Happy Independence Day!

Lori Sturdevant’s column in this morning’s Star Tribune lists Art Rolnick’s 6 bullet points for state success.  Art Rolnick, retiring vice president  of the Minneapolis Federal Reserve Bank (check it out – quite a lot of nifty economic research available from the Fed) , has been one of my public policy heroes for quite a while because of his support for programs like early childhood education which have a huge impact on our success as a society, yet the benefits are long-term, wide-spread and indirect – not instant, sound-byteable, and seen in a single election cycle.

Of the 6 points, 3 are specifically related to education

• Education has been key to Minnesota’s success.
• The Great Recession is confirming the value of Minnesota’s education spending.
• Minnesota has been missing the biggest public investment opportunity — early education.

Rolnick emphasizes that investing in human capital and an educated work force is central to economic success.  Cities don’t have the same direct responsibility for education as the state, but we still do invest  in services which support education.  First, obviously, is the Library which provides materials and develops programs for early literacy and supporting education and information needs throughout life.  Booker the Book Bus is another piece of the early literacy programming, but budget cuts have already put Booker in the garage.  City spending on an interpreter also helped broaden the reach of the Library’s early literacy  and adult literacy programs.  Thinking of investment, rather than spending, the City should consider the long-term value of supporting these facilities and programs and continue our investment to the greatest degree possible under the circumstances.

But moving on to other topics, the other three bullet points are:

• “Are taxes too high?” is the wrong question.
• Capital is more mobile now — but the need for government services is also greater now.
• The next governor and Legislature need to rigorously prioritize spending.

I could not agree more that the City, like the state, must prioritize spending to support the services which are most vital to the community. “Most vital” is tricky, though.  The Council has considered a citizen survey to find out what is important to citizens, other cities hold “community conversations,”  Griff “Mr Twitter” Wigley has nudged us to consider social media.   Any or all would gather useful information.  But, I’m not convinced that any will provide the long-term, big picture information about how various services impact the health of the community.  For instance:

The point about mobile capital is that communities which invest in public safety and education create the kind of safe, well-educated communities which can attract capital and companies.  The City has not considered how investing in these services impacts economic development, instead focusing its attention on big ticket, speculative economic development projects such as the proposed business park.

And, finally, taxes.  Rolnick says instead of asking if taxes are too high, we should ask:

The question should be, are we providing high-quality public goods at the least cost?

I agree, mostly, but at the local level there are a couple of issues to note.  First, in another kind of trickle-down economics, the City is a lower rung on the taxing ladder than the federal and state government and the impact state policy choices have on local government are huge.  The obligations trickle down to the local level from higher levels of government, but the dollars do not.

Local government is hamstrung by the state when it comes to tax rates – the economic development benefits which come from investing in public safety, libraries, good streets and infrastructure also come at a significantly higher cost to commercial property owners at a time when they are already struggling.  And, obviously, cuts to local government aid mean we receive less money from the state to be able to provide needed services; we must tax more and do less.  The state’s choice to withdraw its investment from local government undermines the priorities Rolnick identifies.

So I’m hoping state legislators DO think about their priorities and help fund public services – whether by direct spending or redistributing dollars to local government via LGA.  In the meantime, City government will have to figure out what level of investment we can sustain on our own.