Friday, February 26, 2010

The Legacy Amendment and "Double Dipping"

On November 4, 2008, Minnesotans voted to amend the state Constitution to:

"...dedicate funding to protect our drinking water sources; to protect, enhance, and restore our wetlands, prairies, forests, and fish, game, and wildlife habitat; to preserve our arts and cultural heritage; to support
our parks and trails; and to protect, enhance, and restore our lakes, rivers, streams, and groundwater by increasing the sales and use tax rate beginning July 1, 2009, by three-eighths of one percent on taxable sales until the year 2034."

You had me at "protect our drinking water."

But seriously, presented with this amendment at my local polling place, how could I vote no? I, like other voters, rallied behind the causes outlined in the amendment, before thoughtfully examining the means. Besides, the 3/8 of 1% increase in my sales tax is basically unnoticeable (read: not visible), and protecting our 10,000 lakes sounds like a great way to spend that marginally higher tax revenue (read: politically feasible).

The Clean Water, Land, and Legacy amendment is expected to generate between $230 and $250 million in revenue from the general sales and use tax each year from 2009-2034. The revenue will be split among four funds: Outdoor Heritage Fund (33%) ; Arts & Cultural Heritage Fund (19.75%); Clean Water Fund (33%); and Parks and Trails Fund (14.25%). The increased tax revenue will supplement funding for these causes from the General Fund and the biennial bonding bill.

Prior to passage of the bill, the main controversy surrounding the the amendment questioned the wisdom of levying a sales tax and dedicating funds (regardless of the nobility of the cause or need for funding) in the state Constitution, rather than by amending the state sales and use tax statutes. That controversy is not surprising, given a budget deficit of $4.6 million, and the legislature and governor in gridlock over how to balance the budget. Now that the the amendment is in place and the legislature is back in session, a renewed controversy is brewing.

A Star Tribune article published last week examines how organizations can potentially fund an environmental, arts, or cultural project through multiple mechanisms--like the bonding bill, Legacy funds, and the state lottery--and calls this "double dipping." This comes at time when organizations and state agencies are experiencing deep budget cuts and may wish that they, too, could have access to constitutionally dedicated funds.

Based on some un-scientific research, it seems that most states use the constitution to establish their authority to levy taxes, rather than to dedicate tax revenue to specific funds, perhaps with the exception of lotteries. The Legacy Amendment is unique. By passing the amendment, the citizens of Minnesota made a major statement about their priorities and their willingness to pay more (not to replace existing funding sources) to protect them.

1 comment:

  1. Nice job, Meredith.

    Originally I was all supportive of the Legacy Amendment, because environmental issues tend to be overlooked in regular budgetary process when elected officials get occupied with other budget "sacred cows."

    Now I came to think about the other perspective. We like to dedicate resources for important public service functions to prevent it being underfunded. But there got to be a line somewhere, because, as we have learned about federal earmarks, good-intention dedications might go too far as to leave the budget out of control.

    To dedicate, or not to dedicate. It is the question there.