(00:00:00) Well, of course as you've heard by now Governor Carney Carlson has officially presented his budget plan to the Minnesota Legislature and quite frankly. It is impossible to summarize the budget in just a few sentences, but the Cornerstone of the budget is a suggested one year salary freeze for public employees. The savings would offset for the most part the state's projected budget deficit the governor is ruling out any increase in the income or sales tax, but because revenues will continue to increase spending will be able to go up as well under the governor's plan 15% increase is proposed for education and other seven percent increase for Aid to local governments. Now as you might expect reaction to the budget has been generally mixed many dfl errors are upset with a budget many independent Republican legislators are praising it joining us today to share their thoughts in the budget and take your questions as well are two key players in the budget debate State Senate Majority Leader Roger mole and Kurt Johnson. Who's the governor's Gary Chief of Staff glad you could both come in gentlemen. Thank you. Senator Mall you are quoted as saying this is a slick Quick Fix didn't sound too happy about the budget yet. It does. It does seem to balance off the projected deficit doesn't raise major taxes provides for substantial budget increases in popular areas like education what's wrong with it? (00:01:23) You're right. I did call it a slick Quick Fix because that's exactly what I think that it is. It really does not address many of the structural budget problems that have been cited by the governor. And as well as others as evidenced by that if you take a look at fiscal year 96 97 the budget after this budget, they're projecting a gap of just shy of 600 million dollars. So that's the reason I refer to it as a quick fix and I would I would debate the point that tuition increase isn't a tax increase that fee increases aren't taxes and that property tax increases aren't taxes and in case of this budget all of those are there going to be substantially adjusted upward. (00:02:13) Her Johnson, the criticism that this to Simply puts off Governor's budget puts off the Day of Reckoning. You were head of the Citizens League for a long time Public's policy study group key policy advisor to the governor. We've heard so much talk about the need to come to address head on the the structural problems. It does seem like a Band-Aid simply asking people to freeze their wages for a year and then move ahead. I think it's far from that Gary. I think if you examine the record over the last couple of years, you see that this Governor has been very strategic in all these major areas. There is no question that in a small set of things such as the inter governmental spending the relationship between the state and city budgets. For example that this takes a longer more complicated approach than anybody's taken before it does not ignore it. This Governor has a very good memory and he remembers in 1991. He sort of came out with a whole collection of these structural reforms that good. Groups would approve of and he found himself all alone. I mean there wasn't any support therefore it politically everybody used him as a Target to attack and it's really ironic that the Press has become so recently Pious now pressing for answers to where are these reforms because they regarded the things just Grand Theater at the time there weren't the kinds of coverage in the kinds of support that gave him any reason to continue with that. He's not given up on that but he knows that there is both a time and the right method to get reformed to happen. And if you examine this budget carefully, you'll see the seeds of what we can eventually all agree on I think as the structure reform that's overdue Senator mode, you expect the dfl will come up with its own budget. Now one that will dramatically change the way the state allocates its money and and addresses some of these criticisms that the governor's budget isn't far enough for our thinking and (00:04:09) yes, we will offer some Alternatives. Let me point something out. And then die I'd love to be able to do that today. Obviously can't for some strange reason the governor's office decided not to brief the dfl until one hour before the speech and we didn't even receive the budget documents until after the speech last night, even the press out of before we did but for whatever reason that that was their strategy, so I must confess to not even knowing a lot about the governor's budget. That's the purpose of the hearings. But certainly we're going to be looking very closely at what we think will be significant tuition increases driven by this budget. You can't hardly say that property taxes aren't going to go up when you're going to Nick K-12 education to the tune of about I think the at least ninety two million dollars of additional Levy will be required under this plan, which is more than the levy for this school year across the state. There are LGA impacts in here. So yeah. We'll be offering some some Alternatives constructive alternatives to what (00:05:17) I said Gary. I'm not sure where the Rogers getting those figures. Maybe he hasn't read it carefully enough yet, but the property tax relief area and Aid to local government is actually going up by about 200 million dollars. No sector is going backwards k through 12 is the big winner. We are funding all the student growth in there. Now that doesn't mean we're funding everything that everybody asked for we trimmed the wish list some but it is going up this budget makes property tax increases unnecessary anywhere for any reason if they're going to go up is because somebody's making a local decision to do something the state is not calling for I want to get to the how to get to the collars here in just a moment. But I have to ask now part of the I'm can come very confused about part of the the business having to do with the salaries local governments have to hold or are supposed to hold a referendum on any salary increases is how does that supposed to work? What is that all about? Well, it's not Gary of supposed to all we're saying is that the state is decided in the governor's proposal here that we will not make available the discretionary inflationary resources if cities have got enough money to do reallocation and they feel strongly enough about improving salaries. They can do it if they don't have enough money to do that without severe dislocations, but they feel like there's political will in their Community to do it any way they can test that by having a referendum the governor saying the state shouldn't really tell local jurisdictions. You can or you can't but that we don't think we can afford to put the resources there that underwrite it. (00:06:49) Let me let me just there is no pay freeze in here. There's no pay freeze. The governor said sure you go ahead and bargain I support pal Ray. I support the Public Employee labor relation that you can sit down and bargain. So there's no pay freeze people can bargain. So I guess correctly. The question that I have for you is the governor going To tell the department of employee relations to give no pay increase to State Employees. Just yes or no because if it's if it's yes, then that's a very strong signal that you can send through local governments. If it's no then how can we live with a system of an equity where maybe one segment of our public employees might get a pay increase and the others might not so what what's the governor going to direct the department of employee relations to do (00:07:41) there is no question Roger that state employees have kind of taken it on the chin for a few years in a row here because it has been State departments that are really taken the only bass line cut recently and there is also no question that as this plays out at the legislature agrees to the strategy that it will not fall exactly fairly on everybody the underlying message though here is that for us to get through this period of time that we're in for us to travel through the depth of this fiscal Valley we need for public employees to show some restraint. I tell you you if you I think nearly everybody out there knows one person or more in the private. Sector or the nonprofit sector that's lost a job been laid off had a serious salary reduction mean this is gone all the way through our economies. It seems like everything is getting reorganized through that same period public employees will admit to you that they've been pretty well insulated from that they have been relatively more secure. They have the comfort of knowing they've got jobs and all were saying is let's just keep this thing in steady state for a year because it can help us get to the point that we can be better organized to deal with these structural fiscal problems. Well, um Can confuse now (00:08:50) guy our public (00:08:52) employees going to get a raise or is that still open to you? Just asking him we're suggesting no salary increases for the first year for all public employees. And that that is the way we can all have a more fiscally responsible biennium. That's the governor's (00:09:07) message and he's what you're going to end up with is gross inequities. Let me give you an example City X City X has a budget Reserve. Let's just say that they have some Some that they've been able to set aside Citywide down the road has no Reserve City X decides to grant their employees to three percent pay increase don't have to go to the voters because it doesn't have any impact on the Levee. Now. How do you you know, how can you have a system like that? True true? You can you can make a call for everybody to cooperate and unless I'm least less. So I think that unless you direct the department of employee relations from the from the state level to tell no salary adjustments for anybody and in terms of state employees. I really don't know how (00:09:55) the little under estimating the power of local politics here the cities that behave that way will produce a very interesting pattern relative to the kind of local government Aid that is going on out there. People are not just going to do this in a Cavalier fashion. I think people going to be awfully thoughtful about how they respond to this Benchmark and one last. I'm sorry. I have one last question about Click employee salaries and we'll go to some questions here. It was suggested by suggested this morning that public employees almost automatically get a raise. Anyway, just by virtue of seniority. Is that true? I mean, they get paid by seniority and for inflation as a rule. (00:10:37) I don't think it's it when it's that depends upon what you've negotiated if in the case of let's say the teacher's salary structures most school districts have a grid step structure that they renegotiate every two years and if they keep that Grid in place, and yes, then if they by virtue of the fact that they're there one more year or if they go back and get more education. Yes, they may move on the grid system and receive a cell Readjustment. Yes. Why don't you fellas put (00:11:07) your headsets on there so we can can hear the questions from our listeners and let us go talk to our listeners now take some questions. Hi, you're on Minnesota Public Radio your (00:11:16) question. Yes, I'd like to address comment and questions to mr. Mole. I operate a car wash here in Minnesota. And since 1987. We have had to pay sales tax in a self-serve car wash. You have no way to collect sales tax from the customers. Therefore you have to take that out of your earnings straight out of gross gross income since 87 since we've had to pay that sales tax. We have had trouble being able to pay our property taxes on time. We recently had to take a large loan out from the bank to pay delinquent taxes that were possibly do for judgment this year since 1990. I have not had a pay raise since 1991. I occasionally have to take a cut. Every year every practically every six months I hear from my account about some new tax that we might have to pay or some new tax that we definitely have to pay. I've tried to get ahold of mr. Ogrin. Mr. Johnson the fellow who initiated the sales tax business for car washes. I've never get a call back. (00:12:27) So your question would be (00:12:29) why can't someone else take a pay cut or or have a pay freeze. I'm not making any more money the business doesn't matter. No question about it. I think the point that he's making it makes some sense and that when you take a look at least obviously talking about a number of different taxes and the broadening of the sales tax. I don't know exactly the nuances of that but there are many many kinds of services particular products that you buy that you pay the sales tax on and say Stacks on a car wash is probably not out of keeping with what I what the sales tax ought to be applied to in terms of property tax. I think all of us would agree that the efforts to continue to try to draw down on the commercial and industrial property tax is a goal that we have and we put that in place in the 91 92 tax bills and the governor's meeting that commitment in this budget that he that he has before us. So there's going to be some hopefully gradual drawdown on the property tax end (00:13:44) take another caller. Hi, you're on Minnesota Public Radio your (00:13:47) question. Yes. Thank you. Two quick questions one how can state employees take seriously the call for sacrifices from people who are making 80 to $100,000 one example, David power is a director of hecb this month requested for himself a five percent pay increase and he was given a tour. Half percent pay increase putting him way above ninety thousand dollars and he wants people making 20,000 have no increase second question Kurt Johnson, you're a reasonable person, but the proposal about ending public support for MBA and masters of education programs at public universities forcing students to pay. The full fee is absolute class Warfare. You would be denying any student who has medium or low income the access to an MBA or masters of education program. I'm shocked by this. (00:14:41) Okay Kurt went to respond. First of all on the pay increase for upper or fairly. Well paid employees. Yeah. I'm not sure how this proposal effects whatever unfairness people see in salary scales in general. I mean you can make the same comment make the same argument absent this discussion about the governor's budget proposal this proposal for holding back. Is for the next year neither makes that better nor does it make it worse the other issue the caller calls about though is a very complicated one and it goes to a long-running argument about what and how much the state really ought to subsidize in higher education. And where does the state really have a continuing interest in the product of that? And how much of it is actually just a dividend that accrues to the person thoughtful people can disagree about this and I certainly sympathize with his initial reaction to this in the process of trying to keep tuition increases down to manageable levels for undergraduate students, which are the state's highest priority at this point for teaching. It is necessary to move some money around and to consider not subsidizing at such high levels things that you could regard to be more dividends to the person and perhaps less to society. It precipitates a very big argument that there's no question about it. You think that is going to stand at the legislature Center Mall? (00:16:09) Well, I think the whole issue of tuition I this this budget I believe is going to have a significant impact on on intuitions in this state. So, you know, the whole issue of higher education will be looked at I believe the budget has less than a 1% by annual increase and to me there's only one way you can translate that and that is higher tuition. So yes, we will be looking at (00:16:35) them it also translates to these colleges and universities doing everything they can do to find under undiscovered efficiencies rather than just passing along through the price everything that comes through I'd have to say though that Roger we agree with you that the 1 percent doesn't feel adequate and if more resources do become available, I think you're going to see us recommending having more go in that direction. We are not comfortable with that level of support of higher education and the governor's fully candidate and been admitting that (00:17:04) keep in mind, you know a lot of A lot of these inefficiencies that that Kurtz talks about certainly we want we don't want any efficiencies but if more students show up for higher education, which seems to be the pattern we're now because we are having larger graduating class more and more people are going back before retraining and more education that to a certain degree derives it as well (00:17:33) our guest today Senator Roger mole, who is the Senate Majority Leader at the Minnesota State Senate and Kurt Johnson, who is the Deputy Chief of Staff for governor, Arne Carlson the subject today the state budget recommendation that the governor outlined in the Wood joint session of the legislature last night and let's take another question how you're on Minnesota Public Radio. (00:17:52) Hi, it seems like Beginning the first Salvo for the negotiations for public employees salaries and the first travel was by the governor proposing a pay freeze. I wonder what would be the reaction of the two gentlemen and your studio if instead they first Salvo was all the public employee unions getting together holding a news conference and saying we're going to strike we're going to shut down government on all the schools in the state and then start negotiating. I'd like to hear your reaction (00:18:23) Kurt and take a run at that one. The unions are perfectly free to organize to respond in any way. They want to I Really find the question and pretty befuddling. The governor has a constitutional responsibility to propose how we can make the ends meet how we can present a balanced budget that reflects the priorities of the state and he's done that and he's done that in a responsible way that says we can get through this biennium changing some of the priorities making some of the Investments that are important to all of us without raising taxes on people who have had enough taxes that's his responsibility to do it and he's done it in a he's done it very well another caller on the line. (00:19:05) Hi. Oh my God, three, very quick questions that will require very quickly answers and I'll hang up first. I don't understand exactly in these are for mr. Johnson. Your response to the question about whether or not door will negotiate a pay increase for state employees. I'd like a yes or no answer on that number two. Does the governor support a gas tax increase and if so, is he going to propose it number 3 since the governor wants public knowledge of public compensation to State Employees and like to know how much you and the governor's top staff people make right now and celery and I'll hang up and listen things. (00:19:45) I guess those are for you Kurt number one yes, or no on the other ones are pretty easy to do. There's no way that I am either empowered to nor would I be so silly as to try to initiate negotiations on behalf of doer over Minnesota Public Radio distinguished an outlet as this is question. Number two. I think the governor's been very candid in saying that if we can get this budget reconciliation put together. He does want to turn attention to an adequate funding source for transportation. He wants to be sure that we are in compliance so that we can participate in the federal federal revenues that are available under the new act. So I think you'll see that come together. I believe there's going to be broad bipartisan support for that third question. I don't even know what my salary is and I don't know what anybody else is. I haven't taken any interest in it. I knew I wasn't going to get rich over over this. I don't think anybody else is either so I frankly don't know. It's not a matter of disclosure. I don't know. Let's take another question. Hi, you're on Minnesota Public (00:20:41) Radio. Thank you. I have a question for Senator Morra, MO. You noted earlier that if this proposal goes into effect, it will result in Gross inequities across different municipalities where some can give raises in some not does that suggest that he is saying that the state should assure that all public employees should be paid the same regardless of local circumstances and if he then also believes that can you tell me what the limit is on the amount of taxes that this state thinks it can collect just give me a percentage of gross income that you think the ultimate limit is or do you think we can keep progressing upward and upward to ever increasing share of personal income being taken by the state? (00:21:29) Okay. First of all, Senator Mall, you think all the public employees local governments government employees should be paid the same of course (00:21:36) not Of course not that's ludicrous to think that because there are going to be Geographic differences. There are differences between the responsibilities of cities counties and school districts. Of course, I don't think that and I did but I tend to think that you have certain kind of regional patterns taking place. I dare say that the Municipal Employees in Fosston are probably say paid about the same as the Municipal Employees in Macintosh six miles away. So you tend to have certain kinds of regional patterns taking place and but but the fact the matter is that those two communities may have an entirely different structure in terms of their property tax base. I contend that this budget really does kind of it it lengthens or significantly compounds the disparities between property rich areas. Rich school districts property rich cities and those that are property poor so I know but the quick answer is no of course (00:22:46) not Asana taxes. Do you think that we have reached a limit now of the percentage of money that the state should be collecting from from people here in terms of in terms of taxes. The test on (00:22:57) taxes is that be very careful a property tax is a tax even though it's not a state tax. I'll be at we have a lot of interplay with it just because the governor says he's not going to raise income and sales tax that doesn't mean that the costs of government services aren't going to go up if tuition goes up its attacks. These is budgets going to have what 23 26 million dollars in fees in the mpca to pay for some of their programs a fee is attacks. Our concern obviously is that we don't shift the cost of government services back onto the local property taxes, which is what the governor has has been advocating for the last couple of years basically ripping up the program over the last 20 years. I think it makes sense to keep as much as we can the burden of those costs of government services on broad-based Statewide collected taxes, like sales and income taxes. I don't particularly like pushing it back on the property taxes, which I think this budget (00:24:02) does. Well in the facts are Gary that it doesn't there's no question about what the governor has serious philosophical concerns about the ongoing participation of the state and subsidizing the operating Revenue the operating budgets of cities all over the state and we're going to have that kind of discussion through this new Council on government Innovation, but this budget does not make $1 a property tax increase necessary anywhere if that happens. It is a lie. Cool decision. The state has tightened its belt. Where did we assume that cities? Can't that counties? Can't that other local jurisdictions can't everybody has to share in the sacrifice, but there is no question no matter what you hear anybody say this budget makes unnecessary any property tax increases sounds pretty reasonable Senator, you disagree (00:24:48) I disagree that it has I think about 92 million at least in property tax levies for schools. It breaks Faith with the local government trust fund. I think it takes about 51 million dollars out of that. (00:25:02) Well, we disagree. It keeps Faith with the original intent of the trust fund in which the state-owned the growth in that (00:25:07) fun. Do you not that take out the present law which is a 3% inflation factor for LGA. Do you not take that out? Yes, you do admit it (00:25:17) Aid to cities cities say that they want there are 200 million dollars more than that in the present biennium for property tax relief and Aid to local cities. They are big. Winners not really entitled to do much complaining about this budget. Well, I'm confused again and I don't want to belabor this and I want to get us bogged down in numbers, but I think very one of the thing about a point that Roger raises a couple of times because he is right there are some levees moving around for for K through 12 education, but that isn't direct response to the court case. If you remember the coverage on the scheme case really requiring the state to create more Equity between districts that have high property wealth and those that have less wealth but may have growing enrollments. So there is some equalizing going on across districts there that may cause some adjustments in property taxes, but property taxes are not being used in this budget to balance the state budget or local budgets. Senator mole remains unconvinced and convinced. All right. Well, let's go back to the phones. Hi, you're on Minnesota Public (00:26:20) Radio. Yeah. Shifting funds I was wondering why we continue to spend 10 times of dollars on each of our prisoners as we do on each of our K through 12 students knowing full well that a dollar of prevention equals five dollars after the fact and we also agree that male crime and male prisoners are associated with negative or absence of the essence of good role. Good male role models or mentors. When are we going to take a proactive role in use some of these dollars to cancel these out risk boys and men along with the money. We hope we already spend on a team and single mothers and and make them all realize the grave importance of dedicated father's involved in their children. So that these problems don't arise in the first (00:27:05) place those suggestions part of the governor made a whole state of the speech State of the State speech on this the new children's initiative are those programs part of that. My guess is that this is an area in which the governor and Senator Mo really pretty fundamentally agree that we need to move resources as rapidly as we can to the investment side. In the prevention Side Of The Ledger because we are coping with consequences at ever-higher Cost each (00:27:29) year. Let me just add to that the governor's state-of-the-state concentrated on children and I thought laid out wonderful blueprint for us over the past half a dozen years. We've created a number of different programs targeted for children. Unfortunately, we space them out through all over state government. He wants to consolidate them. I think that makes sense. And if I might also use an example of Governor used last night in the budget address, which I think is outstanding he talked about the difference between locking up a young man in a prison and educating that young man in a Technical College in the difference in by the time they get to be about 45 years old is that one on one side of The Ledger the public will spend a half a million dollars to house that person in a prison versus paying about a half a million dollars in taxes and he said each one of those Million dollars a child and so I thought was an outstanding example and we'll work with the governor to try to do and to correct many of these problems that we Face. (00:28:33) Our guests are Senator Roger mole who is head of the dfl caucus in the Senate and her Johnson Deputy Chief of Staff for governor, Arne Carlson higher on Minnesota Public Radio your question. (00:28:42) Well, I have a yeah, the thing I have a problem with is If everyone I'm private sector worker and I haven't had a cost-of-living raised in 5 years. What makes public employees thinks they should be immune to the economic problems of this country. I'm paying more for my health care. I'm paying more in taxes. I haven't got a pay increase. We're getting hurt out here and public employees are crying because they gotta take a pay freeze for one year if if Roger mole, thanks. If this is such a terrible idea. What is he going to do increase our taxes or cut our spending for programs one year? That's all they're asking one year and then what's going to hurt we can look it over and if there's a deficit next year. Well, that's the way the business (00:29:34) cycle works in case Senator. Ma. What does sound pretty reasonable? (00:29:37) Well, let me let me just say (00:29:38) I mean if indeed if you come from a perspective that public employees are getting paid fairly (00:29:44) already. Apparently the listener. Should probably turn up the volume because he's not getting apparently this is not a pay freeze. This is not a pay freeze. The governor was very very clear last night to point that out that the Public Employee bargaining processes in place and let me just say I think certainly I think everybody ought to pay the price and certainly public employees but let me just point out. I think public employees would also give me the same kind of expressed to me the same kind of concerns as this individual who just call their cost of their health insurance have gone up they've had to assume a greater and greater portion of those costs their taxes. I assume have gone up like anybody else they pay the same taxes is other people. I think the problem is is that I think that this in fact is as I said, I think it's a slick quick fix if you look through this biennium sure it buys time, but look, The next biennium there's a projected 600 million dollar Gap again is that let's assume that all public employees decide. Yeah. Ok. We'll we'll do what we can to to to make this all work and we will will go along with freezing the salaries. Are they going to be asked to do that again in the next biennium where there's a 600 million dollar problem? Yeah, (00:31:13) that's like actually we all hope not and since everybody seems even callers to assume that all public employees out. There are totally resisting this I think that ought to remain a question. I know lots of public employees. They are great people they work as hard as anybody in the private sector. I think they feel a high sense of responsibility for the state's Financial condition and it wouldn't surprise me or the governor as this issue plays out in the legislative session to find lots of Public Employee support for doing this painful as it is. They're not they have no intention to be a responsible. You think they'll voluntarily hold their pay word is nobody volunteers for this but you might have a more stately acquiescence than some of the public representations would imply take another question from a caller. Hi, you're on Minnesota Public (00:32:00) Radio. Hi. Thanks. My question is for Senator Mo for the past 10 years. The dfl party has had a vice-like grip on the house the Senate and the governor's office and I'm wondering why you or me. Of your party haven't taken responsibility for our continual budget problems. Let me just point out that I believe Governor Carlson has been Governor now for over two years. So I that vice-like grip put a little bit of a slip in it here a couple of years ago. Let me also add to that that we're living under Governor Carlson's budget. We basically past I think within very very minor adjustments to his proposals for the fiscal year 92 and 93 budget. It's pretty much the budget that the governor offered and so we're living under that and will certainly work with this budget. I don't so I'm not exactly certain what all you know, what what's the concern here? But this is this is the Carlson budget that we're working under will take this road map that he's giving us to make some general adjustments to it. (00:33:15) It's also true Gary that Roger and I could get into A pretty Fierce argument about the causes of the budget situation and how many of these seeds that are flowering now, we're actually sewn in the 80s that might be entertaining for your audience. My guess is though that we get farther by agreeing that there are some structural systemic issues in the state's spending that do have to be addressed that we've got to find a working consensus on we've got issues like the the escalating cost for long-term care the state right now pays for about a third of the caseload in nursing homes. If we go on the same trend line, it'll be 87 percent by the year 2000. We there's no way we can afford that the governor doesn't think we can afford to continue to subsidize cities and K through 12 education at this way. We got all of these kinds of issues. We need to come to grips with the things that are driving the spending and keeping that Gap there and the governor has a common interest with the legislature in finding a sensible way to do that that does not damage the quality of life that minnesotans expect realistically the governor suggested. This I don't know what we're going to call it. Now a pay freeze or the voluntary whatever whatever we're calling it with a public employee salaries kind of a an effort to buy some time at this point next year our we'll all these structural problems will a plan have been agreed to by the governor and the legislature to deal with those things long term so that no matter what kind of short-term solution you come up with the deal with the projected deficit our short films. Are you're going to have that all solved by this time next year? Well, I don't give Gary that the governor feels very strongly that years about what we've got and that all of the systems that are responsible for spending money and meeting the goals that minnesotans have have got to use this year wisely. He hopes to the various vehicles that we have in place now that we can come to terms with some of these things. And as I said before he knows that he can't lead this charge alone. The legislature can't lead the charge alone. We've got to develop a working consensus about smarter answers to these questions. Very much hopes we can do that and do it with his broader participation as possible. And on as a bipartisan a basis is possible China term. Oh, do you think that's possible putting aside the dispute over the business of the pay and so on so forth. I mean in terms of by this time next year, will you folks have been able to settle the come up with a plan to deal with these long-term structural problems that everybody keeps talking about (00:35:42) well, first of all as it relates to one of the major drivers of State costs Health Care Health care costs. I think that we do have a if not A perfect map. We at least have a map in place and there will be some adjustments to that this session that I think we will be able to agree on. So yes, I think the process is underway to address the health care cost issues and believe me. It's an ongoing process. It's not going to be a one-year pattern it is it's the ongoing fix never be fixed and we'll stay at it as it relates to the issues of whether or not you sever the tie between State and state government and cities and having a what I think will have a significant property tax increase, you know, we have a difference of opinion there. I somehow have a don't quite see where the the governor comes from in that he wants to sever the relationship with cities and put that money back into education and the education system really has had one of the biggest drivers on. Taxes at least in recent years. And so, you know, we'll have to we'll look at all of those but the key is this Curt says they want to work together and and certainly we will work with them but they're asking the people who are really on the line to work with them as well. The public employees. You can't reinvent government without having the people who deliver the service as a part of all of this and I question, you know with this initiative at as it particularly as it relates to their economics whether or not you're going to get a lot of coiffed cooperation by for this this effort to kind of reinvent (00:37:35) government and we know we do depend on these folks to deliver much of the answer but my question for you Roger is what's the (00:37:43) alternative? Well, well, like I said, we're going to be looking at a number of things. I think there are some state agencies that we can do without there are other (00:37:54) You want to name a couple of them? (00:37:56) Well, I let's see. We're going to try to take a look at what's left of State Planning Department of Public (00:38:02) Safety. But at a time when we're trying to figure out our future we would cut the arms and legs off of any planning process that we've got. What sense does that (00:38:09) mean? I think that there are an awful lot of planners Kurt. We've got a lot of planners in state government. You've got them riddled throughout the state agencies. So I don't think there's any lack of planners. So we'll offer some constructive Alternatives. (00:38:25) Let's go back to the phones. Hi, you're on Minnesota Public Radio your (00:38:28) question. Hello. Yes. I would like to know if you have a study of what the employees making the state and what's the comparable study of the people that are in Industry. I was told this morning in a meeting that the state employees have a higher salary than a comparable employee that is working in Industry. He also made I think Moe made the thing that the cost of insurance they have to pay. I have a son that works for the state. He gets all of his insurance paid. Yeah, I think it gets a good salary and he can retire in 20 years in Industry. You'd have a hard time doing that. I don't know how much is pension is worth or anything. But I believe that the people are going to have to sacrifice and their we're going to have to sacrifice. I'm retired. I'd be willing to pay taxes on my Social Security but we've got to get ourselves back. We are going to give our children a very very bad country if we don't and I think Roger mole sometimes really likes to pick on on the Republican mayor or its head of our right now them. Anyway, I thought others are picking up people. All right, thank you. (00:39:40) What is did I read here somewhere that put the average of public employee salaries about twenty-four twenty-six thousand dollars, you know, I think that's the average member of afscme that particular Union. I'm not sure exactly what it is. Roger may know but I want to be very clear the governor is not saying that public employees are overpaid by no means. I mean, we think that you if you did a very precise analysis, you'd probably find some salaries that are above and some that are below what they are in Private Industry. That's not the point here the the idea of asking people to exercise some temporary restraint while we get the fiscal house in order in no way conveys that we think people are overpaid. I do have to ask this Senator Mall based on the few calls we've gotten on so far there seems to be an overwhelming. I don't know a lot of support for this idea a lot of dislike for whatever or if what to public employees get paid going to be a tough thing for the dfl to Buck, isn't (00:40:36) it? Well, I did I say the dfl is Bucking it. I think I pointed out that it isn't a pay freeze that that the Public Employee labor relation Act. Is there unless unless the administration is going to propose some. Assessments in that and I think I've been told that they are not going to so we don't know what will be the outcome of it. I just contend that it is going to increase the disparities the budget by the way gets us back to a pattern of the early 80s of of having to short-term borrow at least about four or five times. If I'm not mistaken based upon the charts that I saw the state's going to have to short-term borrow over the next biennium. Thereby putting at risk the state's credit rating and there are things in this budget that I think are are (00:41:26) we don't think it puts any credit rating at risk a matter of fact, the short-term borrowing can be done mostly internally, but we would agree with the leadership in the legislature that doing something to stabilize and make adequate the stage cash flow account is a goal. We really ought to have we're still dealing with a lot of mismatches between revenue and expenditure that come out of the variety of Artful shifts and other things that happened during the 80s, and we do need to get that pattern stabilized. There's any disagreement there at all other listeners on the line higher on Minnesota Public (00:41:58) Radio. Hi, I am hospital and Minnesota University of Minnesota Hospital employee and I don't mind paying my fair share either to trim the state bus budget deficit, but I do want to say that two years ago. We also had a had a zero percent pay raise and we were promised at that time that that would be a One-Shot deal another point this year. We're trimming approximately 25% of our sick and vacation time. We're converting that into a program called paid time off. And another Point here is that my wife all my wife teaches. So she's also a state employee and we we really don't mind paying our fair share, but it seems to me that this program is at least in terms of my family is a bit lopsided. So you're not too eager to step up and volunteer that our legislators would be a little bit more honest about the the about some some of the historical perspective into it as it relates to this. His plan. All right, (00:42:55) let's take another caller. Hi your (00:42:56) question. Yes, we've heard an awful lot about the salaries of state employees. I haven't heard very much at all about the excessive salaries of of Executives that representative Sabo was proposing that above I think it was 10 or 20 times the amount of the average salary that there be a some kind of federal tax and I'm wondering why we don't look at the people who benefited from the federal tax cuts in the 80s and whether if we had some serious campaign Finance reform and might not be easier to you know have have revenues on the basis of the ability to pay and really just get the money where the money is the people that benefit the most it seems to me should contribute the most. Let me phrase it this way (00:43:45) Kurt why what about the idea of perhaps about like a one-year tax on people of upper in comes to That year where you can complain and kind of get ahead rather than and asking for this voluntary wouldn't that be a way to go to sits off a pretty big argument about who and what is upper income? I mean all the studies we have at hand now indicate the Minnesota has a very progressive tax structure. If you're making low to moderate income levels as a family the text is really don't Nick you very much. If you are household above 50,000 our ranking sores way up to in the top 10 in some areas in the top six in the top four and some other areas. We've got a very progressive tax structure and you know, it fits our culture, you know, the governor's not saying let's peel back all of Minnesota tradition. We have always accepted here somewhat higher taxes and we've expected better Services a result. All the governor is saying is it's as steep as it needs to be we've gone as far with the funding strategy as we can go now we need to learn to live within our means and he's drawn that line. Line in the Sand and said that's where it is. Another another question. Another caller rather is on the line. How your question (00:45:01) please. Yes. I'm calling from Rochester. I want to thank you for the program. I can relate to the previous caller with two people as state employees and they might feel unfair impact but some of us out here got a 50 percent income reduction as a result of family member being laid off in the computer industry. So there were staying out here then might be implied by this budget and I think Governor calls in is right on the money and that bargaining can do its job and really, you know, I think it's it's probably past time for the state to chip in its share in a significant way here. All right for mr. Mo whether he thinks the state can continue to be protected from the realities of the economy by having these increases and covering it with taxes. Well, first of all, let me correct you I don't believe the state nor local units of government have been protected from The problems the previous caller to reminded me of something at the University of Minnesota. I believe they labeled laid off. I close to a thousand people the University of Minnesota. You can you can go through and other local units of government felt the squeezed state agencies, the Department of Education took a 20 percent reduction in their number of employees. So we have tried to ratchet government as well in this process in this balance. Not perfect. I know that but let me just say over the last particularly the last two budget Cycles there has been a ratcheting of of the state employees local public employees as well ratcheting downward. I might add (00:46:41) Let's take another question from a listener higher. I Minnesota Public (00:46:44) Radio. Good afternoon. I thought Roger was solution to the budget deficit was an interesting one. I'd like to find out from him though where he would get the money to pay for the unemployment benefits and welfare payments that planning and Public Safety employees would collect when you about the abolish the Departments. Well, I suspect it'll come from the same places that will go into this budget as being proposed when people get laid off there is I think some kind of severance generally speaking. I think there's some kind of a severance I think with most employees who are laid off. I don't know all of the nuances of that but I would imagine he comes out of the same the same kind of packaged within that state agency. So but the bottom line is you either you either start to trim back on on the growth of state government rim back on what we have in government or we look at some other Alternatives and we think that there's some some growth and some trimming that can be done. There's a keep in mind that most of the Taxes collected Statewide tax is collected really don't end up in state government. They are were passed through I think 3/4 if not (00:48:02) more. I think that's of the (00:48:03) dollars go back to local units of government. And so it has to be restraint exercised (00:48:08) all over and I think if you are an employee in one of our state departments right now, you just kind of want to scream and say wait a minute. We've been taking these Cuts we are the only jurisdiction in government in this state that has taken real Baseline Cuts. They haven't happened other places and we continue out there in those local governments to spend at one hundred and eighty seven percent of the national average and that's probably not sustainable that employment growth has continued hasn't been cut back in the aggregate. So the problem with looking at State Department's for savings is there's not enough there to save you could Lop off several of them and still not make a dent in the problem. We've got for the coming biennium we have time for at least one more caller. Hi your question, (00:48:48) please. Yes. I was wondering if either of the gentleman Not have seen any studies before the governor proposed made these proposals on the effect that decreasing dollars in some of the major regions of the state. This will have on both the taxes collected and the growth that those dollars have by flowing through the community in spending. It's kind of the same question we had (00:49:15) before and that is the sort of the dark side of cut (00:49:17) Banks. Yes. Matter of fact, it was a question put to commissioner the commissioner of Finance late yesterday afternoon head had they equated the loss of income tax state income tax because of of this proposal and let's just say all public employees decided that they were they would play a pay their part. I believe it was 20 somewhere between 20 and 25 million in income tax revenue loss. (00:49:50) The question that the questioner ignores is, where do you think the money comes from for it to flow into the pockets of those public employees? It's got to come out of the pockets of other people in the same communities. So you're not dealing here with any increase in productivity in the economy. You just talking about money moving from one pocket to the other it is exactly that kind of rig. Causes us as a rule in this state to back into yet another tax increase and that's why the governor is saying not this time not anymore (00:50:22) second question. And that is I haven't heard anybody and listening to the to the program today that remembers the effect that the public employees took it in the shorts during all of the high inflationary times when they did not get cost of living raises and the private sector people were getting them. All right. (00:50:46) Well, I have to ask this one other question before we go and I suppose Kirk you this would be the person you'd be the person to ask if the public employees are on the state don't voluntarily want to go along with this and do push for pay increases of some sort or another and for whatever reason the government's agencies of government grant those increases. Is there a fallback position and in the governor's budget to deal with the projected shortfall or what do you what do you do then? Well, I think Rodger pointed that out pretty amply that if you have that kind of thing going on at the local level, then it will have a local property tax impact but we're saying that the way this structure comes out that is a local decision entirely. Okay. Well, thank you so much for coming in. I know we have just scratched the surface of what's going to be a pretty lot more to come interesting debate over the next several months Our Guest today state senator Roger mole. Who is the Senate Majority Leader and Kurt Johnson Deputy Chief of Staff for governor Arne Carlson.