As I mentioned yesterday, I had the chance to go to a townhall meeting and hear some great facts and figures from Rep. Loon, Rep Strenruud and Senator Hann. There were about 30-40 people at the meeting that lasted about 2 hours at the Eden Prairie library on Feb 4th.
According to the Tax Foundation, Minnesota’s taxes are the 7th highest in the nation. The tax burden for an individual is $4,688 or $18,752 per family. Although 1/3 of Minnesotans do not pay taxes and the top 10% pay 40% of the taxes.
How do we look compared to other states:
43rd out of 50 states for Business tax climate, that means 42 other states are more business friendly.
Sales Tax Index: 40th
Unemployment Insurance sales tax index: 38th
When it comes to where our money comes from the fund the government, half comes from individual income tax. So when fewer of us are working, it really impacts the state funds. 28% comes from sales tax and 5% from corporate taxes and property taxes. The rest are made up of various fees and lesser used taxes. In an average year, MN will see 1% or less population grow, and we do have an aging population. This is important as we look at where our money goes.
The money we pay in taxes at the state level go into the general funds, which is 50% of where the state gets funding. 31% is from the federal government, but for the next budget period starting next year, 60% of the budget will come from the general funds and the federal government portion will shrink to 25%. During the current budget period, the increase in federal spending came from stimulus spending.
So where does all that money go? Looking at the proposed 2012-13 cycle, here is the breakdown:
Health and Human Services: 41.4% (MN spends 12 billion and the federal government spends another 12 billion)
Education of K-12: 27.1% (does not include your local property taxes)
Transportation: 8.9%
Tax Aids and Credits: 5.4%
Higher Education: 4.6%
Job and Economic Growth: 1.8%
The rest is made up of natural resources protection, agriculture programs, vet programs, debt services and “others.”
As you can see, we spend a large amount of health and human services which is a really social services programs. K-12 also takes up a large portion of our money while job and economic growth gets almost nothing.
In a nutshell, that’s your budget situation in Minnesota, next time I will go over some of the topics we discussed at the townhall.