Political spin in the free press and the state budget forecast

“The administration of government has become more complex.”

US Chief Justice Charles Evans Hughes
June 1, 1931

With the release of the recent state budget forecast in Minnesota, the above quote on the administration of government being complex is even far more relevant 80 years later. The budget process can often be politicized and that political battle prior to the legislative session is typically played out in the press. The freedom of that press to play the unshackled arbitrator, agitator and reporter of these debates came to a head in a landmark federal Supreme Court decision of Near v. Minnesota from which the above quote came.  The city of Minneapolis was the birthplace of the set of circumstances that changed the interaction of politics and the press forever.

In 1927 Jay M. Near and Howard A. Guilford ran a local political rag in the Twin Cities called The Saturday Press.  This was at the height of prohibition and mobster control of Minneapolis.  Their little paper was keen on exposing corruption and they did not mince words.  Near and Guilford themselves were no paragons of virtue.  They were known to take a bribe to run attacks on rivals in their rag, and they were notoriously anti-Semitic, anti-Catholic and racist.  Guilford would later be shot in a mob-style hit in 1934.

One of their occasional targets was then Hennepin County attorney Floyd B. Olson.  They believed Olson was part of the corrupt structure; the reality is that Olson gained his fame by attacking organized crime.  He used his tough nose prosecutor image to be elected governor in 1930.  As county attorney back in 1927, Olson obtained an injunction stopping the publishing of The Saturday Press by Near and Guilford under Minnesota’s “Gag law”.  Passed in 1925, the “Gag law” gave authority to the government to shut down as a public nuisance any “malicious, scandalous and defamatory newspaper, magazine or other periodical.”

After the action was upheld twice in the Minnesota Supreme Court, the case caught the eye of the newly formed organization known as the American Civil Liberties Union (ACLU) and the wealthy owner of the Chicago Tribune, Robert Rutherford McCormick.  It was through their encouragement and money that the matter was appealed to the US Supreme Court, setting the stage for the landmark opinion throwing out Minnesota’s “Gag law” as unconstitutional and providing the level of freedom of expression in our press that we’ve come to take for granted.  Imagine what the new world of Internet communication would have looked like had not the Court struck down the Minnesota law.

There has been a great deal of political spin in our free press this week surrounding the release of the state budget forecast. For what should be a rather mundane economic report establishing a baseline for the next biennium budget, it has plenty of “spin” potential. This is, in part, a result of the several budget gimmicks that went into balancing this present biennial budget that will end on June 30, 2013. It also masks what should be considered relatively good news for the state’s fiscal outlook.

The biggest budget gimmick that is catching the attention of the press is what is known as the “school shift”. This gimmick helps balance the budget by shifting present school funding obligations due in this budget cycle to be paid after June 30, 2013. This allows the state to claim that the budget is “balanced” in the current biennium, but leaves a gigantic hole in future budgets. This gimmick has been used for over 2 decades to varying degrees but this cycle dramatically expanded this gimmick by shifting over $2.2 billion (6% of the total budget) into future years. Part of the political compromise when this budget was developed in the 2011 session was that any additional revenues above forecast that might come in would automatically go to repaying the big school shift.

The amazing good news from the budget forcast is that the projections for the present 2012-13 budget cycle are in the black by $1.33 billion! Minnesota’s economy continues to outpace the national trend. The additional dollars are a result of revenues exceeding projections by $1.076 billion (3.2%) and general fund spending being $262 million below estimates. As required under the 2011 compromise, the bulk of this “additional money” went to repay school shift gimmick.  Therefore, K-12 schools will receive the same amount of money they are expecting, but their payments will come closer to their scheduled timing. There is still $1.1 billion of the shift that would need to be accounted for in the future biennium.

Unfortunately, despite the present budget finishing in the black, it provides no direct help in resolving the structural deficit in the next budget cycle that the new legislature must start dealing with this coming January. Essentially that next budget cycle has seen very little change with the next legislature facing a $1.095 billion deficit. The deficit does not take into account inflation. If that were added into the equation, the budget deficit would be just short of $2 billion or about 5.5% of the budget. Throw in the school shift and it is over $3 million.

The bottom line is that the structural deficit is not growing and is much more manageable at 5.5% than what has been faced in the last 2 budget cycles. Also, the school shift improvement takes a significant amount of pressure off of the future legislature. Even with this slightly better fiscal picture and the possibility of new revenue, the new DFL leaders will be tamping down expectations in the press of additional new spending. That is because they know pent-up demands will far outstrip any additional revenues they might be able to generate after trying to fix the 5.5% hole in the budget. This will make it difficult for environment and conservation advocates as they try to recoup some of the cuts they’ve experienced over the last decade. It’s likely the legislature will concede to some new spending during the session, but the competition will be fierce. They do not have that much room to be promising any big expansions in government programs. So expect the spin in the free press to continue for some time on the complex budget process.

About John Tuma

John is a former state legislator and litigation attorney. He served in the Minnesota House of Representatives for eight years from the Northfield area, beginning in 1994. Elected as a Republican, John was known for his independent thinking and ability to work across party lines. He is well-known in Minnesota state government circles.
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