While property taxes have increased a bit faster during the Pawlenty years, essential services are intact.

By PAT ANDERSON

Minneapolis Star Tribune || March 4, 2010

In her Star Tribune commentary “State’s mess pushes up property taxes” (Feb. 17), State Auditor Rebecca Otto pulls selected trends from her office’s City Finances Report to deliver a predictably partisan attack on Gov. Tim Pawlenty.

The full data set in the report does not support her ideological conclusion that we need to increase taxes and state aid to local governments to reduce property taxes. The data do confirm that during the Pawlenty era, local governments slowed their rates of growth while still funding essential services like public safety — the right and responsible thing to do.

Property taxes did increase at a slightly higher percentage during the Pawlenty years than they did from 1999 to 2003 (9.3 percent vs. 6.5 percent, inflation-adjusted), and state aid also dropped during that time. But to jump to the conclusion that Minnesota must raise taxes to increase local government aid is a mistake.

Inflation-adjusted current expenditures for cities went up 13.6 percent over the decade, but the difference between the pre-Pawlenty and the Pawlenty eras is stark. Current expenditures rose 10.2 percent from 1999 to 2003 but only 4.3 percent from 2004 to 2008. “Public safety” spending increased 9 percent from 1999 to 2003 but, despite a significant slowdown in overall spending, still increased 6.6 percent during the Pawlenty era — a healthy 17.6 percent over the decade.

In other words, less state aid did not prompt local governments to skimp on essential public services; it motivated local governments to be more efficient. Today, overall government spending is down, and our cities are making better choices on how to use tax dollars.

Both before and during the Pawlenty years, property taxes were rising to cover decreased state aid and to fund additional spending. To maintain the pre-Pawlenty rate of growth in local spending (assuming no cuts in state aid), property taxes would still have needed to rise and overall local government spending would have been significantly higher — and all government spending ultimately comes out of taxpayer pockets.

The City Finances Report does not support the vision of a local government apocalypse, but it does show a system stressed by structural problems that require reform of the relationship between state and local governments.

I have talked about a reform model similar to one proposed by the Association of Minnesota Counties. The plan would eliminate state program aid to counties but also eliminate many state mandates, allowing counties more freedom to decide what services they would provide and how. It’s a good start in the much-needed discussion about doing things differently and more efficiently.

The takeaway lesson of the Pawlenty era is that when local government must set priorities, it acts more responsibly. Further boxing the state into the “tax the rich/no new taxes” debate is not a vision for a better Minnesota that can compete in the 21st century. The state auditor ought to be part of the solution, not part of the problem.

Pat Anderson, a Republican, is a former Minnesota state auditor and is a candidate for that office this year.