Archives for Policy Memos

New Minnesota Public Employee Compensation Study: Outpaces Our Ability to Pay

The Minnesota Chamber of Commerce, NAIOP Minnesota, and the Commercial Real Estate Development Association have released a Workforce Compensation Study conducted by the Minnesota Taxpayers Association. We have all heard that total compensation packages for public employees exceed those in the private sector. As it turns out, that is true in some cases and not in others. But the bottom line, according to Dave Olson at the Chamber, is that “(t)he cost of government services is growing faster than our economy, and our ability to pay. We aren’t receiving the outcomes that Minnesotans expect and deserve,” Olson said. “Government redesign promises to be at the forefront of the 2011 legislature.”  

The study is important because it provides the data we all need to accurately assess where we go from here. You can read the Study Highlights to see both state and local compensation figures and trends. We thank the MTA, Chamber, NAIOP and Realtors for spending their hard earned dollars on this excellent study.

According to the Minnesota Chamber, “Minnesota public employee compensation is largely out of sync with the private sector and threatens the sustainability of public services….Several elements of public employee compensation must be reined in and reformed to ensure that governments can continue to deliver quality services and fulfill obligations in a cost-effective manner.”

The report’s recommendations include:

  • Improve taxpayer understanding of public sector compensation by creating more transparent key labor provisions and explaining their impact on government budgets and property taxes
  • Reform public pensions to reduce cost pressures on government operations and the current degree of taxpayer risk (emphasis added)
  • Reform outdated compensation practices and statutes governing the ability of public human resource management to better reward performance and productivity
  • Reform Minnesota’s prevailing wage law so the prevailing wage more closely reflects average wages

We emphasized the recommendation regarding pensions because the Minnesota Free Market Institute is focused hard against Minnesota’s unfunded pension liability. You’ll be hearing that over and over until we get the issue solved! Minnesota has been promising a lifestyle to both current workers and retirees that has created two classes of workers in Minnesota: the Haves and the Have Nots. That is why we have launched a website dedicated to Minnesota’s public pension system called the Pension Reform Project.  We hope you will get the facts and give Minnesota’s leaders the encouragement they need to tackle this issue in 2011. Republicans and Democrats alike have kicked this can down the road for years–we are at the end of the road and this new study will help guide thoughtful reform in Minnesota.

Minnesota Budget Solutions Coalition; Balance Minnesota’s Budget Without Raising Taxes

The Minnesota Free Market Institute is a proud member of the the Minnesota Budget Solutions Coalition. The Coalition is an informal alliance of non-profit organizations formed to solicit ideas from the public and members of the coalition on the state budget.

The Minnesota Budget Solutions Coalition released a brief in 2009 demonstrating that the budget can be balanced without raising taxes (for a copy go to http://www.mnbudgetsolutions.com/) . Now more than ever, innovative ideas are needed in St. Paul to balance the budget and get us on the road to recovery and prosperity. Raising taxes during an economic recession will have dire consequences. As our legislators debate in St. Paul, employers all over the state are deciding whether to hire (or fire) a new employee, invest in new equipment, or leave the state for a friendlier business climate. Minnesota already has one of the highest per-capita tax burdens in the nation. Taxing the so-called “rich” will not solve our budget problems. Every time we raise taxes on individuals and business, we are showing people the door. Our policy brief contains creative ideas that both parties can embrace if they are serious about living within our means. It also contains some strong medicine that will be hard for any politician to swallow. Please share these ideas and encourage our leaders to return Minnesota to economic health.

Note: The Coalition is busy updating the policy brief with figures from the current budget. Watch for its release this summer.

POLICY MEMO: Traffic Congestion


Traffic Congestion:
Refuting the notion that increasing the gas tax and building more transit reduces traffic congestion.

Congestion is a problem, but it is a good problem to have. Traffic congestion is the result of a vibrant economy. Policymakers must accept that congestion is a market-driven phenomenon and manage congestion to maximize “mobility” – the ability of people to get from where they are to where they want to go to do what they want to do when they want to do it. That approach is a sharp contrast to the “tax first plan later” strategy for massive, across-the-board investments in transportation – especially light rail in the seven-country metro area. It is ignorant at best and disingenuous at worst to tell Minnesotans that they will achieve any real relief from the costs of congestion by paying higher taxes, even if those taxes are dedicated to transportation. Only by grasping the multifaceted nature of congestion – considering congestion as a market-driven phenomenon in the context of Levels of Service – can we develop a coherent strategy for reducing congestion that is focused on the lowest cost/highest benefit solutions.

Download a pdf of the complete Policy Memo

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