Swing the pendulum back halfway.

After an invigorating round of victories in November, Democrats arrived at the State Capitol last month with an ambitious program for 2007. They proposed to restore funding that was cut from the state's public schools and preschool programs in 2003. They wanted to jump-start road construction, accelerate the state's timetable for mass transit and reduce highway congestion. They would make sure that more Minnesota kids can afford a college education. And they would cut the number of uninsured Minnesotans -- now 377,000 and rising.

This isn't liberal overreach. It's exactly the right agenda for a state that has always prided itself on investing in a healthy population and a competitive economy.

Yet before January was out, the DFL majorities ran into a grim reality. There's not enough money in the state's coffers to fund their ideas. The result was "a stunning crash in expectations," Sen. John Marty, DFL-Roseville, told the Star Tribune's Patricia Lopez in a recent story about children's health insurance.

A disheartening story

How can this be? The deficit years are over. The state is projecting a $2.2 billion surplus in the coming two-year budget cycle.

Here are the dreary facts. Half the projected surplus will be consumed by inflation, which the Legislature has pretended did not exist since 2002. The other half is one-time money left over from last year. The same holds true for the $2.9 billion in "new spending" that Gov. Tim Pawlenty proposed in his recent budget: Half will cover ordinary inflation in the price of government goods and services, and half is temporary money. If you don't believe it, turn to the last page of the governor's budget and note that spending in several major categories starts going down again after 2009 -- even before the effects of inflation are factored in.

In other words, the $2.2 billion surplus will be gone in one budget cycle, even without restoring the basic public infrastructure -- schools, roads, parks, health care -- that Minnesotans have long taken for granted.

How did this happen?

To understand how the Legislature could find itself in this fix, after five years of steady economic growth, you have to reopen a chapter of fiscal history.

Between 1997 and 2001 the Legislature adopted five permanent tax cuts, mainly to the income tax and the tax on motor vehicle license plates. Even though revenues have climbed steadily since then with a growing economy, receipts at the state level today remain at least $1 billion per year lower than they would have been at 1990s tax rates. This has consequences. If you adjust state general fund spending for inflation and population growth, you find that it is lower today than it was in 2000.

But put it another way: If Minnesota merely had the same tax system (revenues as a share of personal income) that prevailed during the tenure of Republican Gov. Arne Carlson -- he of the balanced budget and the ready veto pen -- the Legislature would have an extra $1 billion to spend this year, and next year, and the year after that.

Look at the possibilities

Of course it's possible that, given such a sum, legislators would waste the money on projects that would blow a taxpayer's gasket. But this is what they might accomplish with it:

• Provide subsidized, low-cost health insurance to every one of the state's 70,000 uninsured children. The Children's Defense Fund, in a bill sponsored by Rep. Paul Thissen, DFL-Minneapolis, estimates that would cost about $250 million per year.

• Greatly accelerate the pace of new road construction, while breaking ground on new dedicated bus corridors, commuter rail, the next light-rail line, and other projects to get the state's commuters out of traffic. A reasonable cost estimate: $250 million per year.

• Fund an ambitious scholarship program for high school students who demonstrate college readiness and need financial aid. The state's Private College Council has detailed such a plan and priced it at $160 million per year.

• Guarantee access to high-quality child care or preschool for disadvantaged children, an investment with proven returns in long-term school achievement and economic attainment. Simply restoring the state's child-care and early-childhood education programs -- pioneering and admired ideas 15 years ago -- to pre-2003 levels would cost about $160 million per year.

Funding this agenda would cost the average Minnesota household $300 to $400 per year in higher taxes. That would still leave their overall tax burden, as a percentage of their income, lower than it was a decade ago.

Back to the future

Of course most Minnesotans have long forgotten the tax cuts of the late 1990s and, as John Foley argues on today's Opinion Exchange cover, they would insist on getting value for money in the taxes they pay today.

But then that's exactly what their parents left them: a state with healthy children, high test scores, good roads, rich culture, an envied quality of life, a vibrant economy and a government that got them better value for every tax dollar spent than virtually every other state in the union. It's the least they can leave to their children.

http://www.startribune.com/561/story/977775.html