At Minnesota Capitol, GOP hits major snags in playing to rural base

State House Republicans started the legislative session setting high hopes for an agenda aimed at what ails rural Minnesota: the lack of housing options and job training for small-town workers, the scarcity of high-speed Internet connections in remote areas and state aid payments that are a lifeblood to many tiny communities but failing to keep pace with inflation.

Now, as lawmakers speed toward conclusion of the session, the centerpiece of the GOP agenda is a $2 billion tax cut plan that has left few resources for those rural-geared initiatives. Outstate advocates are criticizing House Republican plans, and even some GOP legislators are fretting about the message to voters in what has become the party's most important base of support.

House GOP leaders are "trying to satisfy the wants and requests of everyone," said Rep. Debra Kiel, R-Crookston, an assistant House majority leader. "There's a lot of give and take at this point. It might look like there's not. My emphasis is rural, but I realize we need to look at all the citizens of Minnesota."

Last November, 11 Republicans unseated House Democrats — 10 of which represented far-flung rural districts. With the GOP increasingly reliant on rural votes, and a projected state budget surplus that had swelled to $1.9 billion, outstate interest groups saw a prime opportunity.

Two groups, the Greater Minnesota Partnership and Coalition of Greater Minnesota Cities, together represent dozens of outstate cities, businesses, chambers of commerce, nonprofits and other groups. As the session started, the two groups released a list of priorities, the top one being $100 million for grants and tax credits aimed at building new housing for middle-income workers in small communities.

Unlike the thriving Twin Cities real estate market, dozens of small towns are finding that the lack of new housing options hampers business growth and the spread of jobs.

"There's absolutely a need for the smaller rural communities to have some help to address this issue," said Eric Fisher, director of operations at the Jackson, Minn., plant of AGCO, an agricultural equipment manufacturer. The company employs 1,050 people in Jackson, a full quarter of whom live 30 miles or more from the plant.

Because of lower rents and property values, small-town housing markets find it difficult to attract private developers, who can't charge enough to build and operate developments to make a profit.

"We'd much rather see those people living in town," said Kelcey Klemm, Perham's city manager. The top local employer, the food company KLN Family Brands, has 89 job openings. "It's a labor shortage compounded by the lack of housing," said Fred Sailer, a KLN recruiter.

Early in the session, veteran House Republican Rep. Rod Hamilton, from Mountain Lake, proposed the $100 million grants and tax credits bill requested by the outstate coalition. So how much made it into the House GOP's budget blueprint?

"Zero. Nada," said Dan Dorman, chief lobbyist for the Greater Minnesota Partnership and a former GOP state representative from Albert Lea. The House GOP tax bill includes provisions intended to let small cities use tax-increment financing to spur workforce housing projects, but Dorman said much of what's proposed is already possible under current law.

Outstate groups also requested $100 million to enhance broadbroad infrastructure, reflecting that 40 percent of outstate Minnesota households lack Internet at speeds that match the state's goals. Compare that to the metro, where the figure is just 6.7 percent. House Republicans initially denied any new broadband money. After an angry outcry they restored $8 million.

House Republicans have included high-profile provisions aimed squarely at rural Minnesota. A hefty, $160 million spending increase on nursing homes would also shift more of those dollars to rural areas. Their $7 billion, 10-year transportation proposal that would deliver additional road and bridge dollars to many small communities. A series of smaller spending hikes and tax credits are geared toward agricultural programs and producers, as well as senior citizens.

"If you want to be criticized, put out an idea," said House Speaker Kurt Daudt, R-Crown, who led his party's effort to seize the House majority, and who frequently lambasted DFLers for neglecting rural Minnesota. Daudt disputed the notion that GOP plans don't serve rural Minnesota, arguing it's impossible to come up with policy prescriptions that will find universal backing.

"We shouldn't be surprised that folks want to see us do things maybe slightly differently once in a while," Daudt said.

But for outstate interests, the House GOP's strong political emphasis on rural Minnesota is less in evidence now that the details of their plans are out there.

"I am concerned that what started out on a high note in January as the 'Greater Minnesota Session' has now reverted back to the same old metro-centric song and dance," Gary Evans, president of the Greater Minnesota Partnership and a retired Winona businessman and college official, wrote to lawmakers last week in a letter blasting the House GOP's tax bill. It's the legislation that outstate advocates had hoped would include many of the provisions they sought.

The GOP's single biggest tax cut — the proposed elimination of the statewide commercial/industrial property tax — would put more money in the pockets of small business owners. However, Evans wrote in his letter, "the phaseout of the values in excess of $500,000 is heavily weighted toward the metro area and should be removed from the bill."

To pay for its tax cuts, the GOP is pursuing major reductions in health and human services spending. Among those, eliminating MinnesotaCare, the health insurance subsidy program for lower income workers. But that repeal could also wind up hurting rural Minnesota. According to information compiled by the Department of Human Services, the 25 counties with the highest number of MinnesotaCare enrollees per capita all are outstate.

House DFLers representing rural districts, who saw their ranks depleted last November, have been stinging in their criticism of the GOP budget.

"What's coming out of these bills is that rural Minnesota is being left behind, despite the rhetoric," said Rep. Paul Marquart of Dilworth, a deputy House DFL leader. "Rural Minnesota is going to figure this out."

"If we're not doing something exactly right or addressing it in a way that solves the problem the best way, we're going to have some movement, and I hope they will as well," Daudt said of DFL senators.