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JEFF VAN WYCHEN: What worked then is working again now

ST. PAUL -- What made 1973 Minnesota work? The same things that make 2013 Minnesota work: a strong work ethic, honest politics and a civic culture that values the common good.

Jeff Van Wychen

ST. PAUL -- What made 1973 Minnesota work? The same things that make 2013 Minnesota work: a strong work ethic, honest politics and a civic culture that values the common good.

The famous Time magazine cover story reminds us that working toward common public goals through government investment creates generational security, prosperity and growth.

Minnesota's "cover of Time magazine" moment started with statehood in 1858. The earliest pioneers initiated a pattern of public investment in schools, universities, roads and amenities.

Successive generations redefined and expanded on earlier work. So, when Gov. Wendell Anderson assembled a bipartisan coalition to increase and equalize state K-12 education funding without crushing property taxes, he traveled a well-established Minnesota trail.

Besides K-12 funding reform, the Anderson era created Local Government Aid, sharing revenue with communities that needed it most (enacted two years before the Time article was written) and a homeowner and renter property-tax refund that effectively targeted property tax relief to low- and moderate-income families (enacted two years after the Time article).

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These policies helped modest-income families become permanent fixtures of Minnesota's middle class.

Anderson put the issues directly before voters. In 1970, he ran on a platform that involved a large increase in the state budget to pay for the programs outlined above. Minnesotans "were willing to elect a man who promised to raise some of their taxes in return for larger overall gains," Time wrote.

Anderson believed that government could use increased public resources to make Minnesota a better and more prosperous place to live. Voters agreed.

Anderson's reforms succeeded. As state economist Tom Stinson observed, "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."

During the 30 years that followed the 1973 Time article, Minnesota's job, gross domestic product and per capita personal income growth all outpaced the national average.

But in the waning decades of the 20th century, Anderson's faith in government seemed passe. Ronald Reagan declared that "Government is not the solution to our problem; government is the problem." Minnesota was not immune to the anti-government movement in American politics.

In the decade following conservative Gov. Tim Pawlenty's 2002 election, real per capita state and local government spending fell by 7 percent -- the fourth highest rate of decline among the 50 states.

Anti-tax and anti-government advocates promised growth and prosperity; but that's not what happened. Since 2002, Minnesota has lagged behind the national average in GDP, employment, personal income and median household income growth.

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In other words, the "no new taxes" policy doesn't work. And it's a false promise, as property taxes rose dramatically since 2002 because state budget deficits were balanced on the backs of local governments and local taxpayers.

During the 2013 legislative session, the 1973 Time article stopped being history and became a roadmap. Progressive legislative majorities embraced important public investments. The state replaced a small portion of real spending cuts made over the past decade. It put money into all-day kindergarten and early childhood education -- policies long endorsed by nonpartisan experts.

Fiscal reforms will provide property tax relief to homeowners and renters and ensure taxes overall are more geared to Minnesotans' ability to pay. State actions to implement the federal Affordable Care Act will cut the number of uninsured Minnesotans dramatically. Other investments focused on job training and affordable housing.

New fiscal reforms, including property tax relief, are not carbon copies of Wendy Anderson's work. They can't be. The challenges confronting a 2013 Minnesota -- an aging population, income inequality and an education-equity gap -- are not the same as in 1973.

Even after the budget increases approved in 2013, real per capita state general fund spending still will be roughly 10 percent less than it was a decade ago, at the beginning of Minnesota's "no new taxes" experiment.

Furthermore, as a percentage of personal income, state spending is nowhere close to 1973 level.

Nonetheless, Minnesota's 2013 budget represents a return to the traditional Minnesota vision of government as a positive force for good. Investing public resources in schools, jobs and health care will make Minnesota a more prosperous state and a better place to live.

Ten years from now, on the Time article's 50th anniversary, Minnesota's strategy -- like the North Star state itself -- will shine brightly.

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Van Wychen is director of tax policy for Minnesota 2020.

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