It is a reality that the enormous state budget deficit will require significant budget cuts and tax increases. Yes, I know that Republican legislators claim they will not accept any new taxes, but their first budget proposal contained significant tax increases on renters and is projected to cause large property tax increases on homeowners and businesses. Governor Dayton campaigned for office saying that he is going to increase income taxes. So, although there will be a struggle over which taxes to raise, taxes will go up.
Likewise, for budget cuts. Few areas of the budget will remain untouched. Despite many cuts in recent years, some parts of the budget are projected to continue growing rapidly, making them targets for even deeper cuts.
This is where we need to change our perspective. First we need to recognize that deep cuts in programs and services are not simply a matter of accounting; these programs serve real people with real needs. For a family fighting to avoid homelessness or for people with disabilities who need health care services to live independently, cuts are not painless. Cuts bleed.
In addition to causing real human suffering, some cuts are fiscally irresponsible and cost taxpayers more in the long run. Cuts that lead to higher crime rates, reduce the quality of education for students, or leave sick people without healthcare, hurt Minnesota's future.
One example is Youth Intervention Programs. Minnesota provides funding to 57 local organizations around the state that work with at-risk young people, intervening because of truancy, drug use, homelessness, or when they are in court for shoplifting or other crimes. Youth Intervention Programs (YIP) work with about 25,000 young people each year – counseling, educating, mentoring, and coaching them – enabling them to remain with their families, instead of in costly foster care, correctional institutions or residential treatment. These YIP grantees are community based programs, where the participants live at home but meet with a mentor or counselor in the program. A survey of participants showed big progress for most of the youth – over half had improvement in school attendance and grades, and over 80% had no further interactions with the law since entering the program.
In a benefit-cost analysis conducted by Wilder Research, economist Paul Anton calculated, using conservative assumptions, that the typical YIP program provides almost $5 in benefits for every dollar spent, with $2.33 of those savings going to taxpayers through reduced crime and court costs, and lower human services and school costs.
That's not an 8 or 10% return on investment but a 233% return! That dwarfs the level of savings that legislators and governors hope to obtain when we work to make state government more efficient.
With that type of savings, it would be wise for the state to make sure that these youth intervention services are available to all at-risk youth. Yet only a fraction of those youth have access to the programs, and the state appropriation for YIP was reduced from $2.4 million in the previous budget cycle to $1.6 million now.
Over the past decade, under the push for lower taxes, there are many programs and services like YIP that have been inadequately funded, or have actually been cut. Our current budget crisis is largely the result of Minnesota's failure to invest in prevention. We are paying the price for past short-sightedness.
Economists and demographers tell us that the state will have even greater budget difficulties in the future. We have an aging population, and state revenues are not projected to keep up with the growth in spending needed to address those growing public needs. Some of the budget cuts that are likely this year may balance the state books now, but only make the future budget problems worse.
We will have to make many budget cuts, and none of them will be easy. But when doing so, we cannot afford to cut Youth Intervention Programs or numerous other services – such as early childhood education, preventive healthcare, chemical dependency treatment, and teen pregnancy prevention, which have a strong return-on-investment.
The reality is that it will cost taxpayers less overall if we spend more on these services now. Let's not keep repeating the mistakes of the past.