measure to conduct a unionization vote anyway. Now, a Minnesota judge has stopped the vote, upholding a petition for injunction until a U.S. Supreme Court decision is reached on a similar Illinois case.
The fact is, childcare unionization remains widely unpopular among parents and providers themselves in Minnesota. They know union interference would only drive up costs, limit childcare options and add red tape.
MNsure WOBBLES TO START
Serious problems with Minnesota’s new government-run insurance program – MNsure – continued to emerge leading up to last Tuesday's launch. Concerns over data privacy came to a head in the wake of a recent data breach, when an errant email made public the private information of thousands of Minnesotans. Social Security numbers were included in that email and, now, MNsure documents warn of “an abnormally high risk of a data breach” during the exchange’s first six months. MNsure officials are even advising Minnesotans not to rush to join when the program starts.
The state already has spent some $150 million of our tax dollars on creating the MNsure bureaucracy, without any of that going to things that really matter, like pediatric check-ups, preventative screenings for women or prescriptions for the elderly.
Democrats who created MNsure have been touting the fact Minnesota’s rates will be the “lowest health insurance rates in the country.” The problem with that claim is they are comparing prices with other states’ Obamacare rates instead of private-market rates. They also are not acknowledging MNsure prices are projected to rise by an average of 29 percent or more in 2016.
In health care, citizens care most about accessibility to their doctor of choice, affordability and privacy. MNsure could experience shortcomings in all these areas.
PENSION FRONT - BILLIONS IN UNFUNDED LIABILITIES
The Legislature may be adjourned, but many commissions are at work in preparation for next year. One is the Legislative Commission on Pensions and Retirement which oversees the state's big public employee pension funds – PERA, TRA, MSRS, plus other smaller funds. Kim Crockett of the Center of the American Experiment (www.americanexperiment.org) is providing some eye-opening understanding of the LCPR and its handling of MN's pension funds.
For example, the funds are officially underfunded by $16 billion, calculated using the assumed rate-of-return of 8.0% set in state law (private pensions estimate 4% to 6%). Economists agree the liability is much higher, but they don't agree on the exact method for calculating the liabilities!
According to Crockett, the pension fund managers who together manage $52 billion (covering liabilities of at least $66 billion), only receive performance reviews on one measure of success - achieving the 8.5% rate of return - and not on other measures you would expect for a manager, such as control of liabilities or assets. So, in spite of the Duluth teachers' fund and the St. Paul teachers' fund having to be bailed out with $7 million and $6 million this year, the fund manager is not charged with improving the funding ratios or solving other problems relating to the fund's poor prognosis.
The unfunded pension story in Minnesota is just beginning to unfold. To his credit, Gov. Pawlenty refused to bail out the City of Duluth's pension problems, and instead, expected them to begin solving it. Unfortunately, in both his budgets, Gov. Dayton has proposed and signed bills that bail-out local governments with other people’s money.
Hope you're enjoying our beautiful fall,