With political control in the hands of one party for the first time in decades, Minnesotans had a historic legislative session in store. Democrats delivered that.
“If you were going to design a session with a goal to push businesses out of Minnesota and create disincentives for new business to come here, they succeeded in doing that,” said Charlie Weaver, executive director of the Minnesota Business Partnership, which includes the CEOs of the state’s largest companies. “Overall, this session will be remembered as one where nearly every Minnesotan will pay more.”
One word sums up Bill Blazar’s reaction to the 2013 session, and ours: Why?
Lawmakers had a $627 million budget shortfall to deal with, said Blazar, who works for the Minnesota Chamber of Commerce. “Why are they raising taxes by more than $2 billion?”
“Why not hold the line?” asks Kim Crockett of the Center of the American Experiment, noting that Minnesota already spends more than peer states on K-12 education, higher education and health and human services.
There’s concern about how tax increases will impact decisions and business behavior going forward, said the Minnesota Chamber’s Laura Bordelon, noting the state’s April unemployment report, which showed the loss of 11,400 jobs.
There’s also concern about tax policy that’s “not particularly good for the integrity of the revenue system,” Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence, told us.
They “put a lot of chips” on the corporate income tax, which is the most volatile of state tax structures, he said, something that is “not good for competitiveness” in a state with one of the nation’s highest corporate and individual income tax rates.
It’s not a particularly good session for accountable government either, Haveman told us, because “there’s lots of hidden taxation, a lot of distortion of tax prices.”
Property-tax relief efforts, he said, amount to “spending $400 million to insulate taxpayers from the true cost of local government.”
Minnesota 2020 executive director John Van Hecke has a different perspective. He told us the session will remembered for setting funding priorities that are “actually going to make people’s lives better.”
Small business succeeds best, he maintains, “when people have money in their pockets. Stimulating the economy has an amazing downriver impact on business profitability. You don’t grow the economy through austerity.”
The session, he said, puts Minnesota “back on the right track” after 10 years of “disinvesting in education, in communities, in people” with public policies that “directed resources away from the kinds of investments that have traditionally made Minnesota strong.”
In education, he cites increases in “base funding” or per-pupil dollars. The commitment “says we trust school boards, trust teachers, trust superintendents and principals to make choices for the strongest future possible.”
Weaver takes issue: “They put more money into schools, but with no accountability. They threw money at the problem with no reform.”
Of particular concern, he said, are eliminating the basic competency requirement for a high-school diploma and reductions in teacher evaluation and testing.
“This Legislature and the governor chose go back to the past,” said Blazar. “Their solution is to raise taxes and put more money into programs that have been around forever and nobody frankly knows if they will work.”
How will the session be judged?
We’ll get a formal reading as soon as next year when voters weigh in on Election Day on whether or not House members did a good job.
Other measures might take longer. “If you look over the next five years on where businesses locate in this country and where Minnesota businesses expand, that will tell the tale,” Weaver said.
What lawmakers are doing is “showing people the door,” Crockett told us. “We’re growing government at the cost of the health of the entire state.”
This editorial originally appeared in the May 19, 2013 edition of the St. Paul Pioneer Press.