Conflicting priorities denote state decline

'Crisis.' The word has come to represent a situation of dubious severity, from losing one’s keys to the ballooning national deficit. Lately, however, it was used to describe Minnesota’s 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 Minnesota’s 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. “It’s good to have the economy growing again; we’ll take it. But we don’t think that rate of growth is sustainable, because it is distorted by [the entire] government stimulus.”
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 Minnesota’s individual fiscal problems. “If the economy starts to grow again robustly for some time — a prospect that most economists doubt — this would mitigate the budget deficits.”
A central issue in the debate on economic policy regulation is the cohesiveness between liberal and conservative members of the state’s 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 Minnesota’s 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 “Minnesota Miracle” in the mid-1970s as a time of ideal political strategy. “Both parties agreed on core investments in education and a few other areas that reversed the state’s low economic and social status and led to decades of prosperity. This kind of shared vision is needed now.”
Other major impediments to Minnesota’s 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 Minnesota’s 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 Minnesota’s economy currently hangs.
The first is to bridge the educational gap between the state of Minnesota K-12 students’ performance and the rest of the nation’s. “Education is the engine. Solving the gap is a key part of Minnesota’s future,” says Jacobs. He indicates the University’s role in education as particularly relevant to Minnesota’s future. “The 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 state’s vitality.”
Secondly, the Legislature must work harder toward achieving a higher level of economic development. Specific areas to focus on are “targeted investments, tax credits, reconsideration of existing regulations and other steps to spur the state’s biomedical, green and software industries.” 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, Minnesota’s political bigwigs should look to mirror the political policy of the ’70s. 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 mlandsverk@mndaily.com.