Minnesota 2020 Journal: Bread and Circuses
Minnesota can afford a new pro football stadium but not better schools, expanded affordable healthcare, a robust transportation recapitalization schedule or economic development policy that actually creates jobs. What’s going on?
The short answer: A football stadium is decidedly less expensive than Minnesota’s schools, roads, healthcare and jobs needs. The long answer: Conservative public policy is screwing up our priorities, creating the weird disconnect that makes a stadium appear to be affordable while starving schools and communities.
Yes, you read it correctly. A pro football stadium is suddenly affordable. About the only thing missing is a car salesman in a TV spot shouting, “Our prices are so low, you can’t afford not to buy!” And, with an annual $50-55 million bond debt servicing price tag for the state’s stadium contribution, there’s some truth in the affordability declaration.
Minnesota adopted a $34 billion biennial state budget. That’s $17 billion per year. At one level, $55 million is, quite literally, a drop in the bucket. However, that annual figure risks disguising or at least discounting a long-term financial decision in order to satisfy short-term desires.
Let’s return to the car sales example. You want a new car. With the slowed economy, you’ve declined to purchase a new car, electing to stay with your perfectly good if aging orange 2003 Pontiac Aztek Rally-Edition. Yet as 150,000 miles driven tips into 160,000, those new Ford Fusions are looking better and better, even with an auto purchase loan.
So, you saunter in to the dealership, find your vehicle, negotiate a $25,000 purchase price and begin contemplating financing. Assuming no money down, a 48 month car loan at 3.5 percent creates a $560 monthly payment.
You balk at this. You were hoping to keep the loan payment south of $500 a month.
Consider stretching your loan to 60 months at the same interest rate. Suddenly, your monthly payment is $455. Hey, that’s not so bad. Suddenly, that $25,000 bill has become a number that you can not only understand but can fit into your monthly budget. If you earn the state’s median household income, $57,000, annual car loan payments of $5,500 is not outrageous.
The alternative question, however, is what could you do with money that you don’t spend on a new car as you get another year’s driving from your Aztek? That’s the long term, family financial planning and stability calculation contrasting with the short-term I-want-to-buy-a-new-car-now decision. If you’re jonesing for a new car, the modest monthly payment is a more critical decision factor than saving several thousand dollars at a virtually non-existent interest rate.
Building a football stadium is not the same as buying a new car. Not even close. Some of the same purchasing psychology is at work, however. While you may buy a new car, you’d really rather buy a new house. Your present home has lost forty percent of its value and you’re underwater on your mortgage. You owe more than your home is worth. But, you feel secure in your job and are certainly meeting your mortgage payments.
Pushing the pencil around, you discover that if you just had another $120,000, you could take the hit, sell your home and purchase a better place for less at a lower monthly payment than you’re currently paying. But, there’s the rub. You don’t have $120,000 nor do you have the prospect of finding it. So, you’re stuck in your house.
You can afford the car loan but not the larger home mortgage loan. This is Minnesota’s problem. We can afford a football stadium. We can’t afford to repay the $2.4 billion school financing shift, money promised, budgeted but not disbursed to Minnesota’s schools in order to balance Minnesota’s state budget.
Why? Because Minnesota is boxed in by conservative public policy. In refusing to consider modest tax increases, conservative policymakers have preserved tax policy that places the interests of Minnesota’s highest income earners over every other Minnesotan. The conservative no-new-taxes dictum simply moves costs from state to local, compelling communities to cut budgets and raise regressive property taxes, leaving them to deliver fewer services at higher cost.
Minnesota is experiencing the inevitable result of no-new-taxes, smaller government, conservative public policy. We’re offered short-term entertainment while Minnesota’s long-term competitiveness slips away. Building or not building a football stadium is inconsequential compared to investing in ourselves through education, healthcare, roads and job growth. If we are prosperous, entertainment will follow.
Conservative public policy is a cage, trapping us. Until we open the barred door, Minnesota won’t move forward.