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To no one's surprise, last week's budget forecast once again showed that Minnesota's state spending was expected to exceed anticipated revenues by a significant amount.
Just five months into Minnesota's 24-month budget, it is projected that spending will exceed revenues by $1.2 billion-a 3.8 percent budget shortfall.
That may not sound like a lot of money compared to last session's $4.8 billion shortfall (which would have been $6.4 billion excluding federal stimulus dollars) but it signals the third time in three years that Minnesota will have a significant budget problem.
In the last two legislative sessions state lawmakers have sidestepped their budget-balancing duties by using one-time money or accounting shifts to cover the red ink; now it's time to face the music and stop spending money the state doesn't have.
Our state legislators are like the shopaholic who asks: "How can I be out of money, I still have checks left?" They've once again come up empty-handed in the budget-balancing act, and now DFL leaders are again echoing the worn out refrain: "It's not a spending problem, it's a revenue problem."
As the jobless rate climbs and wages fall, why do DFL leaders continue to think that raising income taxes will solve anything?
Of the $1.2 billion shortfall, 70 percent is from a decline in income tax revenues. This is due to Minnesota's very progressive income tax rates, which result in major swings in revenues during economic up and down cycles.
If our tax system were based less on income taxes and more on sales taxes, there would be less volatility in revenues-no doubt. But this still does not address the real budget problem.
The real budget problem is decades of state spending growth that far outpace the growth in personal income. State spending has grown at an average of more than 10 percent per year from 1960 through 2003. That rate is more than four times the rate of personal income increases over the same time period. The truth is state spending is out of control.
Unless legislators tackle this budget problem head on, it will only get worse. The budget forecast shows that at the current rate of spending there will be a $5.4 billion shortfall in the 2012-13 budget. DFL lawmakers can't continue to pretend that their "tax the rich" proposals will be able to solve this budget gap.
Even if the billion-dollar tax bill passed by the DFL in the 2009 Session had been signed by the governor instead of vetoed, there would still be a half-billion budget hole. The only real budget solution is to match spending with revenue, not to try and match revenue with runaway spending levels.
As an employer for the past 30 years, I have often counseled employees to work on adjusting their spending to their income, not the other way around. Every responsible adult understands that if you continue to spend more than you have, sooner or later you go broke. The same is true for the state. Over the last three years, liberal lawmakers have continued to spend billions more than the state has been taking in. Now is the time to change course.
Gov. Pawlenty recently proposed a Constitutional Amendment that would achieve this goal. It's a simple concept that, if adopted by the voters, would limit the Legislature to spending no more in the next budget than the amount of revenue from the previous budget.
This Constitutional Amendment would force legislators to match spending levels with tax receipts. What a novel concept-don't spend more than you currently have!
Obviously, revenues could go up or down from the previous year, but legislators could not automatically spend more based on anticipated revenue growth.
Under this amendment, if legislators wanted to spend more, they would have to vote for a tax increase before they could spend the money. This approach is vastly different than today's DFL song and dance about not having enough money to cover the checks they have already written-therefore justifying the need for taxpayers to come up with more cash.
The state should take a page from family budgeting-spend based on your current income, not based on possibly getting a bonus or raise.
It's time for lawmakers to stop spending what they don't have.
This column originally appeared in the St. Paul Legal Ledger Capitol Report.
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