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A Look Back at a State That Worked

October 21, 2013 By Jeff Van Wychen, Fellow and Director of Tax Policy & Analysis

August marked the fortieth anniversary of the iconic Time magazine cover with the words “The Good Life in Minnesota” emblazoned across the torso of Governor Wendell Anderson, holding an unhappy northern pike. The story that the cover heralded was entitled “Minnesota: A State That Works.”

What made Minnesota work? The Time article identified several factors. A strong work ethic, honest politics, and a civic culture that valued the common good were all on the list. The last of these factors—an ability to recognize common public goals and to use government as an instrument to advance these goals—made possible a variety of public investments that served Minnesota well over the generations.

Not least among these investments was public education—both K-12 and higher. According to the Time article, “the University of Minnesota is probably the dominant and most prestigious institution in the state.” Governor Anderson also spearheaded an effort to massively increase state funding for K-12 education and to equalize school funding throughout the state so that low wealth districts could afford to adequately fund their public schools without crushing property taxes.

Under Anderson’s leadership, the state also created the Metropolitan Council to help guide development and control sprawl within the Twin Cities region and established the “fiscal disparities” tax base sharing program within the metropolitan area under which, according to Time, “the effects of new development in one part of the area are shared by all, thus eliminating the pockets of poverty and boom that characterize other urban sprawls.”*

Anderson also undertook “a massive reorganization of the executive branch” including the creation of a state planning office. Among other initiatives from the Anderson era was the creation of a Local Government Aid program which consolidated several state revenue sharing programs in a way that did a better job of directing state assistance to the communities that needed it most (enacted two years before the Time article was published) and a homeowner and renter property tax refund that effectively targeted property tax relief to low- and moderate-income families that had high property tax bills relative to their ability to pay (enacted two years after the Time article).

How did Governor Anderson pay for all this? In 1970, candidate Anderson ran on a platform that called for a large increase in the state budget to pay for the programs outlined above. According to the Time article, “They [Minnesotans] were willing to elect a man who promised to raise some of their taxes in return for larger overall gains.” Anderson believed that government—managed intelligently and honestly—could use an increase in public resources in a way that would make Minnesota a better and more prosperous place to live. And the voters of the state agreed with him.

By most reckoning, the reforms that Anderson pushed during his tenure were a success. Regarding the state’s investment in education, State Economist Tom Stinson observed that “Minnesota's economic record over the last half-century is one most states envy. The reason that occurred was because far-sighted public and private sector leaders figured out they were going to invest in the education of the baby boom generation. Now it seems like an obvious decision to have made, but if it was, other states would have done it too and we wouldn't have done as well.” During the thirty years that followed the 1973 Time article touting Minnesota as the “state that worked,” the state’s job, GDP, and per capita personal income growth all outpaced the national average.

However, in the waning decades of the twentieth century, Wendy Anderson’s faith in government seemed passé. At the beginning of the new millennium, Minnesota took a hard right turn toward “no new tax” fiscal policy. The implications of that choice—and Minnesota’s subsequent course correction—are discussed in the conclusion of this series.

*The fiscal disparity program did not truly eliminate “pockets of poverty and boom,” but it did help to mitigate some of worst effects of widely disparate tax base wealth within the metropolitan area. When the Time article was published (August 1973), the fiscal disparity program had been passed into law but not yet implemented, pending resolution of a legal challenge.

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