Republicans declare class war in Minnesota

BY DAVID RUBENSTEIN

It doesn’t resonate like “let them eat grass,” the words of advice that a trader named Andrew Myrick had for some starving Sioux Indians in 1862, but it’s getting there. Taxpayers, according to Republican State Senator Geoffrey Michel, “have had to learn to live within their means, and they expect government to do it too.”

Myrick’s statement is said to have triggered the U.S-Dakota War of 1862.
Michel’s probably won’t do much except keep up his poll numbers.
Senator Michel lives in a half million dollar house in Edina, on a hairpin-curve of a road called Nordic Drive. It’s semi-private, and there’s plenty of room to park on the street, but no one does. At the time of the last census, ten years ago, the average annual family income in Michel’s Senate District 41 was $121,000. Average household net worth in his 55439 zip code, according to a realtor’s website and based on 2007 figures, was just over a $1 million. Out on Nordic Drive and up into the tangle town nearby, where the roads have names like Indian Hills Pass and Cherokee Trail, it would be surprising if average net worth wasn’t many times that.

Senator Michel is a corporate attorney employed by Securian Financial Group Inc., as director of public affairs (“part time,” according to a company
operator). He’s been a state senator since being elected in 2002, when he
joined Tim Pawlenty, Michele Bachmann and dozens of other Minnesota politicians in signing the no-new-taxes pledge of Grover Norquist and his Americans for Tax Reform. Since then Michel has remained a champion of the fiscal rectitude that has prevailed in Minnesota government, under slogans like “learning to live within our means” and “tightening our belts.”

The result has been an increasingly regressive state tax system and deep cuts in what’s known as local government aid. Local government aid is the way that money collected through state income tax is funneled down to cash-strapped cities and towns to help pay for things like public safety, parks, street maintenance and—directly or indirectly—the health and welfare of the people who live there. Local government aid has taken big hits in recent years and it’s taking another one this year.

The back yard of the Michel home butts up to thick woods and a four-acre municipal gem called Heights Park. It features walking trails, sliding hills and, down below, playground equipment and a baseball field. Nine Mile Creek flows through it. “Heights Park is the perfect setting for a get together with friends or a swing,” says the City of Edina website.

This kind of amenity in suburbs like Edina and Minnetonka does not depend on Minnesota state income taxes funneled down through local government aid. Edina doesn’t get local government aid. It doesn’t need to. Heights Park and lots of other goodies in these suburbs are paid for with property taxes.

Lesson No. 1 in the dry, dull and complicated subject of state tax policy is best phrased as a hypothetical question: Why would Geoff Michel and his neighbors want to pay additional state income tax and just shovel more money into the maw of the inner city, and the seemingly endless list of struggling small towns, when they can just write a nice property tax check and take care of their own? There is no single answer, of course, but enough people have supported Michel to get him elected twice.

Make no mistake about it, local government aid is redistribution of income, a notion that since the age of Reagan is often discussed in hushed whispers and pegged somewhere between incest and cat torture. Local property taxes, with the proceeds going to the local government units that collect it, is the opposite. Rich jurisdictions prosper in every respect, from pot hole repair, to parks, to schools—even though supposedly in Minnesota there is a financing mechanism that keeps public school funding on a different and more egalitarian footing. The state constitution requires it.

Anyone with eyes who takes the time to look at the public schools in the wealthier suburbs knows that mechanism doesn’t work, for whatever reason. Creek Valley Elementary, just down the road from the Michel residence, is a case in point. With its own park—acres of it—a sliding hill and five soccer fields, it could pass for a rural New England prep school. Nonetheless there is now a movement afoot—sparked by some suburban Democrats—to remove even this pretense of equal access to schools by freeing up the wealthier suburbs to use their property tax money for their own school districts. Free to choose!

What the numbers show is that Minnesota’s tax system is becoming
increasingly regressive and basic services, amenities and infrastructure
maintenance increasingly concentrated in wealthier communities. “From 2002
to 2008, real (i.e., inflation adjusted) per capita state aid to Minnesota
cities declined by 47 percent,” writes Jeff Van Wychen, a tax fellow with
the progressive think tank Minnesota 2020. That was figured, his article
notes, before another hit late in 2008.

What the numbers don’t show is what this looks like, and how biking or
driving from one legislative district to another can be like going from one
world to the next. The argument we hear now is that economic apartheid is
the price that must be paid to create jobs – that for businesses to expand
some people need to be starved, denied medication and driven to the street,
and tens of thousands more reduced to marginal survival. It’s part of a race
to the bottom, and the governor and his legislative allies are making
Minnesota a real contender.

Not long ago, people who pointed out how fast the rich in this country were
getting richer as the poor and middle class sank were berated for trying to
talk up a class war. Nobody had a better rejoinder than Warren Buffett, the
quirky billionaire who once pointed out that under the U.S. tax system he
pays at a lower rate than his secretary. There’s a class war all right,
Buffett said, and his class is winning.