Op/Ed by Minnesota Commissioner of Revenue Myron Frans
Published in the St. Paul Pioneer Press on February 9, 2012 at 5:56 p.m.
By most conventional measures of economic prosperity, Minnesota is outperforming other states. Yet a recent Pioneer Press editorial, promoting the findings of a flawed tax index, says otherwise - hardly the best way to position our state for more growth.
First, the facts: Minnesota has the nation's 10th-highest per-capita personal income, 7th-lowest unemployment rate, 13th-lowest business failure rate, and 8th-lowest poverty rate. We have regained more than 33 percent of jobs lost in the recession (compared with 25 percent nationwide). In 2011, total wages in the state increased four times as much as in the rest of the country.
Despite the economic reality in the state, the Tax Foundation's "State Business Tax Climate Index" claims that Minnesota is bad for business ("Minnesota takes a licking on tax climate," Feb. 7). This is misleading, and biased.
The index is focused only on tax rates, without documenting the real-world effects or considering what Minnesotans and businesses in the state actually pay. For example:
It knocks Minnesota for having a sales tax on manufacturing equipment, but does not acknowledge that taxpayers receive tax credits (refunds) that cover these costs.
It criticizes Minnesota's research and development credit and Angel Investment Credit, even though they are important priorities for businesses in the state.
It is biased against states with multiple income tax brackets, even though there is no evidence that multiple brackets are a detriment to business growth.
The index ignores the benefits provided by public investment when assessing our business climate - yet it is those public investments that draw employers to Minnesota. As state economist Tom Stinson has noted, our taxes have bought something for businesses - like productive workers, research, high-quality transportation and other business services.
Governor Mark Dayton knows that Building a Better Minnesota means our workers must have the skills and training to fill the jobs of the 21st century. That’s why Governor Dayton has made job creation and workforce development his top priority for the legislative session.
Today the Governor attended a meeting of the Governor’s Workforce Development Council (GWDC) to hear a presentation on their yearly report. The Council serves an important role in workforce development, providing analysis and recommending policies to improve workforce readiness.
The report, entitled “All Hands on Deck: Sixteen Recommendations for Strengthening Minnesota’s Workforce,” offers recommendations to improve worker training, skill development, and education. Many of the report recommendations mirror proposals laid out by the Governor and DFL legislators last month.
Though Minnesota Pollution Control Agency Commissioner Paul Aasen has taken heat from both sides of the political spectrum, he receives the rare credit of landing the in the “Extreme Center” in today’s Politics in Minnesota’s ‘Capitol Life’ series (Full Article, subscription required).
The article gives narrates Aasen’s rich background in the environmental movement as well as three gubernatorial administrations – all of different parties.
Government background is, of course, normal for agency commissioner appointees. What sets Aasen apart from most of his peers, said longtime MCPA division manager Mike Sandusky, is that he also knows the science that underpins his agency.
“That is sort of a rarity for us,” Sandusky says. “We don’t usually get that in a commissioner appointment. … That is powerful within our culture, as well as somewhat comforting to us.”
Minnesota benefitted from the Commissioner’s balanced approach in 2011 through common sense reform of Minnesota’s Environmental Review Process.
Getting Minnesota Back to Work
- Under the Governor’s leadership Minnesota continues to outpace the national economic recovery. Minnesota’s unemployment rate is 5.9 percent, compared to 8.6 percent for the rest of the country. There are 53,000 more Minnesotans at work now, compared to the bottom of the recession.
- Governor Dayton worked to pass a $500 million bonding bill, putting thousands of Minnesotans back to work improving bridges, roads and infrastructure.
Under the Recovery Act, Minnesota was awarded $138 million to deliver energy efficient upgrades such as insulation, air-sealing, and more efficient heating and cooling systems in homes across the state.
Read the full announcement below:
Governor Dayton and Energy Secretary Chu Announce Major Recovery Act Milestone: 18,000 Homes Weatherized in Minnesota, 600,000 Nationwide
Recovery Act Program has Reduced Energy Bills for 18,000 Minnesota Households
Washington, DC -- U.S. Energy Secretary Steven Chu hosted a conference call today with Governor Mark Dayton to announce that states and territories across the nation have reached the goal of weatherizing more than 600,000 low-income homes– including more than 125,000 multi-family homes like apartment buildings – more than three months ahead of schedule. Under the Recovery Act, Minnesota was awarded $138 million to deliver energy efficient upgrades such as insulation, air-sealing, and more efficient heating and cooling systems in homes across the state. Through October, Minnesota has upgraded more than 18,000 homes, exceeding its goal under the Recovery Act by more than 400, and will continue weatherizing homes for the next few months with Recovery Act funds. The state reached this major milestone as part of its efforts with the Department to save energy and reduce home utility bills for families, while creating jobs in communities throughout the country.
The Opportunity Index ranked all 50 states using indicators such as the unemployment rate, poverty rate, on-time graduation rate, and others to assign a first of its kind Opportunity Score. Minnesota earned an Opportunity Score of 81.2 out of 100.
According to the announcement, Minnesota earned high marks:
Minnesota outperformed almost every other state in the union, earning an Opportunity Score of 81.2 out of 100. A few of the highlights that helped set Minnesota apart include:
- Weathering the Economic Downturn: During a time when a majority of the country is struggling to make ends meet, Minnesota’s residents earn a slightly higher on average income than most Americans ($57,007 vs. $51,425). In addition, their statewide poverty rate is just over 10% compared to the national average of 13.47% and their unemployment rate is significantly lower than the national unemployment rate (7.4% vs. 9.1%, respectfully).
Small businesses are crucial to creating jobs, boosting local economies and preserving neighborhoods in Minnesota.
According to the United States Small Business Administration, there are currently 28 million small businesses in the United States. Small businesses have created 65% of net new jobs over the last two decades and are the backbone of the economy and the glue that holds communities together.
Ninety-nine percent of U.S. consumers agree it is important to support small businesses in their communities, and 90% are willing to pledge support for a "Buy Local" initiative such as Small Business Saturday.
Family businesses are crucial to the continued success and vibrancy of Minnesota’s economy. They enhance our communities by providing stable and trustworthy services.
A large portion of the national economy is dependent on family businesses; 90% of businesses in the United States are family businesses, and 86% of new jobs in the country are created by family businesses.
Family businesses also generate 49% of our gross domestic product and employ 80% of the U.S. workforce. Cargill, which is headquartered in Minnesota, is the largest family business in the United States.
The continued strength of family businesses is essential to the future prosperity of our state.
"These investments are a big boost to struggling families and for the struggling construction industry," said Minnesota Housing Commissioner Mary Tingerthal. "With rental vacancy rates at just 2.3% in the Twin Cities area, and stagnant or falling wages among lower income households across the state, we see the demand for affordable housing continuing to grow."
The funding marks the first investments for the agency’s $658 million budget for 2012. The 59 awards were selected through the agency’s annual consolidated request for proposals, which provides financing for affordable housing through deferred and below-market loans, housing tax credits, and operating subsidies.
A recent report on the economic impact of agency investments estimates that $1 million in funding from Minnesota Housing supports an estimated 11.8 construction jobs, which will mean more than 600 construction jobs supported with this funding round.