MN Economy Lags the Nation's, Taxes Among Highest

blur-chart-data-159888.jpgDepending on which economist you believe, the state of Minnesota’s economy is either robust and moving along nicely, or struggling under the burden of bone-headed government. As in almost every debate in macroeconomics, reality is hiding under a staggering blizzard of mind-numbing statistics, and is safely resting comfortably between the extremes.

Having tipped our hats to that bit of complex reality however, it’s still impossible to deny that government in Minnesota is just not very good at getting out of our way. In their breathless passion to control everything, they just can’t let the free enterprise market economy create the wealth and welfare that ordinary Minnesotans have proven over and over to be abundantly capable of producing.

As a case in point, a recent study (for charts, View Full Report) by the Center for the American Experiment points out the fact that Minnesota’s LOWEST individual tax rate is higher than the HIGHEST tax rate in 23 other states. In other words, Minnesota’s most productive workers are literally being paid to leave Minnesota and take their skills and experience somewhere else where they can keep more of what they earn. 

Also, Minnesota has the 3rd highest corporate tax rate in the entire 50 states, and as a result we have one of the lowest rates of venture capital investment in the 50 states. Between 2002 and 2017, the Minnesota stock of venture capital increased by 39%, but over the same period the U.S stock of venture capital ballooned six times more, by 249%!

Similarly, in metric after metric, the CAE study documents the growing lags behind national averages. In output per worker, in output per hour worked, in GDP per worker and even personal income per capita, Minnesota is underperforming its potential because policy discourages capital investment and takes away the workers’ wherewithal to produce.

And even more recently, an article in the Minneapolis Star & Tribune confirmed the continuing trend toward underperformance in Minnesota’s economic growth reporting that the year ending on May 31 Minnesota added jobs at an annual rate of 0.1% while the rest of the country added jobs at an annual rate fifteen times that ( 1.5%)!

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What Were They Thinking? St. Louis Park City Council Votes to Drop Pledge of Allegiance

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This week, the St. Louis Park City Council voted to stop saying the Pledge of Allegiance at their meetings. It is a vote heard round the nation. Even The Washington Post covered it, noting it did not go over well.

Why did the city council of St. Louis Park vote unanimously (5-0) to drop the Pledge of Allegiance at meetings with less than three minutes of discussion? "In order to create a more welcoming environment to a diverse community," one city councilmember was quoted as saying,

City Councilmember Tim Brausen told The Washington Post that "Unfortunately, some of us feel like patriotism has been so politicized that it's almost used as a weapon against people."

So who has politicized patriotism? In 2018, the city council approved a series of strategic priorities that includes "being a leader in racial equity and inclusion in order to create a more just and inclusive community for all." What could promote a more just and inclusive community than a pledge to defend “liberty and justice for all”?

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Wardlow Campaign Fined for “Overspending” While Ellison Spent More

budget_vote_.jpgCampaign finance rules and public-subsidies that limit candidate spending may be intended to “level the playing field” but they clearly don’t, as illustrated by the MN Attorney General 2018 campaign. I believe it’s time to end the public subsidies for political campaigns.

MN Attorney General candidate Doug Wardlow’s 2018 (unsuccessful) campaign got headlines in mid-June when they were fined for “overspending”. The campaign committee’s legal counsel explained how that happened:

"The committee's legal counsel Richard Morgan said they were "overwhelmed by a surge in fundraising late in the campaign."

"Because the committee hired an outside firm to conduct much of its fundraising and compensation paid to that firm was based on the amount of receipts, the surge in fundraising caused both the committee’s receipts and its costs to dramatically increase," Morgan explained to the board.

The report notes the committee spent over $200,000 on radio and television ads in October 2018 alone, with Morgan saying the committee "did not anticipate the rapid increase in fundraising expenses and did not realize it would exceed the spending limit until after it had placed the ad buys for the final days of the campaign."

Reading other published articles about the campaign, it’s evident that Wardlow’s “overspending” was against a lower limit (base spending limit of $864,072) than Ellison’s actual spending of over 1.1 million. Reported by MinnPost: "Where spending by candidates is concerned, eventual winner Ellison raised $1.148 million and spent 1.105 million. His subsidy was $96,067. GOP-nominee Wardlow nearly matched Ellison’s totals, raising $949,203, spending $937,614 and receiving $72,252 in public subsidy.”

The most recent campaign finance handbook for candidates explains how/when spending limits may be set differently for two candidates for the same office, by as much as 30%. (Detailed excerpt is a footnote below).

In addition, outside groups / PAC’s out-spent on behalf of Ellison by 12-times, per a Star Tribune article.
“Republican candidate for attorney general Doug Wardlow also faced a significant cash disadvantage. Democratic donors to outside groups devoted far more on independent expenditures to benefit newly elected Attorney General Keith Ellison — about $1.9 million, 12 times as much money as was spent on behalf of Wardlow.”

And as also reported by MinnPost (whose deceptive headline masks the fact that DFL spending was far more than Republican.) 
“Almost all of the outside money spent to help Ellison came from the DFL State Central Committee, listed as having spent nearly $1.9 million, largely on TV, radio and digital ads against Wardlow.”

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Bloomington Responds to MOA Waterpark Questions

Bloomington City Manager Jamie Verbrugge and Port Authority Administrator Schane Rudlang hosted a FACEBOOK LIVE Q&A session on Wednesday, June 12, to answer questions about the city’s role in developing the proposed Waterpark at the Mall of America (MOA).

MOA_Water_Park_(2).JPGThe water park is proposed to be one of the largest indoor water parks in North America. It is projected to cost about $250 million. Its advocates say that it would add to the vibrancy and resiliency of the mall. While open to the public and not contractually connected to any hotel, it would create new demand for hotel rooms in Bloomington’s South Loop and draw greater interest in the amenities offered at MOA.

MOA currently surrounds and encloses one of the largest indoor amusement parks in North America. Why does it need an equally large water park? Triple 5, the commercial real estate management firm that owns MOA, is dealing with the changing reality of large retail malls. New projects that it is developing have about a 50% non-retail component. MOA is about 70% retail today. T5 has added hotels and office space, but believes that MOA needs to further diversify its entertainment and restaurant features.

If the water park is critical to the future viability of the mall, why doesn’t T5 finance the project itself? It owns the land, which is currently serving as an open parking lot. However, it argues that even with the increased customer traffic, it will not generate enough cashflow to cover commercial interest payments of 7-10% and achieve an attractive return on investment.

Enter the City of Bloomington, its Port Authority development arm, and the concept of a nonprofit specifically set up to borrow the funding needed to construct the water park.

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Edina Survey Results Show Redevelopment Concerns Growing

Edina_Center.jpgThe Edina Sun Current reported last week on a presentation from the National Research Center to the Edina City on the 2019 Quality of Life Survey taken by city residents. The results indicate that Edina is continues to be a highly desirable place to live. However, the pace and management of development in the city may be reaching a tipping point.

Only 51% of the respondents felt that the City was doing well in “managing tensions of the community related to residential redevelopment”. This is down from 68% of respondents as recently as 2017.

City Councilmember Mike Fischer was quoted as saying, “You can see a downward trend in how people are feeling about redevelopment-related issues, which is understandable. It’s a lot of change. It’s the dynamic we deal with a lot in this room. We still haven’t quite figured out the silver bullet on residential redevelopment.”

The sharp drop in positive responses points to a growing concern among Edina’s residents. Do these results simply quantify the unease of long-time residents with the number of older houses being replaced with larger, more expensive homes? Or are they a reflection of the feeling that the uniqueness of the Edina community is being lost with the accelerating pace of higher density development, increased traffic, and the dismissal of comprehensive plans that are too quickly ruled obsolete?

Are half the residents really saying that the Edina mayor and city council need to stop their efforts at managing “tensions” and look again at what makes Edina the special place it is? To protect and sustain it before it is lost forever?

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Avoiding Future Conflicts of Interest at Edina School Board

Contract_coffee-cup-deal-1076815.jpgDuring the 2017 School Board Election, the teacher’s union endorsed 5 candidates. They spent thousands of dollars mailing postcards to households in Edina in their support. The reason the teacher’s union does that is to elect school board members that are sensitive to teacher’s interests, including higher salaries.

However, the fiscal responsibilities of the school board often conflict with the desires of the teacher’s union. Every year, we have a fiscal cost crunch. Revenues increase 2% and expenses increase 3%. Then the school board has to meet budget by reducing programs, delaying maintenance investments or not investing more in programs for our kids. Teacher’s payroll is a large expense. If the school board votes for teacher salary increases greater than expected revenue increases, they are being fiscally irresponsible.

A conflict of interest arises when school board members, who the teacher’s union helped elect, vote for salary increases greater than revenue increases.

To avoid these conflicts of interest, I recommend the school board create a policy, beginning with the 2019 election, that school board candidates do not seek endorsement by the teacher’s union. Further, if the teacher’s union does endorse a successful school board candidate, that individual must recuse themselves from voting on all salary contracts with the teacher’s union.


Preparing for MN 2020 Primary: How Voter Registration Works in Florida

With Minnesota moving to a presidential primary in 2020, voters in that primary will likely have to identify their party affiliation to vote for their party’s candidates. How do other states with a presidential primary work it? We asked Max Robinson, a former resident of Senate District 49, how it works in his new state. And along the way learned that MN is one of only 3 states which does not have provisional ballots.

FL_Registration_Card.jpgIn Florida, you must be registered under your party to vote in that party's primary and the party affiliations of voters is public. You don't have to register under a party but then you can't vote in the primaries. I think that's a good way to do it and it stops some primary skullduggery.

We have "Ballot on Demand" here where they print a ballot showing only the offices you are eligible to vote for. They print your ballot on the spot when you enter the polling place or you can order an absentee ballot. Only Republicans are listed on my ballot in primary elections. Then, in the general election, candidates from all the parties are shown. You cannot vote across party lines in primaries but you can in general elections.

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Conference Committee to Consider Controversial Measure in Omnibus Education Bill

Chalk_Board_Sex_Education.jpgThe Ominbus Education Bill (House bill HF2400) passed on to the MN Senate mandates a model of sexual education for use in Minnesota schools. Opportunities for parental advice and consent is minimized short of removing a child from the class. The Senate’s companion bill (SF0007) does not contain the language for Comprehensive Sex Education, and the differences will be resolved in a Conference Committee.

In the House bill:
• The MN Commissioner of Education must identify a model comprehensive sexual health education program for K through 12 and provide it to all schools, including written materials, curriculum resources, and training for instructors.
• It must teach "consent," which the legislation describes as "affirmative, conscious, and voluntary agreement to engage in interpersonal, physical, or sexual activity." This assumes and normalizes value-free sexual activity among children.
• It must teach "bodily autonomy." Bodily autonomy teaches that one has the right to kill a preborn child in one's body, and therefore abortion is moral.
• It must teach "diverse sexual orientations and gender identities." The legislation allows instruction by "community organizations." Schools could select Planned Parenthood and/or gender activist groups to teach, regardless of their qualifications or real agenda.
• A school district that does not adopt the state model program must include all of the items listed and then submit its sexual health education program to the MN Department of Education for approval. This kills any semblance of local control. Parents cannot appeal to their local school board to challenge what is deeply offensive to them.
• It must teach "abstinence and other methods for preventing unintended pregnancy." What is uncertain is how much emphasis abstinence will get, given the other mandated subjects.
• It must refer students to "local resources for services related to sexual and reproductive health." That could open the door to the referral of children to Planned Parenthood for abortion and birth control without parental knowledge or consent.

The Senate’s companion bill (SF0007) does not contain the language for Comprehensive Sex Education.

The Conference Committee members from the House are James T. Davnie (DFL, SE Minneapolis), Cheryl Youakim (DFL, Hopkins & St. Louis Park), Dave Pinto (DFL, Highland Park), Julie Sandstede,(DFL, Hibbing) and Dean Urdahl (R, Grove City). The Senate members are Carla Nelson (R, Rochester/SD26) John Jasinski (R,Faribault/SD24), Bill Weber (R, Luverne/SD22), Justin Eichorn (R, Grand Rapids/SD05), and Charles Wiger (DFL, Maplewood/SD43).

In expressing your opinion to these legislators, you don’t need to compose a different email for each one. Sending out an email to all of the members as a kind of email blitz works just as well. However, each member of the committee should receive a copy of the email; don’t just send an email to the Committee Chair or Republican Lead. We will update THIS LINK with the list of legislators to contact to urge the removal of this language from the final bill.


Flohrs Predicts Deadlock as 2019 Legislative Session Wraps Up

Jason_Flohrs_AFP_thumbnail.jpgJason Flohrs, State Director for the Minnesota Chapter of Americans for Prosperity, was the featured speaker at Senate District 49 Republicans’ April dinner program. He painted a sobering picture of the obstacles that Gov. Walz and the Minnesota legislature must overcome to reach a budget agreement before the start of the state’s next fiscal year in July. The differences between the DFL-controlled House and the Senate Republican majority will require significant compromises if a state government shutdown is to be avoided.

Flohrs stated that it is the role of the Minnesota legislature to prioritize the needs of Minnesotans within a reasonable budget. This task has been complicated by the view of the DFL governor and DFL House of what constitutes a reasonable budget.

In February, one month into the 2019 legislative session, the Minnesota Office of Management and Budget forecast a $1B surplus for FY 20-21. Gov. Walz’ proposed budget consumed that surplus and demanded more. At $49.5B, it represents a 10% increase over the FY 18-19 budget. The built-in growth in planned spending goes well beyond FY 20-21. Much of the increased spending is not mentioned because it will occur beyond the planning window.

When your appetite for spending exceeds the $1B surplus, what do you do? You simply push for tax increases, without regard to their impacts. A 70% increase in the gas tax, for example. Flohrs pointed out that Walz never campaigned full-out for a 20-cent-a-gallon gas tax increase. He mentioned it, backed off, argued that it should be looked at, but never made it a key point of his candidacy. Now, Walz claims he has a mandate to raise the gas tax, to the point that Minnesotans will be paying the fourth highest gas tax in the nation.

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The Last Election?

Election_Integrity.jpgLast Monday, while many of us technological Neanderthals who still can’t bring ourselves to E-File were standing in line at the Post Office, the Minnesota Court of Appeals in Saint Paul handed down the latest decision in the seemingly endless saga of Cilek v. Office of Minnesota Secretary of State. To the amazement of just about nobody, the three judge panel unanimously “Affirmed” the decision of the Ramsey County District Court in July 2018, ordering the Secretary of State to comply with the request from the Minnesota Voters Alliance, for the public records from the election of 2016.

In a sharp rebuke to the Secretary of State, the Court said that the law he was citing to refuse the request, didn’t classify the information as non-public and didn’t allow him the discretion to keep it from the public!

Immediately, the Secretary of State’s office blurted out a press release full of vacuous and sanctimonious rationalizations about “protecting the privacy rights of voters” and opposing those who “seek to suppress the votes of thousands of eligible voters”, although no one has ever bothered to explain just exactly how anyone might be “suppressed” by the Secretary of State’s office being compelled to obey the law.

Ok, so let’s get this straight. Secretary of State Steve Simon isn’t ignorant about the law, and he most certainly isn’t without competent legal advice. And yet he insists on pushing this totally groundless effort, to deny the MVA the data that everybody knows is public, all the way to the Minnesota Supreme Court….Really????

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