Both GOP and DFL are happy — and quick — to claim credit for Minnesota’s lofty business ranking

MinnPost photo by Corey Anderson
Minnesota ranked fifth in “quality of life,” ninth in “economic climate,” 13th in “growth prospects,” 18th in “labor supply,” 22nd in “regulatory environment” and 34th in “business costs.”

You might think that because Forbes magazine now ranks Minnesota as the eighth-best state in the country for doing business, Republicans might drop their lament that the state has a terrible business climate.

But instead of dumping that old mantra, at least some in the GOP are taking credit for the lofty rating.

A quick review: Forbes came out with its new rankings Thursday. The article ranked Virginia as the best state in the land for business, but Minnesota jumped 12 spots, to No. 8. That jump was the largest by any state.

Among state neighbors, only North Dakota, with its oil windfalls, finished higher than Minnesota. North Dakota was second to Virginia. Meantime, low-tax South Dakota was 11th, Iowa 12th and “open-for-business’ Wisconsin was 41st.

Not surprisingly, Gov. Mark Dayton’s administration was quick to trumpet the news through the state’s Department of Employment and Economic Development.

“The word is out that Minnesota is a great place to live and do business,” said DEED Commissioner Katie Clark Sieben in a jubilant news release.

But Republicans were almost as quick to say that it’s the GOP, not Dayton and the DFL-controlled Legislature, that deserves the credit.

Zellers credits GOP policies

For example, former House Speaker Kurt Zellers, who currently is campaigning to be his party’s candidate for governor, expects “a thank you fruit basket” delivered to his front door. It was, he said, the work of the GOP-controlled Legislature in 2012 that set the stage for Minnesota’s strong economic position.

The data used for the rankings, Zellers noted, was from 2012 — when he was the House speaker and Republicans were in the majority in both the House and Senate. The Republicans were swept out of majority following the 2012 session.

“I’m always glad to see Minnesota do well,” Zellers said, “but for the governor to take any credit is pretty ballsy.”

Zellers recalled that in 2011, when Dayton and legislators were in a showdown on a state budget, Dayton called Republicans “unfit to lead.” When a budget deal finally was reached, Dayton called the resolution “their [the GOP’s] budget.”

It was that no-new-taxes budget that set the stage for Minnesota’s big jump in the Forbes’ rankings, Zellers said.

Beyond holding the line on the budget, Zellers said that the GOP deserves credit for “calming the regulatory climate,” which has helped business in the state.

Over and over, Zellers brought up the insults he heard from DFL legislators — and the governor — in 2012.

“They were saying, ‘We’re going to be a cold Louisiana, a cold Nebraska.’ They were saying, ‘It’s going to be horrible,’ ” Zellers recalled. “Now they’re saying, ‘Look at how great we are?’ So which is it? Be honest. You can’t take credit for something you said wasn’t going to happen.”

Next year’s ranking?

Does that mean, in Zellers mind, that Minnesota’s rankings will tank next year, what with a larger state budget and increases in some taxes?

“I would never wish anything negative for the state,” Zellers said, “but …”

He said he continues to hear stories from individual business owners who are moving out of state because of state tax policies. He blasts Dayton for such things as the warehouse tax (which likely will be eliminated before a penny ever is collected) and some business-to-business taxes.

In other words, expect Zellers and other Republican candidates to keep talking about Minnesota’s poor business climate and the competitive disadvantages Minnesota businesses face.

That may be a little less frightening of a message, given the fact that DFLers are in charge and Forbes is saying the state’s doing pretty well.

Obviously, it’s folly to credit one party or the other for rankings done by a pro-business magazine. But there may be a little fodder for both Republicans and DFLers in this subjective listing.

The ratings are based on six broad categories. Minnesota ranked fifth in “quality of life,” ninth in “economic climate,” 13th in “growth prospects,” 18th in “labor supply,” 22nd in “regulatory environment” and 34th in “business costs.”

Republicans, for instance, will claim that the relatively low-rankings in “regulatory environment” and “business costs” are the fault of long-held DFL policies. (Dayton, it should be noted, believes that he should be credited with cutting some of the regulatory red tape.)

But DFLers are claiming that it’s their party’s historic policies that have led to this lofty — and surprising — ranking.

Long-term investments

“History has taught us that a strong education system is what our state needs for success,” said DFL chair Ken Martin in a statement. “Yet for a decade, Republicans cut all levels of funding and borrowed from k-12 students. With the DFL’s historic investment in education, particularly in the area of early childhood education, Minnesota’s economy is on the right course for years to come.”

In fact, the Forbes high “labor supply” ratings is a direct result of a history of high performance in schools. Minnesota ranks second in the nation, with 92 percent of adults having earned high school diplomas.

On the other hand, when it comes to “labor supply,” Forbes is a fan of right-to-work states — such as Virginia — and frowns on states, such as Minnesota, where labor still has some clout.

Both parties will claim credit for the state’s high “economic climate” ranking, which is based on the number of large public and privately held companies and average unemployment in the last five years. (Even in the depths of the recession, Minnesota’s economy performed far better than the national average.)

What of the future “prospects”?

Other than North Dakota, Minnesota will continue to outperform its neighbors, although the state ranks 13th on future prospects. South Dakota’s future doesn’t look any better than the present, ranking 41st. Iowa, meantime, ranks 43rd. Wisconsin, according to Forbes, actually moves up in the future — to 37th.

Bill Blazer, executive vice president of public affairs for the Minnesota Chamber of Commerce, added some perspective on the Forbes’ ratings.  It’s likely decisions made five or 10 years ago, as far back as a half-century, that create a state business climate.

“Anybody who says it was because of decisions made by the 2013 Legislature or the 2012 Legislature [that created the high ranking] doesn’t understand how the economy works,’’ Blazer said.

He pointed to the Iron Range taconite boom of the 1970s. That, he noted, was based on research done at the University of Minnesota in the 1950s.

“I believe the Forbes report reflects on how a few decisions and actions we took five years ago, 20 years ago, have paid off,’’ Blazer said.

Comments (11)

  1. Submitted by Ray Schoch on 09/27/2013 - 11:11 am.

    Business climate

    I often disagree with the Chamber of Commerce, but I think Mr. Blazer of the Chamber is right on target with his comments. Policies put in place by a current administration, or its immediate predecessor, seem to me unlikely to magically generate the sort of business climate that both Republicans and Democrats are eager to take credit for.

    For example, there’s ample evidence, historically, that failing to regulate business is both an ethical and fiscal disaster. There’s also plenty of evidence that at least in some cases, businesses can be regulated to death unnecessarily. The trick is to find a somewhat happy medium, and Minnesota appears to have done that reasonably well over the past generation or two.

    While most businesses and business executives are obsessed with the short term, what the Forbes story reflects is a willingness on the part of at least some of the state’s political and economic kingpins to think, and act, with the long-term horizon in mind regarding all those factors, from taxes to employee education to health care to transportation, that can shape the business climate. Virginia’s #1 ranking is at least in part due to the convenience of having the lobbyists for your particular industry segment living, figuratively (and perhaps literally), right next door.

  2. Submitted by Gerald Abrahamson on 09/27/2013 - 12:28 pm.

    Zellers is full of it.

    The 2011 Republican legislature created and passed a wealth tax (only it is not called such). That will come back to bite them as a big lie when “no new taxes” claim is fraudulently repeated.

  3. Submitted by Dennis Tester on 09/27/2013 - 03:27 pm.

    Businesses succeed

    in spite of government, not because of it. The more government is willing to get out of the way, the more businesses will succeed that otherwise wouldn’t have.

    • Submitted by Bill Gleason on 09/27/2013 - 04:14 pm.

      Mr. Tester

      Try running a business without infrastructure.

      Your comment is nonsensical.

    • Submitted by Frank Phelan on 09/27/2013 - 07:46 pm.

      Didn’t You Read

      What Bill Blazer of the Minnesota Chamber gave as an example of the PUBLICLY funded U of M’s research leading to the taconite boom? Mr. Tester, are you saying the taconite companies would have made more money without that government interference?

      I guess private industry was either unwilling or unable to pony up for the research on that. Sort of like the way the federal government does basic research on drugs and then gives that research to big pharma free of cost.

      • Submitted by Dennis Tester on 09/27/2013 - 08:50 pm.

        And the taconite companies

        are out of business today … because of government.

        • Submitted by Bill Coleman on 09/29/2013 - 07:53 am.

          Not out of business

          Dennis,

          Don’t let the facts hit you in the rear!

          http://www.taconite.org/mining-industry
          4200 direct employees, 13,000 more in related companies.
          More to come with Essar Steel.

          It is funny that you would slam mining, but based on your track record, currently support a non-regulated approach to copper and other mineral mining. While the future of that has yet to be determined, I think most thinking people would want to require some significant regulatory, government created and enforced safeguards before that happens.

        • Submitted by Ginny Martin on 09/29/2013 - 03:36 pm.

          taconite mining

          DT: Taconite mining is out of business because — the well ran dry. They ran out of taconite. As has been said a couple of times now — perhaps you should learn to read better — they were in business in the first place because of government research. You should know that most research is government funded, including pharmaceuticals.

    • Submitted by Ray Schoch on 09/27/2013 - 11:04 pm.

      In spite of

      That businesses succeed “in spite of government” is an interesting delusion. There’s ample evidence on the record that most of the innovation over the past century — century — has been driven by, sponsored by, funded by, government. That’s true for everything from the internet to antibiotics to food processing to the transistor that makes personal computing possible to the interstate highway.

      The notion that government needs to “get out of the way” is an ideology-based fiction for consumption by the gullible.

  4. Submitted by Paul Udstrand on 09/28/2013 - 09:46 am.

    Virgina is #1?

    Any method that ends up ranking Virgina as number one in business environment is suspect in the first place. I do see that 20% of Virginia’s labor force works for the government compared to 12% in MN however.

  5. Submitted by Ginny Martin on 09/29/2013 - 12:15 pm.

    taconite mining

    Dennis–NO the government is not at fault for the decline of taconite mining. The taconite ore ran out. As for government ruining it, it was the government, scientists at the U. of MN, who found ways to make this low-grade ore profitable. Years of experimentation with taconite by Dr. E.W. Davis, a professor in the University School of Mines, led to a process of extracting and upgrading the ore by “pelletizing” the iron into briquette-like pellets. The Reserve Mining Company built a taconite processing plant at Silver Bay, Minnesota, where, by the late 1950s, they were producing 6-10 million tons of pellets a year, and disposing the remains of powdered rock — the tailings — into Lake Superior. With much of the high-grade iron ore depleted, the economy of the Iron Range became seriously depressed.
    However, dumping tailings from the production process was ruining the lake. After 18 years of dumping, tailings had clouded the once-pristine waters; fish were dying; and people were protesting against continued pollution. In 1972, the United States government sued Reserve Mining under the Rivers and Harbors Act of 1899, citing the company for violations of the Act by disposing of harmful materials into Lake Superior. Years of court battles followed until, a decade later, Reserve created an alternative source for disposal of the taconite
    There’s another health problem with taconite and that’s mesothelioma. Now scientists (that pesky U of M again!) are finding a strong, significant link between taconite and mesothelioma and lung disease and cancer.
    If government would only get out of the way . . . .

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