Jeff Cotton grew up in Yankton, S.D., expecting to join a family law firm. Instead, after earning accounting and law degrees from the University of South Dakota, Cotton moved to the Twin Cities, expecting to work in accounting for a few years. Thirty years later, he's the Minneapolis managing partner of Deloitte, the accounting and consulting firm of 900 that is the largest professional services office in the Twin Cities. Cotton generally is positive about the Twin Cities/Minnesota economy.
Q: What are your responsibilities as the managing partner in the Minneapolis office?
A: I oversee more than 900 professionals providing audit, consulting, financial advisory, risk management, tax and related services. Our team serves major public and private companies, public institutions, nonprofits and fast-growing companies from a variety of industries across Minnesota, South Dakota and North Dakota. I'm also responsible for strategy, operations, talent and business development for Deloitte Minneapolis. Additionally, I'm proud to lead Deloitte's community involvement and skills-based volunteering initiatives, and to volunteer my own time and counsel to help and support local nonprofit organizations.
Q: Where is the Twin Cities/ Minnesota economy headed over the next year?
A: In general, the region's economy is on solid footing. Our economy consistently outperforms the U.S. economy. That includes employment, total GDP and average wages. Local hiring remains solid to strong, and our state boasts a 3.5 percent unemployment rate, which is better than the current U.S. rate of 4.9 percent. More jobs mean more income and spending. Economic diversity is another key strength — at least a dozen different industries have fueled our region's rise, making it far less vulnerable to economic shocks in one or a handful of sectors.
Q: What worries you?
A: In 2016, local clients are still optimistic. They are investing in talent and technology. But we've seen that optimism tempered a bit by global economic uncertainty. We have a significant number of export-reliant companies. And while they have been critical to the regional economy's recent strength, they are currently facing slowing growth in overseas markets coupled with a strong dollar, which is making their goods less competitive outside the U.S. As long as the dollar is strong against major trading currencies, that will put pressure on export-driven industries such as manufacturing, agriculture and commodities.
Q: We've long relied on big legacy companies in food, finance and medical products in health care to drive our economy. How do you rate the local entrepreneurial culture?
A: The region has traditionally been a strong leader in entrepreneurship, but we have seen it lose ground to competing markets in the last few years. Though a leader in technology transfer overall, the Twin Cities often has a lower start-up rate.
Q: Often Minnesota is panned by neighboring states for higher taxes. Are we at risk?
A: The Twin Cities economy consistently outperforms that of Minnesota and the U.S. as a whole, including some neighboring states. This strong growth is aided by the diversity of industries. However, I do consistently hear from many clients and business leaders that lower tax rates in other regions are enticing.
Q: Business lobbyists are trying to knock down state business property and income taxes this legislative session. The marginal tax rate on high-earning Minnesotans was raised to 9.85 percent a couple of years ago. Also, Minnesota has yet to conform to the higher federal threshold of exempting estates below $5.4 million from estate taxes. Minnesota taxes at more than $2 million.
A: Income taxes haven't seemed to have been a huge deterrent to [Minnesota] economic success. The bigger problem [that draws more complaints] is the estate tax.
Q: How do we close the so-called "achievement gap" that results in disproportionately fewer Twin Cities minority kids succeeding in school?
A: We need to continue working to close the achievement gap in order to keep the Twin Cities economy vibrant and provide opportunities for our citizens. I am proud to work with community organizations focused on this issue. There are great organizations to support, including the Northside Achievement Zone, the Harvest network of [charter] schools and Hiawatha Academy. They are embracing diverse, disadvantaged students and families, some great kids. And they are doing great work. It's about swarming those kids with what they need to succeed.
