As lawmakers begin the unenviable task of solving Minnesota’s nearly $5 billion budget deficit, we are already hearing panicked cries from special interests who believe the sky will fall if their program receives a funding freeze or a funding reduction.
It’s really a fishbowl mentality. For many of these folks, the world begins and ends with the taxpayer-funded program in which they have a vested interest - everything else be damned.
Its times like this when I believe everyone in state government could take some real world advice from the area where a poor economy is being felt the most - the private sector.
Not long ago, I talked with a Chief Marketing Officer for a privately held company in Eagan. She understands that Minnesota needs to cut spending, not just stop increasing, because her business faces a similar financial quandary.
The company has been around since 1982, and has been highly successful in recent years. As profits continued to climb, so did salaries. In 2009 profits fell, and the goal of this company was to protect jobs as many as possible.
It made this happen by reducing salaries. The CEO started by taking a 35 percent wage cut, and his management team was slashed 25 percent. The company also implemented a tiered salary reduction plan for its employees making between $60,000 and more than $100,000 a year. Those cuts ranged from five to twenty percent.
In addition, no one will receive bonuses or profit sharing, and everyone will take seven days of unpaid vacation, in addition to the salary cuts. To date, no one has lost their jobs.
This is what responsible private sector businesses are doing to make it through these unprecedented times.
And it’s the same roadmap state lawmakers should follow as we try and solve our budget shortfall.
Your state government spends too much money. This fact cannot be argued. Our spending far outpaces our revenue collections.
In February 2007, state economists began to warn lawmakers that revenue projections for the 2010-11 biennium were beginning to look grim. No matter. The Democrat leadership in the legislature blew through a $2 billion surplus and spent it into a $1 billion deficit. State economists continued to wave big red flags towards the 2010-11 biennium, noting the numbers were getting uglier with each forecast. Again, leadership did not address the problem.
Now we face the worst financial crisis in the history of the state.
Let’s face it; many elements of state government resemble those of business. It employs people. It collects money. It provides services.
It’s time for state government to act with the same discipline required of a business. Times are tough, and we need to live within our means. That means making substantial cuts in our state budget.
As one Chief Marketing Officer said, "A freeze is not equal to a cut.” Companies can’t freeze their level of funding during poor economic times, and neither should most programs within state government.