Government Spending, Budgeting and Prioritizing

All levels of government have some sort of spending authority and are required to produce an annual or, in the case of the state legislature, a biennial budget. One of the most important issues is how government manages the money that was raised by taxing large and small businesses and individuals. Some economists paint a very complicated picture of government budgets, how revenue is received, what and how expenditures should be made and the overall effect these relationships will have on the economy. While this more scholarly approach is technically true, it also serves to muddy the waters and make ordinary citizens feel unqualified to understand such “complex” problems.

However, the basic principles of governmental budgets are not hard to understand when put in the proper context. Governmental money management can easily be likened to the money management undertaken by families and small businesses. Simply put, the outgo cannot exceed the income. This is called a balanced budget. All families and businesses must live by this “kitchen table” economics principle or they go bankrupt..

There is only so much income generated per month. The trick is to make sure that one has more money at the end of the month rather than more month at the end of the money. This is where prioritizing and separating “wants” from needs is critical. Questions of how much of the family or business budget to spend on food, clothing, car, vacations, supplies, wages, advertising, etc., are subjects of intense discussion and debate. At the end of the discussion, the outgo cannot exceed the income or the family or business gradually “goes in the hole” financially.

While borrowing is often easy, it presumes on the future being more favorable than the present circumstances. Experience has shown that the future is very hard to predict and that rosy scenarios often prove false.

The state needs to approach its finances in a similar “kitchen table” fashion as the family. It cannot run deficits without suffering the consequences such as default or paying bills with IOU’s. It cannot look to taxes as an endless source of revenue due to fluctuations in the economy. And because the state establishes two year budgets, lawmakers must plan expenditures to account for these possible economic changes. There will be vigorous debate on how monies are spent but at the end of the session the outgo cannot exceed the income or the state “goes in the hole.” In essence, the state needs to balance its checkbook just like you and I have to.

This is a key difference between me and my opponent Jay McNamer. I believe the state must live within its means and I will work to reform and transform state expenditures to bring expenditures in line with revenues. Make no mistake. This won’t be easy. But to keep our state on a path to prosperity, grow jobs and enhance our rural economies, the hard, painful work must be undertaken. Mr. McNamer believes revenue enhancements (tax increases) are needed to cover the additional spending lawmakers believe is needed. I respectfully disagree..

As a father, small business owner, prior Mayor of Browns Valley and school board member, I have had to make tough decisions on spending. I have had to separate “nice to have” items from “must have” items. I have had to reduce, cut or eliminate products, plans and programs to bring expenditures in line with revenues. It hasn’t been easy, but it has been necessary. Intense discussion and debate has always been a part of these budget decisions, whether with my family or business partners or council and school board members, but in the end, we’ve always come together in a united fashion. Isn’t that what elected officials are supposed to do?

Have a different idea? Am I off base in my thinking, or just plain wrong? Don’t hesitate, let me know! I welcome your comments, suggestions, input and constructive criticism. Working together, we can put greater Minnesota’s priorities first!