Minn. business leaders prepare for DFL in charge

Published 10:58 am Thursday, January 10, 2013

ST. PAUL, Minn. — With the new legislative session under way and Democrats now fully in charge at the Capitol, nerves were on display Wednesday at an annual dinner for Minnesota’s top business leaders.

“We’d like to be hearing a little less about new revenue and a little more about cutting spending,” said David Olson, president of the Minnesota Chamber of Commerce, which holds a yearly dinner in downtown St. Paul for business owners and executives, lawmakers and lobbyists to mark the start of the session with schmoozing and strategizing.

Olson didn’t get his wish. At the dinner, Gov. Mark Dayton’s chief of staff told the crowd that taxes must be part of resolving the state’s $1.1 billion projected deficit and taming chronic budget shortfalls. And at the Capitol, Senate Democrats filed a crop of new bills seeking to put the state sales tax on clothing and online purchases, raise the state’s minimum wage and end a tax exemption for business profit earned overseas.

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“We understand the pent-up demand, but we’re not crazy about the message that sends,” Olson said.

Debates over taxes and spending are likely to take center stage at the Capitol this year. While Dayton has until Jan. 22 to release his tax and spending proposals, he repeatedly has made it clear he will seek an income tax increase on the state’s top income bracket. That could hit some business owners who pay taxes on business profits through the personal income tax.

“Cost savings and reform are important parts of the equation for long-term fiscal stability,” said Dayton’s chief of staff, Tina Smith, who filled in for the governor as he continues to recover from back surgery. “But fair, progressive, sustainable revenue also needs to be part of the solution.”

Smith said the Dayton administration will pursue business-friendly changes in state environmental permitting. She revealed the administration will push to complete certain permits within 90 days, responding to perennial complaints among business owners that state regulations stifle business growth.

While Olson drew a hard line on revenue increases, some chamber members took a pragmatic view. Jim Hoolihan, owner of Industrial Lubricant Company in Grand Rapids, said business owners and executives had to be willing to shoulder a larger burden as Dayton and lawmakers try to bring stability to the state budget.

“We have to reduce costs and we have to raise revenues,” said Hoolihan, whose business is a supplier for mining and logging operations and employs 40 people in Minnesota. Asked if he personally is willing to pay higher taxes, Hoolihan responded: “I wouldn’t want to be quoted in the paper saying that my taxes should go up. But we all have to be part of the solution.”

Mark Stutrud, founder and CEO of St. Paul’s Summit Brewery, also said he isn’t opposed to paying higher income taxes. “The reality is that most of us can afford a little more as individuals,” said Stutrud, who employs 60 full-time employees.

But Stutrud said he is more concerned about tax hikes that could fall hard on his business operation. He said he’d be on high alert for proposals that would increase excise taxes on beer or other user fees that fall on alcohol production or sales.

Charlie Weaver is executive director of the Minnesota Business Partnership, which is separate from the chamber but represents similar interest. Weaver’s group always opposes tax increases if they’re not offset by reductions in other taxes; but he said businesspeople must be willing to work with Democrats to minimize worst-case scenarios. For instance, he suggested that if Democrats decide to increase income taxes on the wealthy, that they should offset that with corresponding cuts in the corporate income tax or property taxes on businesses.

“We oppose generally raising taxes,” Weaver said. “But we recognize in reality, they will probably be able to do whatever they choose to do — and maybe we can help them figure out how to do that in a way that doesn’t hurt our ability to grow jobs.”