A few weeks ago I attended the second-to-last meeting of the Minnesota Budget Trends Study Commission. To recap, this commission, established by the state legislature (not to be confused with the Governor’s 21st Century Tax Reform Commission), is made up of state budget experts and is tasked with recommending how we can minimize volatility in our state budget and tax system and prepare for the fiscal impact of demographic changes.
The commission discussed some of their draft findings (no draft report was handed out). We’ll get their final word in December. From what they discussed, here’s what you need to know:
- Inflation in the forecast matters. There was near unanimous agreement (with two or three notable exceptions) that the current practice of including inflation in the economic forecast for revenues and not expenditures creates a false picture of the budget.
- The need to limit growth in health care spending will be a major finding of the report. It’s not clear how the the commission will recommend we resolve this very sticky issue. I very much hope the commission recognizes that health care costs have been rising in both the public and private sectors. And in fact, private health care spending rose faster than public health care spending in 2005 (see this Minnesota Department of Health report). This is not a “big government” problem.
There are two meetings of this commission left. Next meeting is scheduled for Tuesday, November 25th at 9 am in the Centennial Office Building (could be changed since it’s close to Thanksgiving).