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Economy’s strength poses message challenge for GOP governor candidates

Minnesota House of Representatives Public Information Services
A steady recovery also could hold political benefits for incumbents in 2014 if independents believe Minnesota is on the right track.

Good news about Minnesota’s economy continues to roll in.

Minnesota employers keep adding jobs and the state’s unemployment rate is 5.3 percent, well below the national level of 7.6 percent.

Among major U.S. cities, the Twin Cities metro area has the lowest unemployment rate in the country at 4.7 percent.

On Wednesday, we learned that Minnesota’s tax collections exceeded previous revenue forecasts by $463 million when the fiscal year ended June 30. The Minnesota Department of Management and Budget cited “strong economic growth” as the reason for the extra money.

Right track in 2014?

The fact that Minnesota’s economy is solidly recovering from the Great Recession is welcome news for all Minnesotans. A steady recovery also could hold political benefits for incumbents in 2014 if independents believe Minnesota is on the right track.

Developing compelling economic messages that will persuade swing voters may be particularly challenging for the ultimate GOP challenger who’ll face Democratic Gov. Mark Dayton next year.

In the latest Minnesota Poll, conducted June 11 to 13, Dayton had an approval rating of 57 percent.

Four men from the Twin Cities suburbs are competing to become the Republican gubernatorial nominee.

Only one, Hennepin County Commissioner Jeff Johnson of Plymouth, has waged a statewide race. In 2006, Johnson garnered 40.7 percent of the general election vote when he lost to DFLer Lori Swanson in the attorney general’s contest.

At this early stage in the election cycle, Johnson, Rep. Kurt Zellers, Sen. Dave Thompson and businessman Scott Honour are focusing their campaign activities on Republican activists.

It remains to be seen whether the GOP candidate will be determined by a broad cross-section of Minnesotans in a primary or whether Republicans will rally around a candidate selected at the state party’s convention in 2014.

Regardless of the GOP selection process, if the economy is humming along it may be challenging for Republicans to craft a message that connects with general election voters who don’t follow politics on a daily basis.

Voters who aren’t hard-core conservatives or liberals typically need compelling reasons to toss an incumbent out of office, so the Republican nominee will need a crisp change agenda to be competitive.

Better educational outcomes, lower taxes and less government regulation will resonate with the Republican base. But if Minnesota’s economy is in good shape in the fall of 2014, Dayton may be in the right place at the right time to wage his re-election bid.

However, the Minnesota Chamber of Commerce and Republican legislators argue that the governor and majority DFL legislators have enacted business sales taxes that could restrain economic growth.

Business sales tax skirmish

After the summer vacation season subsides, pressure will build on the Legislature and Dayton to repeal sales taxes on the repair and maintenance of business equipment and on storage and warehousing services of business-related goods.

That important fight will play out in the 2014 session. But it’s hard to see how that topic would become the defining issue of the 2014 campaign.

While the governor is a well-known quantity in all of Minnesota’s 87 counties, the four Republican candidates have a tall hill to climb to become familiar personalities on a statewide basis.

Political junkies know Zellers and Thompson, but all four of the Republicans need to build their brand reputations with the general electorate. To move beyond the suburbanite label, expect the candidates to brandish their rural credentials.

Building a statewide ID

Three of the four Republican candidates have roots in western Minnesota or North Dakota, which they will be highlighting when they court rural convention delegates. Zellers grew up in Devils Lake, N.D., and earned his undergraduate degree from the University of North Dakota in Grand Forks. Thompson, who graduated from high school in East Grand Forks on the Minnesota side of the Red River, also graduated from UND. Johnson, who was raised in Detroit Lakes, Minn., got his bachelor’s degree from Concordia College in Moorhead.

Honour, a Fridley native, is the only one of the four GOP candidates who has not spent considerable time in the Red River Valley, where Minnesota border business people keep a careful watch on the differences between Minnesota and North Dakota tax policies.

When the Dayton administration disclosed last week that it was ending the fiscal year with surplus cash, it explained that the money would flow to local school districts. Previous legislatures had borrowed the money, and the state is now accelerating the payback to schools.

In a statement, Dayton said:  “According to the U.S. Department of Commerce, Minnesota had the fifth-fastest growing economy in the country in 2012. Our state’s strong economic growth has enabled us to work our way out of previous budget deficits and repay most of what we owed our school districts. More work remains, but we have made important progress.”

If Dayton runs on the themes of progress and economic growth, the GOP nominee’s challenge will be crafting a positive alternative vision that connects with swing voters.

Fedor can be reached at lfedor@minnpost.com. She is on Twitter @LizFedor.

Comments (11)

  1. Submitted by Kevin Watterson on 07/16/2013 - 08:53 am.

    So it won’t be a challenge for Mark Dayton to explain why he’s taking credit for the economy in a year when Republicans controlled the Legislature and he did not get to raise taxes? Or is that one of the things we’ll all just gloss over.

    • Submitted by Peter Stark on 07/16/2013 - 10:38 am.

      Polling indicates that people already are giving credit to Dayton for the economic growth. In case you forgot, there was already a referendum on the MNGOP’s legislative record in 2012, and the GOP got thrashed.

  2. Submitted by Tom Knisely on 07/16/2013 - 09:29 am.

    Thank Republicans

    The good economic news your are reporting is the result of the Republican budget that just ended June 30th. The tax raising, job crushing, out of control spending budget of the DFL didn’t start until July 1. Let’s wait a year and see how things look.. Major employers are already leaving the state thanks to the new wharehouse tax.

    • Submitted by Pat Berg since 2011 on 07/16/2013 - 11:12 am.

      Names, please

      Which major employers are leaving the state due to the new “wharehouse” tax?

    • Submitted by Ray Schoch on 07/16/2013 - 11:32 am.

      Name two

      I’m not sure the (relatively) good economic news is the *result* of the Republican budget. The fact that “A” came before “B” doesn’t necessarily mean that “A” *caused* “B.” The most recent Republican budget might have something to do with it, but the influence might be significant, or it might be relatively minor. I’d like to hear from the state economist about this.

      Indeed, the Dayton administration is raising some taxes. There’s little to no evidence that such a policy change is “job crushing” as far as I know. Nothing in the media about “massive new unemployment,” or companies *not* coming to Minnesota because of the tax climate. Nor is there any evidence that state spending is “out of control.” State spending is considerably less than the spending requests submitted to the legislature, so there must be *some* control being exercised.

      Just out of curiosity, how are you defining the “major” part of “…major employers…?” A dozen employees? A thousand? What constitutes “major” employment?

      And finally, since you’ve used the plural term, name two “major” employers that are “already leaving the state” thanks to the new “wharehouse” [sic] tax. Assuming you’re correct, I’d be interested in knowing where those employers were located before they left the state.

  3. Submitted by Tom Knisely on 07/16/2013 - 02:49 pm.

    Names

    Amazon has cut ties with all Minnesota affiliates thanks to this new tax. These 5,200 affiliates generated $500 million in revenue and paid $35 million in state taxes last year. All gone. Navarre Corporation is getting out of dodge and is going to layoff 148 warehouse employees in the process. Redwing Shoes has decided not to spend $20 million on a warehouse expansion in Redwing that would have added jobs to the union workforce. Murphy Warehouse Co., a 109 year old Minnesota company, based in Minneapolis, with 12 warehouses and 200 employees is actively planning to move to Hudson Wisconsin.

    • Submitted by Bill Schletzer on 07/16/2013 - 04:06 pm.

      I guess Hudson could use some jobs

      I thought I had read that Wisconsin’s economy has done way worse than Minnesota’s in the last couple of years, so Hudson could probably use a few warehouse jobs. Seems like all those Walker job growth schemes would have kicked in by now. I know my company has added a ton of good paying middle class jobs in the last year.

      Those Amazon affiliates aren’t necessarily out of business, just out of the Amazon business. How much of that business actually came from Amazon and not another source. I recently bought a book though an “Amazon affiliate” and it came from a local used book store. As a big shopper on Amazon I’m not personally thrilled by the efforts to tax internet sales but I can see some of the fairness of it. Remember a big driver for that tax were the local retail businesses that were being hurt by internet competitors that don’t have to pay sales taxes, so in a sense I imagine a lot of what was lost is regained by another company.

    • Submitted by Lance Groth on 07/16/2013 - 06:06 pm.

      Amazon

      It’s worth noting that Amazon favors (albeit as a practical matter) internet taxation. They did not cut ties with the affiliates because they object to collecting sales tax, they did it because they object to keeping track of the myriad sales tax laws in 50 states and thousands of local jurisdictions. They want a national solution, which is an eminently sensible position to take.

      It’s also worth noting that, either way, it is not a “new” tax, it is merely an attempt to force compliance with existing law. Under the law, sales tax is already due the state regardless of whether the purchase is made locally or on the internet. If Amazon doesn’t collect it, then the individual is obligated to write a check to Dept. of Revenue. I thought repubs were all about the rule of law?

      Tangentially, the whole affiliates mess (here and in other states) can be chalked up to the ineptitude of Congress in crafting a national internet sales tax solution. Had the 50 states jointly agreed on a simple, national plan (for example, the states that want it all get 5%, the states that don’t can opt out), they could have been collecting many millions in revenue for at least the past decade, rather than getting nothing and moaning about how unfair it all is to local brick & mortar stores. The states let the perfect be the enemy of the good, and so (thus far) they’ve had neither.

  4. Submitted by Peter Stark on 07/16/2013 - 07:32 pm.

    Well said

    This is a good summary of the Amazon & Internet Sales Tax issue.

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