In an effort to get more capital into the hands of those running small businesses in Minnesota, Gov. Mark Dayton announced that the state will deposit $100 million to $200 million into state-chartered banks.
The money will come from state pension funds, managed by the Minnesota State Board of Investment. That board will purchase certificates of deposit from participating banks rather than purchasing treasury notes, which is no great sacrifice given the low rate of return on T-notes at the moment.
Dayton said this is an answer to concerns raised throughout a series of economic summits he held throughout the state in recent months. Over and over, he said, he heard small-business people say that the difficulty in borrowing money is curtailing growth in the state.
Those concerns about access to capital were repeated at Tuesday’s jobs summit in St. Paul.
Dayton made it clear that the state can’t require private lenders to make loans to small businesses in their respective communities but it can “prod” banks to make loans that will allow small businesses to grow.
This action is possible, to a large part, because during the recession, the Federal Deposit Insurance Corp. has raised the amount of funds that will be fully insured. All State Board of Investment funds will be fully insured under the relatively new federal limits.
Dayton admitted that this is just one small step in trying to spur economic growth.
At the same time, he announced other efforts that the state — either through executive actions, government reform or legislation — will make in coming months. Many of these seven ideas stem from the jobs summit, the governor said.
1. Increasing access to capital for small businesses.
2. Aligning training at state colleges and community colleges with the job market.
3. Continued streamling of government regulations, which Dayton noted had begun, in a bipartisan fashion, in the last legislative session.
4. Investment in state infrastructure, such as roads, bridges and “border-to-border’’ high-speed Internet.
5. Delivery of better government services at lower costs.
6. Increasing exports of state products, coupled with an effort to entice foreign investment in Minnesota.
7. Continued work on closing the achievement gap in both education and employment.