Minnesota’s Bipartisan Successes Hold Lessons for Wisconsin

Monday, December 14, 2015 at 8:00 AM by

Wisconsin lawmakers could learn a number of important lessons from Minnesota relating to budgeting. I’m not talking about the differences between the two states in budget choices relating to taxes and spending; that’s a topic for another day.  I want to focus instead on state budget processes, transparency, and planning for economic downturns. Those are matters of bipartisan agreement in Minnesota, and they are areas where Wisconsin lawmakers should also be able to come together.  

Minnesota’s budget practices have been on my mind because of a number of recent state and national reports that have cast the Gopher State in a positive light. Aside from the Vikings-Packers game in late November, Minnesota has been on a roll: 

  • A Dec. 3rd report by Minnesota Management and Budget estimates that the state’s budget balance will be almost $1.9 billion at the end of the current biennium, an increase of $1 billion from the previous projection.
  • One third of the projected balance will be allocated to the state’s rainy day fund, raising it to almost $1.6 billion.  
  • The financial news and opinion website 24/7 Wall St. recently ranked Minnesota as the nation’s 5th best-run state (compared to 26th for WI).
  • Forbes ranked Minnesota as 13th best for business (compared to 31st for WI).
  • A new report by Pew Charitable Trusts commends Minnesota as being the only state that deliberatively chooses how much money to put into its rainy day fund based on the level of budgetary risk it wishes to offset.
  • A report released last week by the Commonwealth Fund gives Minnesota the #1 ranking for its health care system (vs. 11th for WI). 

I haven’t carefully reviewed the ranking by 24/7 Wall St. of which states are the best run, and I’m not sure what criteria they used. However, as I reviewed several recently released documents I was struck by a number of things Minnesota does routinely that would improve budget planning and transparency in Wisconsin, as well as fiscal responsibility. For example: 

  • Unlike Wisconsin, Minnesota releases data on revenue collections on a regular monthly schedule, and each statement compares the actual revenue collected with the projected amount (which would be extremely useful for budget analysts in Wisconsin).
  • Minnesota releases a comprehensive budget and economic forecast twice a year, as well as quarterly updates on revenue and economic projections. Wisconsin used to issue economic forecasts quarterly, but they are now released just once or twice a year, and budget updates are also infrequent.
  • In contrast to Wisconsin, Minnesota’s budget projections look four years ahead (currently through FY 2019) and include estimates of future revenue and spending growth.  
  • Minnesota regularly transfers money from projected surpluses into its rainy day fund, which at $1.6 billion will soon be more than five times the size of Wisconsin’s rainy day fund ($280 million).
  • Unlike Wisconsin’s ad hoc planning for fiscal emergencies, Minnesota is one of five states that have a statutory requirement to consider changing fiscal and economic conditions in order to determine a sufficient maximum or targeted balance for their rainy day fund. 

Minnesota’s budget processes aren’t perfect, and one thing that Wisconsin has done much better is to fully fund its pension system for public employees. Nevertheless, there are many things Wisconsin lawmakers could learn from Minnesota’s practices, and there’s no reason why the positive measures that have been implemented with strong bipartisan support across the border shouldn’t also have strong bipartisan support in our state.  

Jon Peacock

2 Responses to “Minnesota’s Bipartisan Successes Hold Lessons for Wisconsin”

  1. Jake formerly of the LP says:

    Thanks for writing this. I’d been noticing the blackout of budget data as well, and it doesn’t do much to give confidence in an Administration that many of us are already suspicious of.

    Maybe they heard you, as I see the December revenues were finally released this morning (and they were decent). Still waiting on the overdue CAFR, however

    • Jon Peacock says:

      Jake — Thanks for pointing out that the latest revenue #s (from Oct.) were finally released today, and thanks for your blog posts over the past few weeks about the various delayed reports, including the FY 2015 CAFR. It will be interesting to see the effects of the change in GAAP standards relating to pension obligations. Perhaps that has something to do with the delay. I think that change will make WI look considerably better (relative to other states) than we have in recent years. If so, an improvement in that ranking would undercut one of the talking points used by the conservative advocates of the proposed GAAP constitutional amendment.