Jim Pumarlo of the Minnesota Chamber of Commerce was in Fergus Falls Tuesday sharing some of his hopes and fears regarding Minnesota’s future business climate.
The MCC’s director of communications joined Fergus Falls Area Chamber of Commerce President Lisa Workman, Otter Tail Power Vice President of Customer Service Steve Schoeneck and StoneL development engineering manager Nick Kunz for a meeting at the Fergus Falls Chamber offices.
“Minnesota is always strong in innovation and in workforce,” Pumarlo told the group.
The task of lobbying for Minnesota businesses at the State Capitol, 75 percent of which have 100 or fewer employees, has forced the MCC to “keep one foot on the floor” in terms of their efforts in St. Paul.
The MCC has boiled their legislative priorities down to taxes, health care, transportation, workforce and workplace mandates.
“We probably have 60 or 70 different priorities but obviously you can’t go to the capitol with 60 or 70 so we identify the top four or five,” Pumarlo said.
The foursome talked about the future of Minnesota businesses under the administration of newly elected governor, Tim Walz.
The Minnesota Democrat, who defeated Republican candidate Jeff Johnson in November, has come up with a tax-laden budget, according to information gathered by the MCC. At this time, the MCC is particularly concerned with how businesses will fare from two points of view – tax competitiveness and the workplace mandates.
“The governor has laid out a very challenging budget,” Pumarlo said. “When his first budget was released even some Democrats said ‘This is a pretty big budget, pretty expansive,’ and then last week the House Democrats laid out their proposal and they actually raised taxes by $500,000 more than the governor. In both the governor’s proposal and the House Democrats there is a very, very heavy burden on business.”
Pumarlo said the MCC has a pretty straight forward formula.
“As businesses change and grow the economy grows and that is good for all Minnesotans,” Pumarlo said.
Pumarlo added the position of the MCC is that talk of taxing the wealthy and taxing big business for the benefit of everyday Minnesotans does not take into account the fact that businesses cannot absorb more costs “year, after year.”
In the next four years the state’s total package of funds is expected to climb by $8 billion. The MCC is also looking for a 23 percent climb in business taxes. The group believes Walz is planning to tap the state’s general fund for $3.8 billion in new spending over the next two years.
Other anticipated handicaps for the business sector are a 70 percent increase in the gas tax, the need for $1.6 billion in total taxes for health care providers and a reinstated policy on automatic tax increases on business properties – costing $53 million in the fiscal year 2020-21 and $165 million in 2022-23.
“From Otter Tail Power’s perspective any of these taxes and especially the gas tax of 70 percent [is undesirable],” Schoeneck said. “We cover a rural area, parts of three states so we are driving a lot of miles all of the time and we pass these costs so there will just be an automatic inflationary effect on our customers and we see this as a negative.”
Kunz also shared his thoughts about the proposed tax package.
“It affects us for being competitive,” Kunz said. “Our customers are outside the state usually and also in the rest of the world.”
Kunz also pointed out that StoneL has competitors in other parts of the world, competitors who may not share the same tax burden as the Minnesota company.
The quality of life found in Fergus Falls and Otter Tail County has always been attractive to Otter Tail Power, according to Schoeneck.
What is not so desirable is a proposal in Minnesota called HF5 which would create an expansive, state-administered paid-leave insurance program – a program financed through a new tax on employers and employees. The program would fund partial-wage replacement benefits for 12 weeks of paid parental and family leave time and 12 weeks of paid medical leave. Businesses would also be expected to provide paid sick leave for routine or minor illnesses.
The House bill was first introduced Jan. 10 and has been working its way through the legislative process. On April 10 it was resubmitted to the House of Representatives’ Rules and Legislative Administration.
Minnesota is currently in the top five in the nation in corporate and individual tax rates according to the United for Jobs Coalition. More than half of the businesses that have left the state went looking for a more tax-friendly environment than they found in the Land of 10,000 Lakes.
“The general public doesn’t understand that businesses pay property taxes differently than residents would, where we are paying local business taxes businesses have to pay those property taxes to the state as well,” Workman said.