Sometimes it’s money straight from state coffers. Other times it’s a tweak to a narrowly focused regulation. With Republicans in charge of the Minnesota Legislature, their allies are seeing priorities elevated at the Capitol.
Republicans are trying to use their state House and Senate majorities to re-engineer Minnesota government in a cheaper, leaner, more business-friendly direction. But they are also pushing for a host of policy changes — tax cuts and credits, subsidies and regulatory relief — that would benefit traditionally GOP-aligned sectors like insurance, energy, agribusiness, homebuilding and other industries.
In some cases, the help extends to a single company. Like a manufacturer in northwestern Minnesota, or a shrimp farm in the southwest.
“We can’t pretend like a company can’t make a decision to move to another location,” said House Speaker Kurt Daudt, R-Crown, as he explained that Republicans are trying to keep businesses here in a tough environment. “It’s easy to do, and other states make it easy.”
He acknowledged interest group allies at the Capitol, but he noted that legislative proposals to benefit them regularly come from members of both political parties and must earn wider support to advance. State lawmakers are off this week and return Tuesday for the final five weeks of their session.
Pursuing policies that help allied interest groups is hardly new in politics. In 2013, when the DFL controlled the Legislature and Gov. Mark Dayton was in his first term, lawmakers authorized two influential unions, SEIU and AFSCME, to organize personal care attendants and child care businesses. Republicans howled at this attempted major expansion of the labor movement, charging that any resulting spike in union dues could make its way back to DFL candidates in the form of political contributions.
Now the roles are reversed, as DFLers accuse the GOP-controlled Legislature of doling out favors. Rep. Jon Applebaum, DFL-Minnetonka, called it “a wish list” for the well-connected.
“Republicans are checking off every single item on it, every single day. It’s not how we should be governing,” he said.
Some of the biggest provisions for GOP-friendly interest groups already received wide airing. In March, GOP majorities approved $542 million to help health insurance companies take the most expensive claims off their books. Dayton allowed the bill to become law last week.
Republican tax bills approved by the House and Senate include broad cuts for all income tax filers and Social Security recipients, and provisions that help people save for college and a new home, pay for child care and reduce their college debt. More than half of the House’s $1.35 billion tax cut goes to individuals.
Tax breaks for businesses
But GOP tax plans also include provisions on the wish list of the Minnesota Chamber of Commerce and the Minnesota Business Partnership, including a cut in the statewide business property levy, and an expansion of the research and development tax credit. The chamber is also calling for a cut in the estate tax. The House estate tax cut would affect about 1,100 families per year and cost the state $162 million of revenue during the next two years.
Rep. Greg Davids, R-Preston, said the estate tax burdens farmers in his district who can be forced to break up their operation if their land is worth more than the current exempt $2 million.
The business property tax break would exempt the first $200,000 of property value from tax, which Davids said would provide significant relief for small-town businesses. Firms with lots of properties would enjoy significant savings, since the exemption would apply to the first $200,000 in value of each property owned.
House Republicans approved tax breaks for farmers, telecommunications companies and smokers.
From Big Tobacco to Big Shrimp: That’s the ironic nickname around the Capitol for a proposed subsidy for a commercial shrimping operation, up to $5 million per year in a Senate provision for projects in the southwestern Minnesota cities of Marshall and Luverne, being pushed by two GOP lawmakers from the area.
Leeway for insurance firms
Key interest groups are also winning regulatory relief.
Auto insurance companies would be allowed to consider seat belt use when determining who is at fault in a wreck. Drivers not wearing a seat belt could be subject to reduced damages.
“Seat belt usage — most of the time but not always — plays a role in how injured you are, or if you’re injured at all,” said Rep. Bob Loonan, R-Shakopee, an insurance agent whose legislative passion is insurance issues. “Right now it has no chance to be admissible at all, even though it may very well have been a factor if you got thrown from the car and got killed, a seat belt played a role in that.”
Loonan acknowledged the ramifications: “The amount I can collect gets reduced,” he said, referring to someone not wearing a seat belt. Which means savings for insurance companies.
Some help for Big Ag
A provision in the House agriculture bill would grant all farms, not just small ones, protections against nuisance claims. During a floor debate last week, DFL lawmakers said it was unfair to Minnesotans whose properties are affected by large, odoriferous animal farms.
Rep. Paul Anderson, R-Starbuck, chairman of the House Agriculture Policy Committee, said residents would still have two years to bring a claim.
A break for condo builders
The homebuilder lobby, newly prominent in recent years, has a list of priorities in play at the Capitol that includes a first-time home buyer tax credit and a measure that would make it harder for condominium owners to sue builders for construction defects. The bill, which has a Senate DFL sponsor and is backed by the city of Minneapolis, is a response to slowing condo construction that the industry blames on litigation.
“It levels the playing field and makes it so it’s appropriately more difficult for an association to sue a builder. They still have access to court, but it brings in appropriate safeguards,” said Rep. Dennis Smith, R-Maple Grove.
Millions for private business
Republicans often say government shouldn’t pick winners and losers.
But the GOP-controlled Legislature is going all in on Digi-Key, an electronics component maker in Thief River Falls that employs 3,100 people. The Senate would help the company with a $5 million-per-year sales tax exemption on building materials for a planned expansion, up to $40 million, plus a $4 million loan and needed infrastructure spending in Thief River Falls.
Sen. Mark Johnson, R-East Grand Forks, a first-year lawmaker who represents the area, said he struggled with the idea of using the government to help a single company. But he decided it’s important to the economic vitality of the region and the families of workers.
Johnson said the long-term solution is to create a more competitive tax and regulatory environment for Minnesota companies so they do not leave the state.
“But we have a company that needs to make a decision in the short term. So do we let them float down the river or do what we can to keep them here?” he asked.
As for picking winners and losers, Johnson joked, “This one is a winner.”