When it comes to state budget, business groups don’t always agree on what’s good for business

Since the start of the session, Republican lawmakers have been promoting the idea that what’s good for business is good for Minnesota.

But it’s turning out that not even business always agrees on what’s good for business.

This week, chambers of commerce that represent hugely different business constituencies have urged Republican legislators to rethink their positions on statewide issues. Chamber leaders from big cities and small even are talking about how they need the support of Gov. Mark Dayton in opposing some Republican budget-cutting plans.

On Monday, the Coalition of Greater Minnesota Cities brought together a group of speakers representing 14 chambers for a Capitol news conference. Those chamber reps urged state lawmakers to raise taxes, rather than cut Local Government Aid. Cuts to LGA, they said, have badly hurt businesses by driving up property taxes by 65 percent since 2002.

During that news conference, David Ross, president of the Duluth Chamber of Commerce, told Forum Communication’s Don Davis that the governor “is our last line of defense” against Republican efforts to cut LGA.

A day later, a letter signed by Matt Kramer, CEO of the St. Paul Area Chamber, and Todd Klingel, CEO of the Minneapolis Chamber, appeared in the Star Tribune. That letter — also signed by Hennepin County Commissioner Peter McLaughlin and Met Council Chair Susan Haigh — said that the Legislature’s decision to cut metro transit funding by $110 million in the next biennium is “a blow to transit users, to business and economic investment and to truth in taxation.”

In an interview with MinnPost Tuesday, Matt Kramer, a former commissioner and aide to Gov. Tim Pawlenty, said he hopes Dayton will veto Republican plans to cut transit funding.

Some business questions
Is the Republican Party only selectively listening to business leaders? Are Chambers of Commerce in the midst of a great civil war over what’s best for the state’s business climate? Are state business leaders becoming wild-eyed progressives who want to see tax increases?

Short answers: Republican Party members are guilty of selective listening. Chambers aren’t in agreement on ALL issues. Business leaders, like most of us, believe that public money spent on their causes is an “investment,” but that public money spent on somebody else’s causes represent “waste.”

David Olson
David Olson

David Olson, executive director of the Minnesota Chamber of Commerce, the organization most often cited by Republican legislators, downplays any cracks in the unity among chambers. But he also makes it clear that it’s vital for the chambers to show a united front.

“When the business community is united [in dealing with the Legislature], we have a chance to come out all right,” Olson said. “If we’re not united, we’ve got no chance at all.”

His organization, he said, is united.

On Monday, Randy Kehr, executive director of the Albert Lea-Freeborn County Chamber of Commerce, took aim at the pain businesses in Greater Minnesota are feeling because of cuts to LGA.

“Property taxes are hammering businesses, especially small businesses,” Kehr said. “Maintaining LGA is critiical to business growth and job creation in Minnesota.”

Kehr, and others, called for a combination of spending cuts and tax increases to balance the state budget.

But the idea that taxes need to be increased is out of step with the state Chamber’s position.

“$34 billion is enough,” said Olson of the budget number that Republican legislators say they can reach without any tax increases. “Our members have had to do layoffs, cut benefits to employees, find ways to become more efficient. Our members have suffered; government will have to suffer, too.”

State chamber says business community united
But aren’t some Chamber members calling for tax increases?

Olson responded to the question with a lot of frustration and just a bit of a brush-off.

Start with the brush-off.

“They [the Coalition of Greater Minnesota Cities] are saying that they have 14 chambers,” Olson said. “Most of those, except for Duluth, are very small. There’s 280 members [in the state chamber]. At least 130 to 140 of those are big enough to have paid staff.”

Small is in the eye of the beholder. Duluth, Albert Lea, Crookston and the Laurentian Chamber (which represents four Iron Range communities) were among the chambers calling for a balanced approach to balancing the budget. Those chambers would seem to represent a fairly substantial cross-section of Minnesota communities.

Olson was frustrated by the complaints of those chambers.

“They never said where to get those higher taxes,” Olson said of the 14 chambers. “They never said who should pay. I would guess that the position is: Raise somebody else’s taxes.”

Beyond that, however, Olson insists that the state chamber’s position on LGA often has been “misconstrued.”

“We don’t want to eliminate it,” he said. “It needs to be restructured, but we’ve never said we want it eliminated.”

Monday’s event may have featured concerns of smaller chambers.

But the Tuesday letter represented the largest of chambers in the state, the organizations representing businesses in the St. Paul and Minneapolis metro areas.

But Olson said that the letter criticizing the legislative desire to whack $110 million from the transit budget does NOT represent a split in the state chamber’s position.

“We haven’t taken a position on that piece of the budget pie,” said Olson.

It seems strange that the state chamber would not have a position on transit, an issue that the leaders of the metro chambers say is of fundamental importance to their businesses and the competitive future of the state.

Minneapolis, St. Paul chambers say transit a priority
Certainly, the comments of the leaders of those two metro-area chambers represent a split in Republican-Metro Chamber thinking.

“Roughly 60 percent of all riders on the MTC are [going] to and from work, and another 20 percent are [going] to and from school,” said Kramer. “That would seem to indicate that transit is a very basic jobs-and-economic-development tool.”

Klingel was just as adamant about the need for more funding for transit.

Klingel described transit as “a No. 1 priority” for metro-area businesses and workers. Beyond that, he said it’s a No. 1 priority if “we’re going to compete with Denver and Singapore.”

Both also said that transit is an issue of fundamental importance to younger people, who are more seeking out places to live and work where they are not tied to cars.

But as crucial as the two say the issue is, neither is willing to criticize either the state chamber or the Republican-controlled Legislature.

Kramer, who served as Gov. Tim Pawlenty’s commissioner of the Department of Economic Development and later as the governor’s chief of staff, defends the Republican/Olson goal of holding the budget line at $34 billion.

“But in our zeal to reform, let’s not throw out the baby with the bathwater,” said Kramer.

That’s his way of saying that there are several things that could be cut from state government but that transit isn’t one of them.

Cutting transit funding, Klingel said, may reflect the inexperience of many of the Republican legislators, who haven’t had time to digest the nuances of such complex issues as transportation.

“Many of them are brand new,” said Klingel. “I know they’re trying to find the line we all try to find: What do we have to have? What can we get by without?”

Again, neither Klingel nor Kramer is joining some of the chambers from smaller communities in calling for higher taxes to balance the budget. Nonetheless, they are expecting help from a DFL governor who does want to raise some taxes.

“At this point, what they [Republican legislators] want to do with transit is just a proposal,” said Kramer. “It’s important to remember, it remains only a proposal and the governor makes the final decision.”

So we have several chambers calling for taxes to preserve LGA, which they say is business-friendly. We have two major chambers calling for the state to hold the line on overall spending but to preserve most transit funding.

And Olson’s playing it in the middle.

The state chamber, he said, reaches its priorities through a multi-step process. In the summer months, Olson said, state chamber leaders travel throughout the state, talking face to face with business people about their priorities. Two “statistically valid” polls follow. After the data are gathered from the meetings and the polls, the executive board writes up the state chamber’s proposed positions. Those proposals are reviewed by members across the state again. Finally, positions are formally adopted.

“We represent the wishes of our members,” said Olson.

But clearly, as events this week are showing, not even businesses are in total agreement on what’s good for business.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

Comments (7)

  1. Submitted by will lynott on 05/18/2011 - 12:13 pm.

    My, my. The wingnuts don’t like those cuts so much when they themselves are affected. Why am I not surprised?

    So Matt Kramer says cut somebody else, does he? Wasn’t he the one who said cutting LGA was okay because then local units would be forced to decide what they were willing to raise property taxes for? Well, there’s your answer, Matt. If transit is so important, just raise local taxes.

    Doesn’t seem so copacetic now, does it?

  2. Submitted by Tom Christensen on 05/18/2011 - 12:39 pm.

    Taxes from everyone for everyone are a good thing. I wonder how those adverse to taxes think Minnesota became a great state looked up to by many without taxes. Over the years we all have paid our taxes and we all have enjoyed our state. The politicians have been busy giving away tax dollars to special interest and now we don’t have enough to cover the basic needs of the state. It is the tax loopholes and tax cuts for the few that have everything so skewed right now. If businesses are hiring based on a tax cut and not product demand they will shortly be laying off those they just hired because only product demand makes a business healthy. The voting public needs to pay attention every November who they vote for or we will get more political zealots who only serve a special few. That is not how I want my tax dollars spent!

  3. Submitted by will lynott on 05/18/2011 - 01:15 pm.

    Almost forgot–Doug, good questions and FOLLOW UP, calling them on their BS. Nicely done.

  4. Submitted by Daniel Olson on 05/18/2011 - 01:22 pm.

    The state chamber, much like the US Chamber, is dominated by a handful of multinational companies. These companies have a global perspective and can shift operations to other states and countries as needed. These are the folks the republican legislature works for. Many of them would burn down our town and move on to greener pastures if it made them more money. These corporations are much less interested in a free market than maintaining an economy rigged to their advantage.

    The local chambers are composed of small business owners and have a much different perspective. They are our neighbors, their children attend our public schools, and their businesses rely on a functioning and competent state government. It’s no wonder organizations full of local entrepreneurs don’t fall for the scorched-earth tactics of the “drown government in a bathtub” crowd.

    Because after all, how is deferring maintenance of crumbling infrastructure, demonizing the educators of tomorrow’s workforce, and undermining commuters ability to get to work going to help our economy thrive in the future?

  5. Submitted by Ginny Martin on 05/18/2011 - 03:37 pm.

    So where do the republicans think they’re going to get money for their next elections if they refuse to fund education, roads, rail, and dozens of other things? Do they expect the huge multinationals will bail them out? Wouldn’t the economic slump of not funding these necessary state agencies work their way up?
    Lemmings, following each other off the cliff. Or maybe we could wish. Following each other into disaster, I think.

  6. Submitted by George Nelson on 05/19/2011 - 06:57 am.

    One thing I don’t understand about the Republican “all cuts” budget, among many things, is why they don’t include cutting legislative salaries and staff. A 25% cut, for instance, would certainly deflect some of the “cut progams that benefit others, but don’t cut mine”, argument. What ever happened to, “what’s good for the goose is good for the gander”?

  7. Submitted by Tony George on 05/19/2011 - 08:18 am.

    All those Minnesota legislators that are working for the ‘Americans for Koch Brothers Prosperity” don’t care what is good for Minnesota business. They only want to help their beloved Koch brothers.

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