Archive for the ‘Jobs Jobs Jobs’ Category

Overcharged!

Monday, March 16th, 2015

By Ford Peterson, March 16, 2015

What a country! Two billion people live on less than $1/day. Our state government extracted an extra $1/day, per person, and there is no revolution. I guess we are blessed born American and are accustomed to such waste! Headlines read: “You’ve Been Overcharged!” The average Minnesotan paid roughly an extra $1/day. (Editor: $2B divided by 5.5 million people) The debate is over what to do with that money—spend it or return it to the taxpayers.

I can honestly say my life would not be much different with or without that $1/day. Refunding this surplus is of little benefit to my family if they later ask for it back. In truth, spinning taxpayer benevolence at $1/day is a slap in the face. State and local government costs these same taxpayers, on average $4,912 a year. (Editor: 2012 Tax collections of $27.0 Billion and 5.5 million Minnesotans) The overcharge is effectively a 7.4% increase. (Editor: $2B divided by $27B)

Mental note to self… Add this overcharge to the list of other excessive taxes. Social Security and Medicare, for example, has been overcharging workers. The social security “trust fund,” which was rightly set up to be like a Ponzi scheme and not a savings account, was originally intended to extract from workers ONLY what is paid out to handicapped and retired Americans. The rhetorical spin is that the fund goes “bankrupt” unless we pay extra today. Current rates mean that costs and revenues are not in equilibrium until 2033. Add this latest “overcharge” to the gas taxes redirected to fund urban transit. Why must rural residents pay extra so others can have a subsidy for commuting to work? The public foolishly considers Corporate taxes paid as part of grocery and utility bills to be paid by somebody other than the customers. Then there are the Property taxes added to every business and passed on to the consumers they serve. The political rhetoric, common to both major political parties, is offensive to common sense.

Deficits and surpluses come and go. Most Americans yawn with indifference. Tongue firmly in cheek, and an apology to Job… What the government giveth, the government will taketh away.

A windfall refund has political appeal in every household—mine included. With a refund, most households would attempt to use the money in ways that make life more efficient. Pay off debt, or fix what needs fixing. What a concept! Spend the money on true needs and the taxpayers reap a dividend year-after-year in the form of lower taxes!

The Legislature should consider practical efforts to consolidate infrastructure. Pay it forward! Form mutually beneficial alliances between neighboring jurisdictions. Consolidate remote counties (or services they provide) and create a true investment in our future. Why not spend some of it engineering efficiency into our aging infrastructure! Consider making social services, roads, court system, law enforcement, and jails, more efficient! New urban sports stadiums, downtown retail space, and railroads for urban commuters, are of little value to the vast majority.

As morally bankrupt and administratively inefficient as it seems, the Minnesota Legislature indirectly dictates the hourly wages of teachers, medical care workers, municipal workers, and even construction workers. They attempt to provide a rural and urban difference through “equalization,” which is not equal. The practice is social engineering at its worst! Political solutions for engineering problems never work. Union protections are of little value compared to the power of the purse. The rural versus urban equalization process is substantially broken. Administrative rules routinely deny rural workers a wage similar to their urban counterparts, who enjoy higher wages due to back-door equalization subsidies. The subsidy of urban sprawl is abusive and destructive to the health and well-being of those living in rural Minnesota. An urban subsidy by any other name is still an urban subsidy. Our state government holds rural wages artificially low, and urban wages artificially high, by denying parity in equalization. Why should an urban employee receive more? Rural reimbursements and preferential rates on urban reimbursements are unfair and devastating rural MN. This is wrong, and morally bankrupt.

Whatever happens to this latest surplus, demand that our Legislators pay it forward. We need to see real benefits for years to come, or give it back! Deny the urban subsidies and repair the crippling disparity in rural versus urban reimbursements. At a minimum, end the Legislature’s systemic assault on rural wages.

Minnesota Needs A Miracle

Thursday, January 8th, 2015

A call for Parity in Equalization!

By Ford Peterson, January 8, 2015

The 1967-1971 Republican legislatures moved to enact the first “Minnesota Miracle.” The 1970 Democratic Governor candidate, the then Senator Wendell Anderson, ran on a campaign pledge to make sweeping changes in the way we finance Minnesota’s local government and schools. The voters bought into his pledge by electing him. In 1971, during the longest special legislative session in Minnesota history, debate became law. Passage happened during a grueling legislative special session that lasted from May 25, 1971 until it adjourned on October 30, 1971. 159 calendar days of debate and no government shutdown! What a marathon! Minnesota witnessed a Miracle.

The disparity in the quality of public services was striking when comparing area-to-area. The disparity in services paralleled the disparity in resources across Minnesota. The economic engines that drive the tax capacity of local jurisdictions were, and continue to be, critical to controlling the local levy on real estate that fuels the machinery to provide services to our communities. The competition to attract commercial-industrial development was fierce. The growing need for “Equalization” was strikingly apparent.

Prior to this miracle, local government and our public schools had to levy local property taxes to fund the ever-growing demand for services. Passage of that bill changed the state’s then minimal role in funding local services into what we witness today. Formulas drive the daily “state aid” for students; per-bed-per-day allowances for the fragile elderly; housing allowances and renter’s credit for the poor; rationed health care for the destitute. The demand for money to fund roads and bridge repairs through local levy is putting significant pressure on local governments. To be blunt, many areas are becoming dilapidated with neglect and state-dictated “charitable” demands hijack local funding priorities.

The funding structure has remained largely intact since those great debates 44 years ago. A quick view of your property tax statement will show the result. Many municipal, city, county, school board, “local” jurisdictions are party to the public assessment against real property. The state leaves homeowners alone and goes after the commercial-industrial base to redistribute to the various jurisdictions. Over the years, tweaks to rules and gaming the system have created hundreds of different property classes, complex funding formulas for schools; healthcare; roads; etc. were frozen and reflect the differences in costs between rural and urban jurisdictions 44 years ago! Tweaks in the formulas along the way skew to favor the urban centers—surrendered by rural legislators as a bargaining chip.

What is striking is the way in which urban legislators have been able to achieve geographically favorable reforms to the rules and formulas to “bring home the bacon” to their district—their urban district. There seems to be money for parks, bike paths, rail lines, athletic stadiums, recreational facilities, higher education, and all at the apparent expense of rural infrastructure. The irresponsible budgets of the past have gamed the system to the brink of a rural collapse.

It costs no less to heat a square foot of school in rural Minnesota as it does in urban Minnesota, yet urban schools can receive double the daily state aid per student. There are also reasons why educators entering the profession must often start in rural Minnesota. School boards have no funding to pay for experience—teachers are released before tenure. Elaborate curriculum in urban schools is common—many languages, advanced instruction, science, art, music, athletics, etc. In rural schools, remote students are lucky to see basic language, math, and science. The disparity is striking. Disparity in funding results in the disparity in services.

Rural care for the elderly suffers a tragic formula misfortune. A new roof on a rural nursing home costs no less than a roof in an urban location. The electric bill is often at a higher rate in a rural area. Wages are minimal in a rural area—intentionally driven low by an urban controlled legislature with their thumb on formula to deny rural money.

If you want more of something, subsidize it. If you want less of something, tax it. Rural MN is vacating to the metro each day that passes. Why? Human existence in Minnesota’s modern funding mechanism demands the flight to subsidized urban sprawl. Are these people drawn to the metro or fleeing the wastelands of the prairie? Do we need wider roads and bigger trains to carry commuters to their urban jobs or a do we need to maintain rural MN so the jobs can move to the country?

The legislature is frequently funding research projects. How about this research project:

A comparison of income by zip code to sales tax collections by zip code and compare those disparities to the changes in property tax capacity over the years. The changes in commercial tax capacity are dramatic. Minnesota leadership needs to do regional analysis. The past 40 years has brought significant change to rural Minnesota. The ‘big box’ retail stores locating in regional centers are systematically starving small communities out of their tax capacity. To add insult to injury, residents of small communities are traveling to regional centers to deposit a handsome ransom in the form of a local option sales tax. Tax capacity has moved from deep-rural to mid-rural communities. Not only does the loss of tax capacity decrease the denominator causing an increase the local levy mil rate, there is an assessment paid by deep-rural residents to regional communities. Why? Without a corresponding change in the funding formulas, these changing trends are robbing deep-rural communities of their only access to money for repairing our aging infrastructure—local levy.

As of the date of this editorial, Minnesota Department of Revenue collects 56 different local option sales taxes. Local options as low as 0.25% and up to 7% additional, most often 0.5%, are becoming common. With a couple exceptions, like Lanesboro and Clearwater, all local option jurisdictions are either major metro or regional retail dynamos. The infrastructure within and the services provided by those regional centers do not support the local communities of many of their customers. This shift is harmful to the health and wellbeing of the deep-rural communities patronizing those regional centers.

Originally called “Equalization” in the formulas, today this is a call for “Parity in Equalization.”

Al Franken promotes lower wages for employees

Saturday, August 16th, 2014

By Ford Peterson

Senator Al Franken boasts “3.5 Million Jobs.”

The truth: Al Franken is actually damaging wages! This is basic economics!

Think about it. If you are a welder, machine operator, truck driver, corrections officer, (pick any skilled occupation), your wages are determined in an established marketplace. If wages are better than average, it is because special skills are in high demand. An employer has to pay higher wages to keep and attract workers.

Read that again…

An employer must pay higher wages to keep and attract workers when those skills are in high demand. That is, until Al Franken skips econ 1001, lines his pockets with campaign contributions, and moves to destroy middle class wages! Employers (read—wealthy employers) likely provide Franken with campaign contributions while demanding cheap labor. Al Franken is quick to grab the money and promote low pay for workers! It is clear that Al Franken’s rhetoric deserves a big “thank you” from wealthy business tycoons as Al Franken works to destroy middle class wages.

Think about it… Consider the worker who makes $30/hour today. What happens when Al Franken floods that occupation with trained $12/hour 25 year olds? Are experienced workers more likely, or less likely, to enjoy overtime wages? Layoffs of higher paid experienced workers and a reduction in overtime pay becomes more likely because of Senator Al Franken! As the employer picks up newly trained workers (thanks Al) at lower wages, there is pressure to make experienced workers disappear! Some workers may even experience seeing his or her own wages slashed! It will be far cheaper for the employer to sign up readily available newly trained low wage workers (thanks Al) than pay the current work force overtime. There is no longer a natural upward pressure on wages when Franken starts flooding the market with cheap labor.

Meanwhile, these very same workers vote for this fool as they fall prey to “3.5 Million Jobs” rhetoric. Apparently, these same voters skipped the same Econ 1001 class.

Anyone voting for Al Franken is voting to destroy wages in America!