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The Mayo Clinic's Gonda Building in downtown Rochester.

Glen Stubbe, Star Tribune

Minnesota Legislature wasn't so bad for business

  • Article by: LORI STURDEVANT
  • Star Tribune
  • June 8, 2013 - 5:22 PM

Grumbling about the DFL-dominated 2013 Legislature’s performance started emanating from Minnesota’s business quarter well before the gavel went down for the year at midnight May 21. That background noise made one dissenting assessment stand out:

“Overall, we were pleased with the session,” said the spokesvoice for Small Business Minnesota. “We didn’t get everything we wanted. There’s still work to be done, but there was definitely movement in a direction we support.”

Those are the words of Audrey Britton, and her more charitable view of legislators’ performance may have something to do with the fact that in 2012, she was the DFL candidate for the Legislature in District 44A.

Britton lost that election. But she came to the Capitol this year anyway, as a representative not of the good citizens of Plymouth, but of the 300 small business owners who have formed a nonprofit, “fact-based” (that’s Britton’s description) alternative to the Minnesota Chamber of Commerce. She’s reflecting their views, she said.

Mentioning her two-year-old organization in the same breath as the state’s business Goliath is more than a mite audacious. The state Chamber is about 2,000 members and 125 years ahead of Britton’s upstart lobbying collective, whose members employ fewer than 100 employees apiece.

But she does not hesitate to sling a stone at the big guy. As does her organization, the state Chamber bills itself as nonpartisan, she noted.

“But they have become an arm of one political party,” she said of the coziness that exists between Republicans and the state Chamber of Commerce. “They don’t speak for all businesses. They don’t even speak for all local chambers.”

Her tally of the private sector’s win-loss record at the 2013 session shows a higher percentage of wins than has typically been acknowledged by the Chamber and the lobbying coalition it leads.

One big reason: Her organization does not count as a defeat the decision to raise $550 million more per year from the state’s top earners, despite the fact that many of its member firms’ profits are taxed as personal income for their owners.

That’s because the vast majority of them have incomes well below the annual taxable income threshold — $250,000 for married joint filers, $150,000 for singles — at which the new marginal 9.85 percent rate begins to apply. According to the state Revenue Department, only 6 percent of small businesses will be affected by the new higher personal income tax rate.

In Britton’s “win” column:

• Property tax relief: The Legislature divided a $400 million new-money pot for property tax relief between homeowners and local governments, including schools. Local governments were also exempted from the state sales tax, which will save them $125 million per year. To the extent that local governments gained, so did the commercial/industrial property they tax.

• Sales tax fairness: Main Street retailers finally got a requirement for some (alas, not all) online-only retailers to collect the sales tax at the point of purchase, just as bricks-and-mortar stores do at their cash registers. Minnesota now has gone as far as it can go toward e-fairness in retail taxation. The next move must come in Washington.

• More sales tax fairness: Businesses that buy capital equipment will no longer have to apply to receive the sales tax exemption they are already due. Beginning in September 2014, the tax won’t be collected in the first place. That puts $81 million more in business coffers (a figure that attests to how much even business taxpayers hate the hassle of applying for refunds).

• Education boost: Businesses will be beneficiaries of the $735 million over two years in increased education spending. That’s especially true of the $250 million that will go to freezing tuition and boosting financial aid for low-income students, measures that should invite more students into college classrooms.

• Health care exchange: Unlike some business organizations, Small Business Minnesota is enthusiastic about the Legislature’s steps to prepare Minnesota for the dawn of ­Obamacare. Britton particularly praised legislators for sparing employers from underwriting participating insurers’ marketing costs.

Britton didn’t mention these, but I will:

 If your business is Mayo Clinic, 3M, the Mall of America, Baxter or Emerson, you had a very good year. Gov. Mark Dayton and the Legislature demonstrated that DFL heads turn just as quickly as Republicans’ do when a big business asks for state help to create a lot of good-paying jobs. If you have a smaller expansion plan, you might qualify for aid from a beefed-up Minnesota Investment Fund.

• If you pay unemployment insurance, you got a $347 million rate reduction. (Bet you didn’t notice. Most of us in the Capitol basement didn’t.)

 If you’re in the national market for top young creative talent, you’ll be well-served by the legalization of same-sex marriage. Being among the dozen marriage equality states will be noticed by a lot of Millennials.

• If you’d rather not see a minimum-wage increase, rest easy. It didn’t pass. (It should have. But that’s another day’s column.)

Granted, seeing those pluses requires looking past some minuses. If you’re a farmer or a factory owner, you likely hate the new sales tax on equipment repairs. If you’re a third-party warehouser, you’ve likely been talking to commercial realtors in Hudson, Wis. The sales tax is due to hit you starting next April.

But business lobbyists — including Britton — were so successful in beating back other proposed sales taxes on business services that it’s hard to think they won’t be as effective in 2014 in getting these goofs out of the tax code. Dayton’s retreat from his services sales tax notions in March, well before the House and Senate tax bills were written, attests to business’s considerable Capitol clout, even when DFLers are in charge.

The Business Bigs complained about insufficient government reform in 2013. So did Britton. But reform is an eye-of-the-beholder thing. On these pages on May 22, state Chamber president David Olson said businesses want reforms that eliminate “unnecessary and wasteful spending.” It wasn’t clear what that is.

Britton was more specific: Small Business Minnesota wants to curtail tax breaks that favor big businesses over small ones. “We support closing the estimated $2 billion in corporate tax loopholes first before providing additional [corporate income] tax relief,” her organization said in a May 15 letter to lawmakers.

Clearly, not all business voices at the Capitol are singing the same song, let alone the same tune. But between now and next year’s session, these dissonant choirs would do well to find some harmony on a few things. I’ve got a list for that too. It’s a short one:

• Transportation: The political reality is that the Legislature won’t step up metro transit funding unless roads in Greater Minnesota get more too. And that, in turn, won’t happen unless businesses support a gas tax increase.

• Bonding: The backlog in state building repairs and infrastructure needs keeps getting longer in part because Republicans find it politically advantageous to oppose big bonding bills. The business community can change that.

If those things happen in 2014, Britton shouldn’t have to sing solo in praising the Legislature. And Minnesotans will have more reason to praise the business community for advocating for the public good.

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Lori Sturdevant is a Star Tribune editorial writer and columnist.

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