State economist served under five governors, 14 finance commissioners
At age 70, after 26 years as Minnesota’s top economic soothsayer, Tom Stinson’s retirement hardly came as a shock. He was already by far the longest-serving state economist — none of his predecessors held the position for more than five years — and he had a comfortable side job teaching economics at the University of Minnesota, where he was working when he was initially named state economist in 1987.
But Stinson, who announced his retirement on Monday in the same Capitol hearing room where he had revealed countless November and February forecasts, admitted that it had been difficult for him to think of leaving as the state faced repeated budget deficits during recent years. With financial numbers looking up — the fiscal period that closes on June 30 is likely to show stronger-than-expected tax collections — he could finally step down and transition into a full-time position teaching at the university.
What’s more, Stinson is handing the reins off to someone who came up much as he did. University of Minnesota applied economics professor Laura Kalambokidis will officially take over as state economist in July, making her the first woman to hold the position since it was created in 1975. Like Stinson, she will split her time between the university and her role with the state.
“Now is a good time,” Stinson said. “The state’s in good financial shape. The economy is in better shape than it’s been in quite a few years.”
Stinson served through the tenure of five governors and 14 budget commissioners, and most of those who worked with him described him as an asset to the state in his ability to accurately predict the numbers that governors and legislators use to craft the state’s budget. While Stinson said he always lived in fear of making the “$200 million arithmetic mistake,” he never botched the numbers.
“He was a master,” former Minnesota Management and Budget (MMB) Commissioner Tom Hanson said. “He was probably the best state economist in the country. I’m just glad he didn’t retire when I was there — I wouldn’t have let him.”
And Stinson’s style of presenting the information to the public — usually with dry humor and in his characteristically deliberate monotone — was clear and careful.
“He has been a standard bearer for getting the information to the public. He has been here through thick and thin, and mostly in recent years, a lot of uncertainty,” current MMB Commissioner Jim Schowalter said. “He has made this job an institution.”
‘More than theoretical, more than textbook’
Stinson grew up in Puyallup, Washington, where his parents were public school teachers. After earning a bachelor’s degree in political science from Washington State University, Stinson went to work for the U.S. Department of Agriculture. In the early 1970s, he decided to earn a Ph.D. in economics at the University of Minnesota while continuing to work for the Department of Agriculture in the state’s field office. He eventually accepted an economics professorship at the University of Minnesota before being offered the job of state economist.
MMB staff economist John Peloquin said Stinson struck him as very “curious” when he first started the job. “He was clearly a guy that was more than theoretical, more than textbook,” Peloquin said. “There are those who are into the theory of public finance and then there are those who want to get into the nitty gritty of public finance. That was Tom.”
Stinson said the most political pressure he ever felt on the job came from Democrat Rudy Perpich, the first governor he worked with. Perpich used to call Stinson months before the November forecast and say, “I’m more optimistic than you are.”
“I didn’t know how optimistic I was, and he didn’t know how optimistic I was, but he wanted to be sure he was getting in and exploring a little early, and that was really the most pressure I felt,” Stinson said.
Stinson said most of the governors he worked with understood the state economist’s role in the political process, which was to provide an unvarnished financial picture of the state and its revenue prospects.
“Every governor always wanted more money, there was no doubt about that,” Stinson said. “[But] the political process works better if you have good information, and I think all the governors realized that.”
But not every governor was thrilled with Stinson’s style. Former Republican Gov. Tim Pawlenty famously burned Stinson in the op-ed pages of the Star Tribune, saying he “tends to be a bit on the pessimistic side of things, to put it charitably.”
“I don’t think it’s helpful, unless it’s clearly justified by the data, for people to get overly pessimistic or overly scare people,” the governor wrote in 2008.
Stinson said he harbors no hard feelings toward Pawlenty for his comments. “Part of the governor’s role is to be a cheerleader of the state’s economy,” Stinson said. “It was just two people playing their roles in the process.”
Looking back on his long career, Stinson said the state economist job was the “best one” he could have had, but he struggled with the 2011 government shutdown, when Gov. Mark Dayton and Republicans who controlled the Legislature arrived at an impasse on how to solve a more than $5 billion budget deficit.
After the shutdown, Stinson remembers traveling to New York City with Schowalter to meet with credit rating agencies. Minnesota had long enjoyed AAA bond ratings, but they knew that the shutdown and the tobacco bond borrowing scheme the state had used to balance the budget deficit were almost certain to knock that rating down. “We still kept up the tiniest bit of hope,” Stinson said.
Upon arriving at one of the ratings agencies’ offices, Stinson and Schowalter knew something was different. Instead of heading up to their usual top floor conference room with a view and “treats,” Stinson said, they were brought to an interior conference room on a different floor. “There were no treats,” he said. “We knew we were toast.”
“The shutdown, the statewide shutdown was really a difficult time for me,” he continued. “It was really a difficult time, because we had spent years telling everybody who was important on Wall Street that Minnesota had a culture of fiscal responsibility.”
Looking ahead, Stinson still has some concerns for Minnesota’s economy, particularly Minnesota’s aging workforce and its subpar high school graduation rates, which will lead to a lower quality workforce in the future. Stinson has spent the last decade tag-team speaking with former State Demographer Tom Gillaspy to deliver that warning about the state’s economic future.
“We have a situation that is going to be extraordinarily challenging. The high school graduation rates in the states are just really not at the level they need to be,” he said. “As people retire out of the existing workforce, we are losing high school diplomas. We are diluting the quality of our workforce. That will be the challenge, figuring out how to deal with that.”
A ‘complicated’ and ‘challenging’ job
Budget officials wasted no time in appointing Kalambokidis as Stinson’s successor, introducing her at the same press conference where they announced Stinson’s retirement.
Kalambokidis, 49, lives in Stillwater and has done research and taught applied economics at the University of Minnesota for the last 13 years, working with Stinson throughout that time.
After getting a bachelor’s degree in economics from the University of Minnesota in 1985, Kalambokidis went to the University of Michigan, where she graduated in 1992 with a Ph.D. in economics. She spent time as a financial economist for the U.S. Department of Treasury in Washington, D.C. before taking her teaching job at the university. Kalambokidis was also a member of the 2007-2008 Minnesota State Budget Trends Study Commission and the 2010-2011 Minnesota Tax Expenditure Review Study Group.
She knows it will be difficult to adjust to the political pressure of her new job. For the past two budget forecasts, Kalambokidis has been in the room while budget officials go through the numbers.
“I know enough about the process of producing the forecast to know that it’s not a straightforward process. It’s complicated and challenging and I have a lot to learn. My focus is on doing that job and on estimating the revenue that’s going to be coming into the state and producing accurate and relevant forecasts,” she said. “I know how challenging and intricate the process is.”