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State’s wealth is healthy, but will we be wise?

Date Published: 05/01/2009

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State's wealth is healthy, but will we be wise?

Star Tribune | August 19, 2005
By David Peterson

Two top state government analysts are giving a series of quiet talks in which they describe Minnesota as a rich state that is getting richer but could face a more troubled future unless it invests in things like schools.

On Thursday, State Demographer Tom Gillaspy and State Economist Tom Stinson delivered that message to a standing-room-only audience of state employees at a brown-bag seminar and drew an irritated response from a spokesman for Gov. Tim Pawlenty.

"Are they running for the Legislature, or what?" asked Brian McClung.

But other experts on the same issues are applauding.

"The 'two Toms,' short and tall, are absolutely fantastic," said economist Dennis Ahlburg, who just took over as dean of the business school at the University of Colorado after a long stint at the University of Minnesota.

Stinson (he's the taller one) and Gillaspy stress that as tightly stretched as many families may feel, Minnesota is one of the nation's most affluent states and will get richer in the next few years.

"These really are the 'good times,' " Stinson told his audience on Thursday. "This is the time we have the most resources we're going to have."

Stinson said the 25 percent growth that is expected in coming years in per capita personal income means Minnesota can "buy 25 percent more stuff" without sacrificing anything. "I don't have room for 25 percent more stuff in my garage," he noted pointedly.

In other words, he said, Minnesotans have a choice: keep and spend, or invest in ways that ensure a better future for all.

"What we do today will shape our future for a quarter century," he said.

But the climate likely will turn chilly in just a few years.

The retirement of baby boomers will shrink the pool of available workers. Any growth in the labor force will have to come from attracting other Americans, and immigrants, to what Gillaspy calls a "cold place at the end of the road."

That means investing in ways that make the state attractive, they say, and investing in training that can bring young immigrants up to the educational level of native-born Americans.

Gillaspy said after the session that he and Stinson are "not promoting a Republican or a Democratic agenda. If taxes go up too much, businesses could leave. If we don't have skilled workers, businesses could leave. It's not a 'good guy, bad guy' thing. We're trying to connect a lot of dots and say, 'Here are the issues facing this state.' We are making choices, whether we realize it or not."

But it remains highly charged territory, and Pawlenty's spokesman and others reacted accordingly.

"Are our taxes too low?" McClung said. "The Census Bureau says they're the fourth-highest in the nation per capita."

DFL spokesman Bill Amberg replied: "The state's own demographer, and the state's own economist. Quite the one-two punch."

University of Minnesota geographer John Adams, who attended Thursday's session, said the challenge facing the state's leaders is an aging population that is already growing focused more on saving and holding down their taxes. That makes Gillaspy and Stinson's pitch for more spending a tougher sell.

"The present administration, and the Legislature, are pandering to that, because the consequences of not investing are not obvious," Adams said. "As they become more obvious, people will be more concerned."

Lori Schaefer, associate director of Growth & Justice, a progressive economic think tank, said the group is assembling a committee of community leaders to discuss solutions to the investment dilemma. The group, which advocates for higher taxes on high earners, was founded by Joel Kramer, a former publisher of the Star Tribune.

Schaefer said ground-breaking research with suburban residents commissioned by former Vice President Walter Mondale showed that the voters who determine the outcome of Minnesota elections do believe in investing but are not convinced that schools and others make wise use of the money they get.

"A lot of people believe progressives stand for 'tax and spend' -- not investing wisely," she said, "We need to do a better job of articulating what a wise investment looks like. What are people willing to support?"

The group's 17-month project will go into greater depth than the Mondale effort, she said, and "we think it will be pretty powerful."


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