Remember the story of Chicken Little?

An acorn fell on her head and she ran around telling everyone the sky was falling. The parable is reminiscent of the legislative process around Minnesota’s budget. For the past few years there have been acorns falling and some people have reported the sky is falling — it wasn’t apparent to all because an acorn hadn’t fallen on or around them. But now the cracks are showing and Minnesota’s sky seems to be falling on everyone.

The fact of the matter is of course the sky isn’t literally falling, but that doesn’t mean there isn’t cause for alarm. Sustaining the cost and supporting the benefits of services and programs people have grown accustomed to is just not possible. People who are feeling the impact of budget cuts (those who see, feel and hear the sky falling) are being called on now to let the Legislature know just what potential there is for short-term harm and long-term damage through an all-cuts scenario.

An honest, structurally balanced budget means the money the state spends matches what comes in; not only for this budget cycle but for the next. Doing such a budget gets us off the roller coaster of boom and bust budgets. Under Gov. Pawlenty, the budget was balanced using multiple accounting tricks to pay out more than came in. That included using one-time funds (like federal money), delaying payments to schools, and raiding pots of money in one area to pay for others. That cycle continues this session as members in the majority want to take one-time funds, local property tax money from one part of the state and distribute to others. They even want to raid constitutionally dedicated lottery money to backfill their cuts in other areas. For the past eight years the dilemma of not having enough money just got swept under the rug, hoping the next revenue forecast would quietly take care of the problem. To use another chicken analogy — the chickens have come home to roost and there’s not enough money in the checkbook to pay the bills.

As an example, we know what it will cost to educate a student each year. As the state adds students, the state pays school districts to educate each of them. More students mean the K-12 budget is higher than the previous year. Simply put, costs go up with more students to educate. On the revenue side, Minnesota has been lagging, meaning we take in less than we spend. Minnesota has gotten a great value for our tax dollar, getting more in benefits than we actually pay to support. It’s a heck of a deal if you can keep it going. Unfortunately we cannot.

It is what it is but is that acceptable? There is another option — raising revenue to cushion the blow. Minnesota’s tax system is regressive, which means people with lower incomes pay a higher percentage of their incomes than those with higher incomes. Local property taxes, which are regressive, have made up a larger share of people’s tax burden over the past decade. In Minnesota, those who make less pay more. The Tax Incidence Study released this spring by the Minnesota Department of Revenue showed 90 percent of Minnesota’s earners paid an average of 12.3 percent of their income in local and state taxes in 2008. For comparative purposes the study breaks down Minnesota households into 10 equal groups or deciles. Effective tax rates rose from 11.7 percent of income in the third decile to 12.3 percent in the sixth decile, and then fell significantly to 10.3 percent of income in the 10th decile. The gap between top earners, households which earn more than $130,000, and the rest of Minnesotans has widened.

The Legislature and the governor have yet to agree to the right options for a structurally balanced budget. We have to continue to maximize the tax dollars currently being spent and recognize our commitments to our citizens and our collective future. As we have approximately four more weeks of the legislative session it is very important to hear from constituents. Minnesota’s current path is unsustainable. The answers will come when we answer the questions — do we lower our expectations by cutting programs and services or do we keep our expectations at a level we have felt comfortable with in the past and agree to pay for them? By May 23, the governor and Legislature will need to develop a budget — how would you answer the questions?