Conflicting priorities denote state decline

According to one University political scientist, Minnesota’s economic future is “not a bright one.”

by Maureen Landsverk

‘Crisis.’ The word has come to represent a situation of dubious severity, from losing oneâÄôs keys to the ballooning national deficit. Lately, however, it was used to describe MinnesotaâÄôs current economic and political conditions. In a recent interview with Capitol Report, University of Minnesota Humphrey Institute of Public Affairs Professor and political scientist Larry Jacobs expressed cynicism about MinnesotaâÄôs economic and political future. Comparatively, Minnesota has been falling further and further behind its state competitors. The state Budget Trends Study Commission found that significant factors such as population and employment growth have taken a turn for the worse. Beginning in 2004, these statistics began plummeting relative to national averages. In a report released Thursday by The Associated Press, the national economy appears to have grown in the third quarter of this fiscal year, making a possible recovery a plausible speculation. But many economists, including Brian Bethune of HIS Global Insight, question the statistic. âÄúItâÄôs good to have the economy growing again; weâÄôll take it. But we donâÄôt think that rate of growth is sustainable, because it is distorted by [the entire] government stimulus.âÄù This is also one of the main problems Minnesota faces now. The stimulus package provided by the federal government will run out in a year, according to Jacobs. He also mentions that the projected improvement in the national economy could be an aid to MinnesotaâÄôs individual fiscal problems. âÄúIf the economy starts to grow again robustly for some time âÄî a prospect that most economists doubt âÄî this would mitigate the budget deficits.âÄù A central issue in the debate on economic policy regulation is the cohesiveness between liberal and conservative members of the stateâÄôs government. Republicans and Democrats have very different concerns, and at this figurative economic breaking point, these concerns need to be addressed cooperatively, and a bipartisan plan of action must be agreed upon. As MinnesotaâÄôs economy hangs in the balance, powerful supporters from both ends of the political spectrum continue to clash on fundamental issues. Jacobs recalls the age of the âÄúMinnesota MiracleâÄù in the mid-1970s as a time of ideal political strategy. âÄúBoth parties agreed on core investments in education and a few other areas that reversed the stateâÄôs low economic and social status and led to decades of prosperity. This kind of shared vision is needed now.âÄù Other major impediments to MinnesotaâÄôs economic success are an unsustainable budget and shaky government infrastructure. In the report made by the Budget Trends Study Commission, projections for the upcoming 25 years back up these claims, predicting MinnesotaâÄôs revenue growth rate to reach 3.9 percent, while total state spending will likely climb to 5.4 percent by 2033. Jacobs cites three main ways to approach the precarious state in which MinnesotaâÄôs economy currently hangs. The first is to bridge the educational gap between the state of Minnesota K-12 studentsâÄô performance and the rest of the nationâÄôs. âÄúEducation is the engine. Solving the gap is a key part of MinnesotaâÄôs future,âÄù says Jacobs. He indicates the UniversityâÄôs role in education as particularly relevant to MinnesotaâÄôs future. âÄúThe return on investment in the U is enormous, as it serves as an incubator of promising startups. And, conversely, the Legislature should hold the U accountable for continuing its renewed effort to translate its research and to contribute to the stateâÄôs vitality.âÄù Secondly, the Legislature must work harder toward achieving a higher level of economic development. Specific areas to focus on are âÄútargeted investments, tax credits, reconsideration of existing regulations and other steps to spur the stateâÄôs biomedical, green and software industries.âÄù Finally, Jacobs states tax reform as critical to transitioning the budgetary system and adjusting it to meet the requirements of the 21th century. In the interest of economic welfare, MinnesotaâÄôs political bigwigs should look to mirror the political policy of the âÄô70s. They must resolve differences of opinion in a timely and judicious manner in order to avoid the black hole of steady economic decline the state is otherwise poised to fall into. Maureen Landsverk welcomes comments at [email protected].