Gov. Mark Dayton proposed a bold budget to increase Minnesota’s competiveness in the global economy and get Minnesotans back to work. If enacted, the governor’s budget will deliver an economy Minnesotans can depend on for high-quality jobs, living wages and a stronger middle class.
Since 2008, Minnesota and the nation endured a damaging recession. Three years ago, our state’s unemployment rate peaked at 8.5 percent with more than 250,000 Minnesotans out of work. Today, our state is well on the path to recovery and outpacing many states’ economic growth. In 2012, Minnesota had the 12th fastest job growth rate and the 11th lowest unemployment rate in the country.
However, as Gov. Dayton stated in his State of the State address, we have a lot more work to do. Nearly 170,000 Minnesotans are still struggling to find a job — which is enough unemployed workers to fill the stands at Target Field four times over. We can, and must do better.
Minnesota needs significant investments in infrastructure and economic development incentives to make our state competitive in attracting new business opportunities. In a recent New York Times study, Minnesota ranked 39th among all states in economic development spending — including both funds and tax incentives. On a per capita basis, Minnesota ranks 46th.
I should note — economic development isn’t just about incentives. There are many other reasons why companies are interested in expanding or relocating their business in Minnesota. Our strong education system, abundant natural resources, highly skilled workforce and ease of transport to all coasts of the United States make Minnesota an attractive place to do business. But, the reality of today’s competitive economic development environment is that companies across the U.S. and the globe are receiving robust incentive packages from other states and then asking, “What will Minnesota offer?”
The answer to that question is, unfortunately, not very much. Our key economic development tool — the Minnesota Investment Fund (MIF) — does not have one dollar in the bank. Over the last decade, funding for MIF has been reduced by 86 percent. And, our state’s second largest economic development tool, JOBZ, is scheduled to sunset in 2015. Meanwhile, other states are ramping up their efforts to attract businesses and high quality jobs to their communities. Michigan has a $50 million closing fund to lure new business and Texas boasts a $200 million closing fund.
Minnesota needs an economic development toolbox that will show companies that Minnesota values their investment and put our state in the running for major business expansions and relocations. We don’t need to match other states’ proposals dollar for dollar — but, we do need economic development tools that give us a seat at the negotiation table.
Gov. Dayton’s budget invests $86.5 million in targeted economic development incentives — including MIF, a reformed JOBZ program called the Minnesota Job Creation Fund, transportation and housing improvements and global competitiveness. These key investments would attract an estimated $1.5 billion in private investment in Minnesota’s economy, and help create tens of thousands of new, high-quality jobs across our state.
And, there is a lot more in Gov. Dayton’s budget proposal for businesses to like.
The governor proposed cutting business property taxes by 3.6 percent and providing employers a $466.5 million unemployment insurance tax cut — giving businesses more money to expand and hire new workers. The governor also proposed eliminating unfair corporate tax loopholes enjoyed by only a few companies in order to pay for the largest corporate income tax cut in 26 years — a 14 percent reduction in corporate income tax for all companies.
These attributes of the governor’s budget will strengthen our business climate and create the jobs and economic growth Minnesota needs. But none of this is possible unless we have the courage to make difficult choices and raise the necessary revenue to create long term solutions for the state’s economy. We need to invest in our state, in order to maintain its competitiveness.
For more than 40 years, Minnesota has been a national economic leader because we made smart investments in our schools, our workforce, our communities and our economy. Generations of middle class Minnesotans could depend on our state’s economy for good jobs and living wages; entrepreneurs had an opportunity to succeed with access to a skilled workforce and a strong, supportive business climate.
We can choose to reinvest in this legacy or watch it slip away. This governor has chosen to invest in a stronger economy, and a better Minnesota. But he cannot do that work alone. It requires all of us working together to get Minnesotans back to work and make our state a true competitor, and a leader, in today’s global economy.
Katie Clark Sieben is commissioner of the Minnesota Department of Employment and Economic Development (DEED)