‘Jobs’ are back on the front burner for governor and legislators

'Jobs' are back on the front burner for governor and legislators
CORBIS/Robert McIntosh

Back in January, both the new governor and the new Legislature made “Jobs, jobs, jobs” their rallying cry, only to see divisive budget politics quickly overwhelm their top priority.

But in reality, some little-noticed job-friendly measures did get through the legislative process.

And now Gov. Mark Dayton says he is making job creation his priority. He plans to launch a jobs tour next week and says he will “go anywhere, call anybody, do what I can.”

Republican legislators, too, talked about their new efforts – unveiled Thursday under the name Reform 2.0 – to make government more friendly to businesses and job providers.

Governor says jobs key to fiscal stability
Dayton, discounting the effect that volatile stock prices would have on individual state economies, told reporters last week that he believes that employment levels are the most important factor for Minnesota’s fiscal viability.

“Stock prices are a measure but, in and of themselves, aren’t as significant as the number of people working and creating jobs and having jobs and paying taxes,” Dayton said. “That’s a real source of concern, and that’s why I’m going to focus in the weeks ahead on ‘jobs, jobs, jobs.’ “

Minnesota’s jobless rate shot up 0.4 of a point to 7.2 percent last month as the state lost 19,800 jobs, fueled largely by the three-week state government shutdown.

Gov. Mark Dayton
MinnPost photo by James Nord
Gov. Mark Dayton

The August report should be back on track, but with all the ongoing concern about the weak economy, Dayton is getting ready to unveil new jobs-related initiatives.

Before he does, here’s a look at recent legislative actions and at some of the economic development tools the Dayton administration already has in place.

Although its jobs impact is likely short-term, Dayton’s $497 million bonding bill — passed as part of the special-session compromise to end the state government shutdown — is probably the single most powerful economic engine available now.

Such a bill could create more than 14,000 jobs, especially in the struggling construction industry, according to Dayton administration estimates. Most agree the bill is about three-quarters “shovel ready” projects.

DEED Commissioner Mark Phillips, who has worked with construction giant Kraus-Anderson, has seen the impact of industry unemployment up close. The construction industry provides about 5 percent of the jobs in Minnesota, but construction workers make up roughly 30 percent of the state’s unemployed.

Phillips said in an interview he’s happy to get back to work after haggling with Republicans over the $250 million jobs bill all session, especially with the opportunity to implement some new policy areas that received funding increases.

Although DEED did sustain a small overall cut, Phillips said, the department received $3 million in new funding for the Minnesota Investment Fund, the first increase since 2005. The investment fund provides grants of up to $500,000 “to help add new workers and retain high-quality jobs on a statewide basis,” according to the department.

Workforce development initiatives — which received a 5 to 10 percent cut — will distribute $35 million over the next budget cycle to help hard-to-train workers, those with mental disabilities and laid-off professionals looking to change careers, among others.

Another increase came in the form of $2 million in new money for a redevelopment program that leverages other funds to help clean up contaminated sites for business development.

DEED also received authority from the Legislature this session to establish a loan guarantee program, which allows businesses access to the capital they need to expand if they can’t secure a loan from a private bank. The department is applying for federal funding to begin the program since it didn’t receive any legislative aid this time around.

To Scott Martin, president of the Minnesota Economic Development Foundation, the loan guarantee program is perhaps the most useful of any DEED initiative.

“The issue of access to capital from the state’s perspective is: If banks can’t fill all the needs of small businesses, how can state government — and the other organizations like them — … work together to make sure that small businesses get the financing they need when they need it, in partnership with banks?” Martin said. “That was probably the single most significant, at least in my mind, job creation initiative that the Legislature passed this year.”

But, Martin said, despite that bright spot, Minnesota’s economic development initiatives are typically ineffective. Other states have much larger budgets than Minnesota’s $250 million allotment, so there’s only so much officials can do.

“The budget has just been slashed and the amount of meaningful funding available in programs that have an opportunity to help in job creation are pretty much barebones if they even exist anymore,” he said. “So, bottom lines is, I think expectations have to be realistic because when you don’t have tools, there’s not a whole lot you can do.”

Overall, state economic development officials agree, at least in part, with Martin’s assessment. The countless racino proposals over the past decade aimed at boosting Minnesota’s economic development efforts without increasing taxes or general fund spending are perhaps the best example of that recognition.

“When they mentioned racino, I said, ‘I don’t know if you want to do a racino, but if you do one, I’d as soon get the money’ – money for improving employment and the economy,” Phillips said.

‘Sunnier spots’
For some, however, sunnier spots exist within Minnesota’s economic development package. Margaret Anderson Kelliher, president and CEO of the Minnesota High Tech Association, considers the session success in that regard.

The former House speaker said the much-touted data center tax relief provision and funding for the Minnesota Science and Technology Authority are two great examples.

Margaret Anderson Kelliher
MinnPost/Terry Gydesen
Margaret Anderson Kelliher

“I think as far as high-tech jobs and knowledge work — jobs of the future — in a very difficult session, this session turned out pretty well,” she said.

A provision in the tax bill allows large data storage centers to be exempt from sales taxes on equipment and computer software, as well as electricity. The goal for lawmakers and technology advocates is to spur growth and investment in Minnesota from companies who are already interested in our state’s chilly climate, which makes it easier to cool giant computer systems.

Funding for the Science and Technology Authority and increases in the Research and Development tax credit also set “Minnesota on a course to be able to grow and attract entrepreneurs to create more jobs in the state,” Kelliher said.

But to Kelliher, the most impressive work going on in the technology sector to spur job growth comes from collaboration between cities, business partnerships and the state and federal governments.

“The most encouraging things happening are really around coordination in Minnesota for really all being on the same page,” she said. “I don’t actually see disappointment right now, either in how state government is doing this or how others are doing it.”

Strong exports
Katie Clark is looking for a different a sort of partnership to spur economic development. As executive director of the Minnesota Trade Office, Clark heads a subset of DEED dedicated to helping small businesses expand into foreign markets.

But before July’s special session ended, Clark and her employees didn’t know if they would be able to return to their jobs. Under the GOP budget, the entire office would have been shuttered as part of the spending cuts necessary to close Minnesota’s budget gap.

“We definitely went through a time of uncertainty, and for the staff that are in the office, it was a stressful time,” Clark said. “I think everyone now is coming together and now we get to do the fun part, which is actually do our work.”

Exports are booming for Minnesota businesses. In 2010, manufacturing exports — helped by strong sales in Asia and Canada — jumped 17 percent to $17.2 billion. “Exports are definitely a bright spot of Minnesota’s economy,” Clark said.

The Trade Office offers training services to companies for a small fee to help them begin exporting. Now that funding is secure, the department is also implementing a strategic planning process to increase exports over the next biennium and into the future.

Through a partnership with the Brookings Institution and a number of local partners, the Trade Office is also helping to examine the Minneapolis-St. Paul metro area (which accounts for 80 percent of Minnesota’s exports) and search for ways to improve trade and business connections internationally.

Trade missions
But perhaps the brightest spot for Minnesota’s bourgeoning exporters is Dayton’s planned trade mission to South Korea and visit to Japan, which make up two of the state’s largest export markets.

“Japan and the Republic of Korea are two important markets for Minnesota businesses with the potential for further growth,” Dayton said in a statement. “The goal of the trade mission is to make contacts and build relationships that will help Minnesota companies increase exports to that part of the world and create more jobs for here.”

Japan and Korea, which together bought about $1.5 billion in Minnesota products last year, mark the state’s third- and sixth-largest export markets, respectively.

Clark said the governor’s trip to Korea in late September would help open doors for small businesses that would not otherwise be able to arrange meetings with business leaders and political officials. In Japan, Dayton will ceremonially welcome Japanese business leaders to Minnesota for the 2012 Midwest U.S.–Japan conference.

Although the trip is still in the planning stages, Clark said more would be scheduled.In her many conversations with Dayton, the governor has made exports a key area of focus for his administration, she said..  

The governor’s interest and Clark’s zeal are a perfect fit, and that’s why her goal for the end of this budget cycle is so lofty.

“I hope that our state’s exports have doubled,” she says with a laugh. “That would be amazing. I hope that we see a drastic increase in exports from Minnesota, and I hope that we see as a result, jobs created here in Minnesota.”

Comments (7)

  1. Submitted by Paul Udstrand on 08/19/2011 - 09:32 am.

    We’re stuck. Dayton will never get any stimulus package through this legislature, and the Republican believe it’s not their job to create jobs, that’s up to the private sector… in other words, it’s someone elses job. They’ll talk about jobs, but they have coherent or reasonable plan.

  2. Submitted by Mark Stromseth on 08/19/2011 - 11:16 am.

    Repubs and Tea Totalers don’t believe in collective efforts to improve the lives and standard of living for everyone. They only believe that they shouldn’t have to pay for anything, while everyone else should.

    Turning a blind eye towards poverty, homelessness, and hunger does not make it go away, much less the greater expense that everyone ultimately pays due to such problems. The same holds true for creating jobs through public spending: if the roads fall apart, city and county services are cut or eliminated, then who puts out the fires, enforces laws and fights crime, or makes those roads something you can actually travel on without damaging your car?

    Living in the Repub/Tea Totaler utopia means they would ultimately have no reason to stay here; they’d move the the place where all those services are intact. Except that if they had their way, no state would have those things, at which point there only option would be to admit defeat, or commit suicide.

  3. Submitted by Jon Kingstad on 08/19/2011 - 11:26 am.

    #1: Paul: “They’ll talk about jobs, but they have coherent or reasonable plan.” I assume you meant the Republicans have NO coherent or reasonable plan.

    I was reading the link to the Republican plan “Reform 2.0” which is about “listening” and something about cranks. Kurt Zellers says that the “liberals” ideas are outdated and from the 1960’s. Oh really? When did J.M. Keynes get refuted? By Arthur Laffer and “trickle down” economics? Zellar is too young to know or remember that this country did not get into financial trouble until the 1970’s when we had all but 4 years of Republican Presidents and then Reagan-Bush who ran the biggest deficits on the “trickle down” theories of Arthur Laffer, which failed to deliver growth or more revenues. Zellars needs to go school or go back to get some real education.

    Zellars admits people are tired of the “no taxes” mantra but then what do the Republicans have to offer? They’re listening especially to people who say “live within your means. Except “within your means” is “no taxes” and so back to square 1. In other words, no plan period.

    The Republican nostrums for economic progress have been a proven disaster from the last 30 years. At what point are people going to say, yeah the tax cuts and no taxes craze didn’t work. Maybe it’s time to try something new.

  4. Submitted by Kevin Watterson on 08/19/2011 - 12:48 pm.

    Jon –

    You’re a little off on what the Speaker said, here’s the transcript:

    “We have a 1960s jalopy that practically has a crank where you have to turn the engine to get it going. We put some new paint, we added some fancy mirrors on it, maybe some new rims, but it’s still the same old chug-along engine. We need to change the way government works.”

    No mention of liberalism. That’s a far cry from what you portrayed him saying.

    Thanks.

  5. Submitted by craig furguson on 08/19/2011 - 02:09 pm.

    I’m quite disappointed in both parties. There is no evidence that tax breaks create jobs – business exists to make profits for shareholders. And I’m getting a little tired of the stimulus discussion. How about we invest in education? My 16 year old just said the other day he’d like a degree where he has a chance of earning money, perhaps engineering. We should be encouraging education and innovation instead of remaining in the same old rut.

  6. Submitted by Jon Kingstad on 08/19/2011 - 02:46 pm.

    Kevin,

    You’re right. I’m used to hearing “DFL’ers” equated with “liberals” by the Right all the time so I’ll accept the correction. But change it to “DFL’ers” and Zellers still has not explained what he means by “reform” or that he knows what he’s talking about. I don;t think my comments were too far off if you look at the rest of the transcript:

    “Why no DFLers?

    “In a lot of cases, our friends on the other side of the aisle aren’t interested in reform,” Zellers said. “The status quo is their best friend.”
    . . .
    Why no DFLers?

    “In a lot of cases, our friends on the other side of the aisle aren’t interested in reform,” Zellers said. “The status quo is their best friend.”

    “A ’60s jalopy
    Their ideas, the speaker said, are ancient, from the 1960s.”

  7. Submitted by Paul Udstrand on 08/19/2011 - 02:55 pm.

    Thanks for the clarification Jon.

    Kevin,

    I see what Zellers is saying, it’s a typical distorted Republican fantasy pretending to be history. That 60s “big government” jalopy has long since been traded in for the 80 trickle down- free-market Reagan miracle. It’s funny, the Republicans try to act like they’ve gotten into power in the last 40 years. like all the 80s vintage cars Reaganism turned out to be a product of designed obsolescence, not a rust bucket with no functioning bells and whistles. Republicans have been promising more efficient and re-designed government for 40 years and never delivered. They’ll never deliver anything other than dismantled government because they don’t believe in governing.

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