Minnesotans received more good news with the latest state economic forecast of a $1.87 billion surplus for the next biennium. State coffers continue to grow on the strength of the hard work and success of Minnesota employers and employees.

A projected surplus of $1.2 billion — after $594 million is transferred to the budget reserve — will greet Gov. Mark Dayton and the Legislature when they get down to work in March. Another forecast will be released in February.

The budget surpluses the state has enjoyed since the permanent $2 billion tax increase in 2013 signal that it’s time to bring taxes on Minnesota employers to a more competitive level. The surplus also offers the opportunity to provide sustained and strategic investments in roads, bridges and transit systems.

The Minnesota Chamber of Commerce leads the statewide United for Jobs Coalition, which represents more than 75 local chambers of commerce and business associations. We recommend that the governor and the 2016 Legislature focus on reducing the state business property tax, which will benefit Main Street businesses in every community.

Unlike homeowners and others who pay only local property taxes, businesses also are paying a state levy that goes into the general fund. The state property tax is about one-third of a business property tax bill.

Minnesota employers traditionally have been an upbeat bunch. That rang true once again in this year’s Minnesota Business Barometer Survey. Employers say they want to stay in Minnesota. However, business owners and managers also underscored high taxes as the No. 1 barrier to creating and retaining jobs in Minnesota.

Our state regularly wins high marks as a great place to live and work. We have abundant natural resources, a hardworking and educated workforce, diverse industries, and innovative and entrepreneurial business leaders.

Competitiveness matters. Minnesota regularly wins high marks for its quality of life, and we celebrate that. Why not start to lower our high tax burdens that hinder the ability of Minnesota businesses to compete?

Even the most risk-taking of business leaders will rethink where to start or expand an enterprise if costs continue to climb. Minnesota has the unfortunate distinction of being in the top 10 of too many business tax categories. We will never be a low-tax state; Minnesotans demand quality services, but the price must be competitive and the results “top shelf.” We must drop from the top of the “top 10” tax lists if we are to sustain and build the economy. We must seize the opportunity before our budget surpluses begin to wane.

Most Minnesotans may dismiss higher business property taxes as out of sight and out of mind. The taxes don’t come of their pocketbooks, so why be concerned?

Not so fast.

Businesses cannot simply absorb increased costs and remain competitive with their peers. Higher taxes are ultimately paid by consumers in higher prices for goods and services. Higher taxes limit what’s available for employee raises, reinvestment in the business, expansion and potential job growth.

Property taxes for Minnesota businesses are among the highest in the nation — second highest for rural properties and sixth highest for metro properties. Minnesota business property taxes exceed some of our neighboring states by more than 200 percent.

The burden is real, and it’s rising. From a restaurant owner in Rochester: “I can remember when property taxes were manageable, but now they represent our sixth-largest cost. At one of our facilities, we have to do 20 weddings a year just to pay the property tax, and this is 25 percent of our weddings.”

Minnesota employers want to live and work in this state. But there’s a distinct difference between simply staying here and investing to help the economy change and grow.

Our favorable “quality of life” rankings deserve a collective “high five.” But look beneath the headlines and there are troubling details. The costs for doing business are among the highest in the nation.

Economic growth ultimately will come from a strong business climate that encourages employers to reinvest in Minnesota. That benefits employers and employees alike.


Doug Loon is president of the Minnesota Chamber of Commerce, which leads the United for Jobs Coalition — www.unitedforjobsmn.com.