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Why DFL leaders need to work with business in the 2013 session

The Great Recession showed us what happens to tax collections when businesses and jobs vanish.

Gov. Mark Dayton, who got his first exposure to the business world through his retailing family, has crafted goals that are similar to the Minnesota Chamber of Commerce.
MinnPost photo by James Nord

Minnesota legislators are awaiting Gov. Mark Dayton’s budget inside the state Capitol, just a few blocks from the Macy’s going-out-of-business sale in downtown St. Paul.

Macy’s pulled the plug on its St. Paul store — founded decades ago as a Dayton’s by the governor’s relatives — after its subsidy from the city of St. Paul expired.

During the 2013 legislative session, we should expect considerable debate about how to make Minnesota a better place for business expansion and start-ups.

In the prelude to the session, the DFL governor set three priorities that are linked to growing Minnesota’s economy. When Dayton gave his commissioners their marching orders about tax and spending reforms, he said they needed to support creating jobs and improving Minnesota’s competitiveness. He also stressed the importance of improving how state government works to deliver the best services at the best price as well as producing sustainable budget and tax policies.

Common ground with business

The governor, who got his first exposure to the business world through his retailing family, has crafted goals that are similar to the Minnesota Chamber of Commerce.

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“Minnesota needs competitive fiscal systems if we are to keep and grow jobs in our increasingly global economy,” the Chamber stated on its legislative priority agenda. “Both our spending and tax systems must be competitive. The Minnesota Chamber of Commerce endorses a spending and tax system that encourages expansion of our economy, creates and retains Minnesota jobs, and maintains a high quality of life for all Minnesotans.”

Although the Republican Party historically has been viewed as the party of business, the DFL governor and the DFL-controlled Legislature need to work with business to produce a truly successful session.

If the DFL politicians want adequate funding for education and health care, they need a thriving and growing private sector to help pay for key services with taxes.

The Great Recession showed us what happens to tax collections when businesses and jobs vanish.

Businesses need a tax system that is fair, regulations that are clear and administered in a timely fashion and workers who are well-educated for 21st century jobs.

Businesses, workers and politicians have a mutual self-interest in a robust economy, because it yields strong profits, good jobs and healthy tax collections.

Political gridlock and patchwork solutions are still standard fare in Washington, where long-term approaches and hard decisions sorely lack bipartisan support. The politicians in St. Paul can do better.

‘Collision course’ for state budget

In Minnesota, the Chamber has acknowledged that the state budget is on a “collision course” because current government programs can’t be sustained by a smaller number of workers who will follow the retiring Baby Boomers.

In the second half of Gov. Dayton’s four-year term, he has the rare opportunity to usher in tax and spending changes that will help Minnesota adapt to this demographic bulge. That means redesigning and altering government services, and that’s the type of lawmaking that should attract support from reform-minded Democrats and Republicans.

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Building political consensus for what needs to be done will be tricky, because the specter of the 2014 election will hang over the session.

Crafting support for a reform agenda also is challenging because the needs and politics differ in urban, suburban, exurban and rural areas.

“The industries important to rural Minnesota — farming, timber, mining, and manufacturing — while still a large part of the state’s economy, are employing fewer and fewer people,” wrote Tom Horner, former Independence Party candidate for governor, in a new report. Horner’s consulting firm did research on behalf of the Center for Rural Policy and Development, which is seeking a stronger and more unified rural voice on public policy issues.

While there is tremendous diversity in Minnesota’s rural and metro economies, residents in every county benefit if Minnesota has state laws that make Minnesota an attractive place to do business. In a global economy, it’s even more critical for Minnesota to have a hospitable business climate because companies have numerous location choices.

Without a growing private sector and job base, Minnesota will bounce from one state budget crisis to the next. In just a few days, Gov. Dayton will unveil his budget plans to right the state’s fiscal ship and spur business and job growth.  That’s when the real business debate begins under the Capitol dome.

Fedor can be reached at lfedor@minnpost.com.