This week’s perspective is for the ones who spend your money and don’t want you to know; at least they have chosen to consistently ignore it or outright refute it when brought up during budget discussions. It’s the “pigment” they would prefer to keep out of the mix; however, as I have stated in previous articles, all perspectives must be considered if we are to honestly comprehend the “true” price of local government.
While low property taxes and the highest amount of exported taxes are used to justify increased spending, the traditional price of local government perspective provides a better sense of the public’s ability to finance local government operations.
Ever since the Minnesota Center for Fiscal Excellence (MCFE) began comparing – in 2012 – how local governments’ fiscal footprints differ across the state, Cook County has held the dubious distinction of having the highest cost of government per person than the 86 other counties within the state. That’s a fact!
How is this determined? Per capita, personal income is calculated as the total personal income of the residents of Cook County divided by the population of the county. In computing per capita personal income, the U.S. Bureau of Economic Analysis (BEA) uses mid-quarter population estimates based on unpublished Census Bureau data. The MCFE replicates this methodology at the county level – calculating the ratio of total local own-source revenues (all state and local revenues less “intergovernmental revenues” – grants from one unit of government to another) collected in each county to personal income–to generate a Price of Local Government (POLG) for all 87 counties.
As one might imagine, there is considerable variation across the state in the burdens local governments impose on taxpayers.
Although the Price of Local Government climbed in 49 of Minnesota’s 87 counties for 2014 (most recent report, released February 2017), a definite pattern emerged based on population. Six of the seven metro-area counties and seven of the state’s 10 largest counties saw a decline in their Price of Local Government, which offset the increases in smaller counties and led to a slight year-on-year decline in the statewide average, which for 2014 was 4.12 percent, which translates to $2,019 per person.
It should also be noted that half of the 12 counties where the POLG was at least 25 percent more than the state average are located in the Headwaters or Arrowhead regions.
Price of Local Government
So, what do the 2014 figures tell us about the Traditional Price of Local Government across the state? They ranged from a minimum of 2.8 percent ($1,169) of personal income in Winona County to a high of 7.5 percent in Cook County, which translates to $3,164 per person – that’s per person, not per family unit. Lake County was at 5.9 percent ($2,484) and St. Louis County at 4.8 percent ($2,004) by comparison.
Personal Income
Consider, on the other hand, while overall personal income in Minnesota grew by 4 percent between 2013 and 2014, personal income in Cook County increased by only half this amount at just over 2.1 percent. Another way to understand the relationship between the POLG and personal income is to say, “The rate of increase in local government’s ‘ask’ is greater than the underlying ‘economic activity’ that supports the ask.”
As Minnesota Center for Fiscal Excellence Research Director Aaron Twait observed, “Cook County really stands out as a county where local government is asking a lot more of taxpayers than they can afford to support.”
“Elections should be held on April 16th–the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders.” Thomas Sowell
Former Cook County Commissioner Garry Gamble is writing this ongoing column about the various ways government works.
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