A Governor Who Gets It
Business leaders often find reasons to criticize a state’s governor, especially if he or she shows a lack of understanding over, or indifference to, their concerns. Minnesota Gov. Mark Dayton has his pros. But to many, he’s proven ignorant to the point where some fear it could hurt our state’s long-term economic vitality.
In particular, there was his solution for pulling the state out of a deficit caused by the Great Recession: Beginning in 2014, taxes on business owners and executives rose to among the highest rates in the nation.
The move helped generate $2 billion in additional revenues and seemed brilliant to some. Short term, sure. But harm will come from how increased taxation, plus overly aggressive tax policing by the Department of Revenue, is now chasing away wealthier Minnesotans by the thousands. (See TCB’s proof of this at http://bit.ly/2yLJERm.)
These individuals include people who invest in and/or start new businesses and help make our communities strong. They’re now doing it in places such as Florida and Texas. Meanwhile, we still have thousands who love the state too much to move, but have less with which to invest in their companies.
Dayton created the most extreme personal income tax ratio in the nation, which affected tens of thousands of individuals, including 22,000 who run their S-corp., sole proprietorship or LLC income through their personal taxes. He not only raised the top rate to the third-highest in the country, 9.85 percent, he set it up to apply to household incomes of only $250,000 a year or more.
This, plus enacting a gift tax and adhering to the state’s estate tax, made it clear that “wealthy” to Dayton includes those who inherit a farm, cabin or business; successful entrepreneurs; and middle-income earners just reaching the higher-income range (i.e. couples in management-level jobs with one person receiving and cashing in stock options: a segment of talented individuals Minnesota employers have increasingly said are harder to attract and retain here).
Dayton also has made other anti-business moves as governor. The Minnesota Chamber of Commerce, other business groups, CEOs and business owners tried to change his direction, but often it was to little avail.
The situation led the chamber to conclude it needs to shape the economic discussion during the next gubernatorial election and, if possible, recruit the next governor.
That’s right: the chamber is actively recruiting for a gubernatorial candidate. And it’s doing so based upon its impressive success record with legislative elections. For example, in 2014, 69 (85 percent) of its PAC-endorsed House candidates were elected. Two years later, 91 percent of House candidates and 82 percent of Senate candidates it endorsed were elected.
For the governor’s race, the chamber launched “The Minnesota Leadership Project” earlier this year and recruited as its chair Marvin Windows and Doors Co-Chair Susan Marvin.
“All too often as businesses, if you wait until after people are elected to when they’re developing legislation, you can find yourself the victim of some really bad stuff,” she says. “When [chamber president Doug Loon] mentioned the chamber was doing something similar for the governor’s race, it was a no-brainer given the success it’s had with legislative races.”
The chamber has since conducted 10 small-group business leader meetings around the state to gather a list of long-term challenges and opportunities that will face the next governor, and a list of characters or qualities of a successful gubernatorial candidate. The results are well defined and detailed, and roll up into three primary issues that it says, if left unattended, could erode Minnesota’s economy:
- Workforce quality and quantity: While the state has ranked among the nation’s best-educated states, too many students leave to attend college in other states, or graduate here and go elsewhere to work.
- Ensure economic vitality for the future. This gets to the aforementioned tax issues, but also includes the need to invest in world-class infrastructure and protect natural resources “through reasonable regulations.”
- Open door: Minnesota needs entrepreneurs, investors and workers, and newcomers must be better integrated into our economy and culture. Additionally, the cost of living, particularly the affordability of childcare and housing, is becoming too expensive for many.
The chamber plans to use its findings to help shape the dialogue taking place with as many gubernatorial candidates as possible, Loon says. They’re considered “fundamentals of an economic agenda that all candidates should be embracing.”
The conversations also will touch upon the chamber’s most recent “Business Benchmarks” report, which shows we’re losing ground in terms of our competitiveness relative to other states.
Whomever the chamber eventually recruits or endorses will understand business, but not necessarily have to have been a business owner or operator, Loon says. He or she also will work well with others, and not be an “agitator” or have an agenda implying major changes are needed.
Whether or not the chamber succeeds, it is at least providing a refreshing perspective on how business and state government in Minnesota could work together much better than they have been, while reminding us what is at stake if they do not.