Category Archives: disclosure

Scott Jensen’s Unanswered $15,000,000,000 Question

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Minnesota Republican gubernatorial candidate Scott Jensen proposes to eliminate the state income tax.  At first blush, that might sound good to inflation-weary taxpayers. But to balance the state budget, such a change would necessitate $15 billion per year in service cuts and/or increases in other types of more regressive taxes.

Quite irresponsibly, Jensen won’t say what services he would cut, or what taxes he would increase, to balance the state budget.  But make no mistake, serious pain would result.  Jensen’s plan would necessitate massive cuts in education and/or health care, and/or a huge increase in property taxes, or other types of taxes that are more regressive than the state income tax. 

Shifting from the progressive state income tax to the regressive property tax is popular among the wealthiest Minnesotans, because that change would greatly benefit them. The progressive state income tax requires that the wealthiest Minnesotans pay a higher share of their income in taxes than is paid by the poorest Minnesotans.  On the other hand, regressive property, sales, and/or excise taxes put more of a burden on lower-income Minnesotans compared to the wealthiest Minnesotans.

Wealthy doctors like Jensen, multi-millionaire professional athletes like his running mate Matt Birk, and the most financially privileged Minnesotans who disproportionately fund Republican candidates don’t want to pay their fair share in taxes.  This is a political payoff to them.

Jensen’s proposal not only is a grossly inequitable giveaway to the wealthiest Minnesotans, it’s also dishonest.  Jensen only discloses the benefits – no more income tax bill! – without disclosing the costs – crippling school cutbacks, slashed health care services for vulnerable Minnesotans, and/or crushing property tax increases. All of those costs are enormously unpopular with Minnesotans, so Scott Jensen simply refuses to answer that critical $15,000,000,0000 question.

Jensen isn’t explaining the downside of eliminating the state income tax, but reporters should be doing that. Unfortunately, it’s barely happening.  Compared to heavy front page reporting on Walz’s actions related to a nonprofit fraud prosecution and the debate over the number of debates, this hugely consequential policy proposal has received relatively scant coverage.

One exception is the Minnesota Reformer. Though the Reformer has relatively light readership, it has done thoughtful and constructive reporting, such as this: 

“Minnesota has a steeply progressive individual income tax, meaning households with higher incomes have a higher tax rate as a share of their income compared to lower income households. Eliminating individual income taxes would disproportionately burden low-income Minnesotans while giving huge tax cuts to the state’s wealthiest.

‘Progressive income taxes are integral to having budgets that can meet the needs of all citizens, and they’re also really important in ensuring racial and socioeconomic equity,’ said Neva Buktus, state policy analyst for the Institute on Taxation and Economic Policy. ‘Eliminating the personal income tax would completely throw that out the window.’

Each year, the Institute on Taxation and Economic Policy creates a ranking of state tax systems and how they foster income inequality.

The six least equitable in the U.S. are among the nine states with no individual income taxes. Minnesota’s progressive personal income tax makes it one of the least regressive in the country — 47th out of 50. That means our lowest income earners get a better deal than nearly every other American when it comes to state and local taxes. 

‘If you’re going to eliminate the income tax, there’s no way to spin it. It disproportionately benefits the wealthiest Minnesotans by a long shot,’ Buktus said.”

At other major news outlets, my best guess is that reporters are shrugging off the issue relative to other issues because they believe that elimination of the state income tax could never pass the Legislature.   

It’s not reporters’ jobs to gauge likelihood of passage.  After all, no one knows what the future makeup of the Legislature might be if voters sweep Republicans into office, as historical trends portend.  Instead, reporters are supposed to explain the candidates’ major policy proposals and analyze the consequences so voters can make fully informed decisions.

That’s just not happening as much as it should. Whatever the thinking in Twin Cities newsrooms about Jensen’s most radical and reckless policy proposal, their silence on the topic has been deafening. 

South Dakota: Imagine There’s No Parties

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Imagine there’s no countries
It isn’t hard to do
Nothing to kill or die for
And no religion too
Imagine all the people
Living life in peace… 

You may say I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will be as one

John Lennon

Cursor_and_amendment_v_south_dakota_-_Google_SearchWhen I heard about the constitutional amendment on the South Dakota ballot to make all
state elections nonpartisan, I thought of these lyrics.

Imagine there’s no parties?

Believe it or not, that’s sort of what South Dakota is debating this fall.   At first blush, it struck me as every bit as unlikely and impractical as what John Lennon sang.  But if Amendment V gets a plurality of votes from South Dakotans of all party affiliations this fall, every state office would become nonpartisan.

That means that in every election except for presidential contests there would no longer be separate primaries for the respective political parties, party labels would not be used on ballots, and citizens would no longer have their voting restricted due to their party affiliation, or lack of a party affiliation. Instead of party primaries, a single primary contest would be held, and the top two finishers, regardless of their party affiliations, would face off in the general election.

Cursor_and_nonpartisan_nebraska_-_Google_Search

“Imagine there’s no parties. It isn’t hard to do.”

Partisanship Pros

Except that it is hard for me. Very hard. While municipal and judicial elections currently don’t use party labels, I like having party labels on ballots. They give me helpful shorthand clues when I come across an unfamiliar name towards the end of the ballot.  For instance, if I want to avoid inadvertently casting my vote for someone who wants to underfund public services or weaken environmental protections, seeing that “D” next to a candidate name on the ballot reduces the chance that I will mistakenly vote for someone who doesn’t share my  values.

To be sure, party labels don’t tell you everything, but they give a pretty solid clue about a candidate’s likely positions. I support disclosure in government and governing, and requiring party labels has disclosure benefits.

If party labels weren’t on the ballot, I’d have to do more homework to avoid making voting blunders on the more obscure portions of the ballot.  On the other hand, with online resources that are now available, homework has never been easier.  By the way, this problem could be lessened if all state and local governments allowed citizens to use smart phones or other types of computers while voting. That’s an antiquated rule that needs to be changed.  I need to be able to use my spare brain in the voting booth.

Imagine A Nonpartisan System

Maybe the inconvenience and lack of disclosure associated with a nonpartisan election system would be worth it.  I am painfully aware of what extreme partisanship is doing to our politics. It’s making us mindlessly tribal. It’s causing legislators to substitute logic and analysis for blind loyalty to party leaders and their most powerful interest groups. It’s muting the voices of independent and moderate citizens who don’t identify with either of the major parties. It’s making compromise almost impossible.

Drey Samuelson, one of the founders of the South Dakota public interest group championing Amendment V, TakeItBack.org, feels strongly that the benefits of nonpartisan elections and offices greatly outweigh whatever disclosure-related benefits there might be associated with the status quo.

Imagine no closed door caucus scheming.  Samuelson says one of the most compelling reasons to keep party labels off the ballot is that it removes partisan control from the Legislature, as it has in Nebraska. Party caucuses don’t exist in the Nebraska Legislature, so policy isn’t made behind closed party caucus doors.

Party caucuses aren’t banned by Amendment V.  But Samuelson said that if the nonpartisan amendment passes in South Dakota this fall, there would be strong public pressure for South Dakota legislators to organize themselves in a nonpartisan way — without party caucus meetings and with party power-sharing — as Nebraska has done.

Imagine sharing power and accountability.  In Nebraska’s nonpartisan Legislature, legislators from both parties can and do become legislative committee chairs. Because they share power, they also share credit for legislative successes, and accountability for scandals. There is less time and energy wasted on blame games.

Imagine an equal voice for all.  TakeItBack.org also stresses that a nonpartisan system will give South Dakota’s 115,000 registered Independents an equal voice in the elections and government they fund, which they lack today.  This is particularly important in primary elections, where many of the most important decisions are made.

Imagine a popular Legislature.  A nonpartisan Legislature would also very likely be a more popular Legislature.

“People, by and large, don’t like the division, the bickering, the polarization, and the inefficiency of partisan government,” says Samuelson. “They find that nonpartisan government simply functions better.”

In fact, the nonpartisan Nebraska Legislature is nearly twice as popular as the partisan one to the north. A January 2016 PPP survey of South Dakotans found a 36% approval rating for the South Dakota Legislature, while a June 2015 Tarrance Group survey of Nebraskans found a 62% approval rating for the Nebraska Legislature.

A 62% approval rating should look pretty good to Minnesota legislators.  Minnesota DFL legislators have a 29% approval rating, and Republican legislators have an 18% approval rating (PPP, August 2015).

For my part, I’d be willing to give up partisan labels on the ballot if it would get us a less petty, Balkanized and recalcitrant Legislature.   If Nebraska is predictive of what Minnesota could become, the benefits of such a nonpartisan body would outweigh the costs.

News Flash: Candidate Announces a Running Mate…zzzzzzzzzzzzzzz

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KuisleIn recent years, it feels like the quantity of political reporting in daily newspapers has dropped off.  Whether a function of smaller newsrooms, editors who believe the public wants less political coverage, editors who are gun shy about provocative political topics, or something else, there just seems to be less political coverage.

Political reporters do still cover the most predictable, scripted and formal of political events — candidacy filings and announcements, campaign finance filings, party endorsement events, and running mate announcements.   For the most part, the public snores through all of this formulaic coverage of predictable events.

Case in point:  Today’s Star Tribune carried a fairly in-depth article about Hennepin County Commissioner and gubernatorial candidate Jeff Johnson picking Guy I’ve Never Heard Of as his Lieutenant Governor running mate.   In this article, we are earnestly briefed about the selection of someone who almost certainly won’t impact the outcome of the gubernatorial race, and almost certainly wouldn’t have substantive duties if he somehow beat the odds and actually got the job.

What is even better is that we can look forward to this kind of scintillating “candidate chooses running mate” coverage for each of the multitudes of candidates in the gubernatorial race.  Spoiler alert:  Each candidate will be picking someone brilliant who is “balancing their ticket” in some fashion.

Meanwhile, more important and interesting things go uncovered or undercovered.

  • When congressional candidate and big box store heir Stuart Mills III airs a TV ad portraying himself a self-made man who treats his workers well, there is no newspaper  probing of those two claims.
  • When Senator Al Franken films an ad implying he has been working overtime to help small businesses get high skilled workers, there is no probing of the veracity of that claim.
  • When shadowy independent expenditure groups’ attack ads are aired, there is too little work put into trying to learn about the financial backing for the ads, and whether the groups’ claims are based in fact.
  • When Candidate A criticizes Policy X while refusing to offer a detailed alternative, there is too little exposing that act of political cowardice and intellectual dishonesty.

These are shadowy areas where savvy, sleuthing political reporters could actually shed light.  But when political operatives figure out that lying and hiding won’t get exposed, guess what, lying and hiding proliferates.  When that happens, our democracy gets weaker.

I hope this isn’t an either/or issue.  Maybe there still is enough capacity in newsrooms and column inches in newspapers to cover both the formulaic stories and the more probing stories.  That would be ideal.  But if there no longer is enough journalistic capacity for both types of coverage, our democracy needs the latter much more than it needs the former.

– Loveland

Which MN Candidates Will Sign The Pull-The-Plug Pledge?

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Pull_the_plugAs a general matter, I despise campaign pledges.  Candidates are continually badgered by interest groups to pledge in writing that they will always do X, or never do Y.

The Problem With Pledges

The problem with most pledges is the “always” or “never” parts of them.  The world changes, and policy positions therefore sometimes need to change with them.

  • Pledging to not increase taxes today may make sense at one point in history, but a few years later the circumstances may have changed dramatically.
  • Pledging to support a policy or project now may make sense, but not after surprising new information surfaces.
  • Pledging to tax millionaires may make sense at a time when they’re not paying their fair share, but not a few years later when circumstances may have changed.

So sometimes making policy shifts isn’t  a sign of weakness or dishonesty, as pledge enforcers often claim.  Sometimes, shifting is a sign of courage, vision and integrity.

That’s why I don’t like most campaign pledges.

Pull-the-Plug Pledge

But I came across a pledge the other day that fits our times, and has an infinite shelf life.  South Dakota congressional candidate Rick Weiland challenged all congressional candidates to sign this simple pledge:

“I hereby pledge that, if elected to represent you, I will never vote to shut down your government, or to place your government in default, in order to force it to act, or to prevent it from acting, on unrelated issues.” 

As a voter, I want to know where every Minnesota congressional candidate stands on this Pull-The-Plug Pledge.

Flat_line-2If there are candidates out there who think it is acceptable from them to pull the plug on the American people’s government and economy, that is their right.  But it’s also the right of the overwhelming 72% percent of Americans who oppose the Republicans’ current plug-pulling scheme to be forewarned of a congressional candidate’s position on that  issue, so that they can vote with their eyes wide open.

Yes, Americans and their policymakers must always be able to make their government a different size and shape as future circumstances dictate.  This pledge doesn’t prevent them from having such flexibility. It simply says it’s not acceptable to completely pull the plug on the American economy and government.

So, Tim Walz, Mike Benson, John Kline, Mike Obermuller, Paula Overby, Betty McCollum, Keith Ellison, Erik Paulsen, Tom Emmer, Rhonda Sivarajah, Phil Krinkie, John Pederson, Judy Adams, Collin Pederson, Rick Nolan, Stewart Mills III, Monti Moreno, Chris Dahlberg, Mike McFadden, Julianne Ortman, Jim Abeler, and Al Franken, will you sign the Pull-The-Plug Pledge?

– Loveland

Note:  This post was also featured in Politics in Minnesota‘s Best of the Blogs.

Mistaken Dayton

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mark_dayton_Photo_by_Minnesota_Public_Radio-2Teddy Roosevelt said “the only man who never makes a mistake is the man who never does anything.”

A couple years back, Governor Mark Dayton was trying to do something.  He was attempting to do something that scores of other elected leaders had failed to do, after about a decade of trying.  To great fanfare, he helped strike a bipartisan Vikings stadium financing deal that was passed into law.  But in the process, the Governor and Legislature made a big honkin’ mistake in relying on electronic pulltabs to finance the stadium.

I don’t admire the Governor’s mistake.  But mistakes happen to human beings, and I do admire two things that mistaken Dayton has done in the wake of the error.

Mistake Admitted

The first thing I admire about the Governor is that he admitted the mistake.   He said the four humble words you rarely hear coming out of elected officials’ mouths —  “We made a mistake.”    In the Star Tribune, Governor Dayton didn’t sugar coat, blame, or make excuses:

“We made a mistake, and corrected it.”

It should be noted that the Governor didn’t say this right away.   He was initially hoping that time might heal the e-pulltab wounds, and it was probably reasonable to give the new product a bit of time to develop a following.  But he did admit the mistake quickly enough to keep the stadium project on track, and that’s something that modern politicians almost never do any more.

Admitting mistakes is a core competency voters need to demand from elected officials.  Mistakes are inevitable for any leader, and admitting them is the sign of a courageous, constructive and honest leader, not a weak one.  After all, mistakes usually don’t get fixed until they’re identified and owned.  If we don’t have leaders who are willing to do that, we’ll be stuck with a government focused on cover-ups, mop-ups and work-arounds.

Correct Lesson Learned

The second thing I admire about the Governor’s admission is that he learned the correct lesson from the mistake.  Errors present teachable moments where leaders can learn the wrong or right lessons.  Wise leaders learn the right lessons.

As I wrote a while back, the right lesson here is NOT that private sector fiscal input is always evil or incompetent, or that anything that the Vikings owners’ endorse must be rejected on its face. These are the conclusions that a lot of stadium critics have been pushing, and they are rash and wrong.

Fiscal analysts would be foolish to reject private sector vendors’ input as part of their analysis.  Just because they were spectacularly wrong in this case doesn’t mean that they shouldn’t be used.  History shows that private sector input is one important element, among many others, of good policymaking.

Governor Dayton learned the correct primary lesson from his misstep:

“To take an untried source of revenue for the sole source of funding for a major project is ill-advised. That’s my number one take-away from this.”

When it comes to new revenue sources derived from the sales of a product that is completely new to the marketplace, all public and private analysts are guessing.  They aren’t guessing because they are incompetent, lazy or corrupt.  They are guessing because there is no historical consumer demand data to inform sound fiscal analysis.  That is why a virgin revenue source should never have been used by the Governor and Legislature, not because the Wilfs and pulltab vendors are necessarily scoundrels intent on scamming taxpayers.

Admit the mistake promptly, and learn the right lesson.  In a system run by mistake-prone human beings, that’s the best we can expect of any leader.

– Loveland

Note:  This post was featured in Minnpost and in Politics in Minnesota’s Best of the Blogs.

Wilf’s Minnesota Partners Should Seek Advice From Their New Jersey Partners

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Josef_Halpern_Wilf_business_partner_photo_credit_New_Jersey_Star-LedgerMinnesotans are about to become business partners with Zygi Wilf, to the tune of half a billion dollars.  To get the partnership structured correctly, part of our due diligence process should be to ask past Mr. Wilf’s past business partners what they would do if they were us.

For instance, we should consult with Josef Halpern and his sister Ada Reichman, who the court says were defrauded by their business partner Zygi Wilf.  What advice would Halpern and Reichman give Minnesotans on the eve of our business partnership with the Wilfs?

My guess is that Halpern and Reichman wouldn’t be at all focused on ability-to-pay, which seems to be the primary, if not sole, concern of the Minnesota Sports Facitilies Authority (MSFA) and the reporters covering this issue.  Minnesotans seem to be learning the wrong lesson from the New Jersey case.  After all, ability-to-pay falsification wasn’t the flavor of fraud the Wilfs served up to Halpern.  Having money wasn’t the Wilf’s problem in the New Jersey case; sharing it was.

As  Judge Deanne Wilson said, Mr. Wilf’s own testimony showed that he had “reneged” on the agreement with Reichmann and Halpern because he decided that they got “too good a deal.”  The judge also said “I do not believe I have seen one single financial statement that is true and accurate.”

So, what if the Wilf’s decide Minnesotans got “too good a deal?”  Will Minnesotans get the Halpern-Reichman treatment?

Given the Halpern-Reichman experience, I doubt very much that their advice to us would be “make sure they have enough money.”  It would more likely be “protect yourself.”

You can bet that Halpern and Reichman wish they had written a stronger accountability provisions into their contract, and regular audits reinforced with stiff fines for falsification.  You can bet that they wish they had made the Wilfs regularly disclose everything about the operation of the partnership, so that the financial funny business could have been discovered sooner rather than later.

Actually, what Halpern and Reichman probably would advise Minnesotans is to avoid partnering with the Wilf’s at all costs.  But since that doesn’t seem to be in the political winds at this stage, the MSFA should do what the Wilf-defrauded partners would surely do if they had it to do over again:  Don’t trust, verify.

– Loveland

Zygi’s Blind Spot

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When you’re a wealthy, secretive, pin stripe wearing New Jersey family who is found guilty of a multi-million dollar racketeering charge, you are fighting a certain stereotype.   Francis Ford Coppola-inspired biases are inevitable.   Many Minnesotans are too polite to say it out loud, but they’re thinking it.

Zygi_Wilf_undisclosedThe Wilf’s have chosen to become very public figures, so they need to be aware of how the news of the last few weeks is effecting their public image.  But instead of mitigating the reputation damage, they are aggravating it.

This week in court, the Wilfs argued that they cannot disclose information about their wealth.  The refusal to disclose is bad enough.  Secrecy fosters suspicion, and plays into the stereotype.  But the rationale they provided for not disclosing is even worse.

“Unfortunately, in the world in which we all live, it is not uncommon to read articles in the press describing plots by malicious individuals targeting well known high net worth individual[s] and their families for physical attack and extortion.”

Did Mario Puzo write that statement for him?  “Attackers?”  “Extorters?”  When scenarios like that are described by a rich guy convicted of racketeering and fraud in New Jersey, many are going to hear Speak Softly Love in the background.  Maybe they shouldn’t, but they will.

Mr. Wilf’s growing reputation problems run the risk of creating business problems.  Those personal seat licenses start to feel like “an offer you can’t refuse.”  The $575 million partnership Minnesota taxpayers are about to enter into with the Wilf’s starts to feel more shady and risky.

To be clear, I obviously don’t wish an attack or extortion plot on Mr. Wilf.  But let’s be real.  It’s hardly a  secret that Mr. Wilf is a very wealthy man.  After all, he flaunts a $19 million apartment on Park Avenue, and it is regularly reported that he owns huge real estate developments and Adrian Peterson.

Therefore, any would-be extortionist or attacker already knows that Mr. Wilf is in possession of a boat load of money.  If the court puts a  number in place of “boat load” it will not further endanger Mr. Wilf.

So, disclose already.  Act like someone who has nothing to hide.  Stand up and proudly say “This is what I have, and this is how I earned it.”  Don Corleone would never say that.   If you don’t want Minnesotans to fall prey to the stereotype and subsequently become wary of entering into a $575 million partnership with you, stop feeding the stereotype and let the sunshine in.

– Loveland

Note:  This post was featured in Politics in Minnesota’s Best of the Blogs and MinnPost.

Beyond Ability to Pay, Stadium Authority Needs To Assure Monitoring, Disclosure and Accountability

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vikings_stadiumAfter weeks of delay, Minnesota Vikings owner Zygmunt “Zygi” Wilf is finally sharing more financial information to prove he has sufficient financing to pay his share of the new Vikings stadium.  Or, more precisely, Mr. Wilf is proving that he has enough money available, minus whatever he has to pay in a pending fraud and racketeering judgment against him, plus a boat load of financial help from the National Football League, a forthcoming corporate naming rights deal, and Vikings fans’ personal seat license fees.

That’s progress.  Proving ability to pay is a necessary condition of moving forward with the stadium.  But while it’s necessary, it’s far from sufficient. Minnesota taxpayers also need assurances that the pledges Wilf makes in the stadium agreement are kept.

Not “One Single Financial Statement That Is True”

If you think that’s too paranoid, populist or punitive, remember what New Jersey Judge Superior Court Judge Deanne Wilson said just a few days ago about Wilf’s behavior in another business partnership (from MPR):

“The bad faith and evil motive were demonstrated in the testimony of Zygi Wilf himself,” Superior Court Judge Deanne Wilson said, adding the Wilfs hadn’t fulfilled the “barest minimum” of their pledges as partners in the deal. “I do not believe I have seen one single financial statement that is true and accurate.”

Officially, she ruled that Zygi Wilf, his brother Mark and cousin Leonard committed fraud, breach of contract and breach of fiduciary duty and violated New Jersey’s civil racketeering law.”

“I do not believe I have seen one single financial statement that is true and accurate.”  Gulp.  Judge Wilson’s statement should be disconcerting to anyone thinking about entering into a business partnership with the Wilfs, including the Minnesota taxpayers about to sign onto a half billion dollar partnership with them.

 Ability To Pay Not The Only Safeguard Needed

The Stadium Authority’s oversight must go beyond ability to pay.  It must also look into the veracity of other claims the Vikings owners have made so far, and, just as importantly, set up a tight system for monitoring whether the Wilfs are being honest throughout the life of the contract.

Financial oversight is certainly not my field, but maybe “keeping them honest” means regular audits, with large penalties for financial statement shenanigans.  Maybe it means requiring holding large amounts of the Wilf’s money in escrow until major partnership obligations are fulfilled.   It surely means plenty of public disclosure of all of any accountability-related reports.

 Rush to the Ribbon Cutting

Negotiating such accountability measures may take time, and consequently delay the project.  Though the delay has been caused by the Wilf’s own stonewalling, it would be unfortunate if the Vikings had to play some extra games in the University of Minnesota stadium, and if the delay drove up the cost of the project.  But a delay would not be as unfortunate as  the taxpayers getting stiffed because the stadium authority was in too big of a rush to hold a ribbon cutting ceremony.

The Wilfs and the NFL won’t like the idea of being subject to penalties for bad partnership behavior.  They will send spokesman Lester Bagley out to express outrage and hurt feelings.  This from the folks who are freshly convicted of fraud and racketeering.  This from the  folks who regularly penalize their employees for the high crime of having fun with end zone dances.

Minnesota taxpayers should no longer care about Zygi and Lester’s hurt feelings or delayed ribbon cuttings.   In the wake of Judge Wilson’s startling findings about the Wilf’s past partnership chicanery, “Wilf has the cash” is no longer a good enough assurance for Minnesota taxpayers.  Taxpayers need the Stadium Authority to take their time, and assure taxpayers that “Wilf has the cash, and he’s being regularly monitored and held publicly accountable.”

Loveland

Note:  This post was also featured in Politics in Minnesota‘s Best of the Blogs and MinnPost’s Blog Cabin.