Friday, May 08, 2009

Friday night, nothing much to do but hang around Think I might just grab myself a cab and head downtown. May as well start this entry with some obscure lyrics (artist, title, and album will be listed below) to describe what's going on here at the Capitol. It is Friday night. There's not much to do but hang around. But I won't be grabbing a cab and heading downtown because the House just passed HF 885--the "curveball bill," (or the Plan B bill . . .or the "Hey Governor, look over there!" bill) for lack of a better term--and it's heading over to the Senate, where it will also be passed this evening and then head to the Governor where it will be dealt the ignominy of a certain veto.

This bill is another attempt by the DFL-controlled Legislature to shed some light on the Governor's budget package and try to highlight some of the items that frankly, are a little bit murky in the policy department. One of the items the Governor is trying to sell is about $1 billion in bonding for cash flow purposes. I term this as "deficit spending with a balanced budget." This is borrowing from the future in the same way that the federal government does, but, of course, the state is constitutionally bound to have a balanced budget so any borrowed money must be just that--borrowed, in this case from the future, because real-time biennial expenditures must be in balance with revenue.

Now the Governor isn't wimpy. Quite the contrary. But this does remind me of the character Wimpy (on the right) from the Popeye cartoons who often spouted the memorable line "I'll gladly pay you Tuesday for a hamburger today." The problem is that the price of the hamburger can go up precipitiously depending on the terms that govern how the money is paid back. In conversations with other Capitol wags, the price on the Governor's borrowed $1 billion is about $1.6 billion over the term of the bonds.

The Legislature can't seem to get the public riled up about this aspect of the Governor's budget package, which is really starting to result in a considerable amount of frustration. The option to the Governor's approach, and the $1 billion hole that is created if it is abandoned, is a tax increase of some sort. That is where the DFL has had its problems. As has been the case in all things public finance-related in the political sphere, the word T-A-X has little traction even if a case can be made that it is better than the alternative.

One thing that has surprised me, and it shows up a bit in HF 885, is the concept of a temporary surtax to raise the $1 billion (or thereabouts) in the short term and phase the tax out as certain revenue thresholds are met. The Senate has proposed something similar, but the House is resistant to the concept.

Experience isn't always a good thing to have. I keep thinking back to the fiscal challenges of the mid-to-late Quie admininstration when state finances went into the tank due to the energy crisis and the horrifying inflation/high interest rate situation that led to the recession of the late 1970s. To solve that crisis (and it was solved again and again and again in repeated special sessions) everything was on the table--taxes, cuts, shifts--and it took a little bit of each of those tools to get us back to a budget situation that was sustainably balanced. Right now, the situation seems to lack one leg of that stool, which is going to make it really hard to stand. But, it's not like we aren't going to have a special session to figure it out.

So, where does education sit in HF 885. There's not a lot of detail. The only thing pertaining to education is a very vague revenue number--it was stressed to me that it IS NOT a target--that explains (at least as it was explained to me) the revenue "space" available to the E-12 budget. Again, that's vague and I will try to get more detail from those in the know.

What I do know is that the E-12 conference committee will continue to meet and hammer out a final compromise, both on the financial and policy matters in HF 2. The only thing that happened today was that the Senate came forward with its second offer after reviewing the House offer that was delivered on Thursday. From my perusal of the offer, there doesn't appear to be a ton of progress being made as the proposal ping-pong continues. Whispers in the hallway seem to indicate that legislative leadership wants all major bills on the Governor's desk by next Tuesday that in the event that they are vetoed, there will be time to attempt overrides.

My guess is the conference committee on HF 2 will be meeting tomorrow (Saturday) in an attempt to come closer to a final agreement. So if you're not doing anything, just check the legislative schedule and head over to Room 200 of the State Office Building. But, if you have something exciting to do, like watching paint dry or neutering the ants in your backyard, by all means do that. Seriously, it would be nice to see some different faces in the audience.

Now, for the answer you've all been waiting for, the song lyrics introducing this entry were written by Todd Rundgren, from the song "Long Flowing Robe" which led off Todd's 1971 masterpiece, Runt: The Ballad of Todd Rundgren. Give it a listen sometime. It's got one of the great slow songs of all time, "Be Nice to Me," which is what I hope is paraphrased to "Be Nice to SEE" in the final version of HF 2.


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