Republican job creation proposals scrutinized

Republican leadership in the Minnesota Legislature unveiled its job creation proposals on Monday and filed the first bills intended to boost employment and reduce the deficit. The House bills would create “priority-based budgeting” and scale back the environmental permitting process, while the Senate introduced a bill to reduce income and property taxes for businesses. The latter policy drew strong criticism from DFLers, unions and nonprofit groups.

Freshman Rep. Dan Fabian (R-Roseau) said of the changes to the environmental permitting bill, “This a bill, as we said during the campaign, it’s about jobs. This is a bill that I think can be bipartisan.”

The bill would shorten the amount of time it takes for businesses to get a permit, would allow developers to write Environmental Impact Statements (EIS) “rather than a responsible government unit such as a state agency or local government,” and “repeal Minnesota Pollution Control Agency rules that “prohibiting construction before permit issuance for projects requiring National Pollutant Discharge Elimination System water permits.”

He said the changes would help Minnesota businesses because “the permitting process at this time takes too long.”

Another freshman, Rep. King Banaian (R-St. Cloud), has offered a bill that would change Minnesota’s budgeting system to a zero-based budget or as he called it “priority-based budgeting.”

“This bill is about some very basic economics,” he said. “Instead of looking at an agency or department, we are going to ask them to look at a service, ask them how do you provide a service to us, how much does is cost, who do you serve, compare us to other states so that we have some benchmarking.”

It would also establish a sunset commission that would evaluate state agencies and boards every 10 years and look at reorganization or elimination of those that are no longer needed.

On the Senate side, a bill has been introduced that would cut the corporate tax and business property tax rates.

“We want to make Minnesota the best place to start a business,” said Sen. Geoff Michel (R-Edina). “We will do anything to help a job creator.”

He said the GOP’s goal was to give job creators a reason to choose Minnesota and take a risk in Minnesota.

“Minnesota has the third highest business tax in the country. We are going to cut that in half over 6 years,” he said. “We are going to roll back the statewide business property tax to roughly 2009 levels and cut off the inflator.” That inflator means that the tax rises every year.

He added that there would be a cost to the deficit in cutting taxes.

“There would be a $200 million cost in tax relief, half in income tax, the other on property tax relief. We will make up for that with cuts in spending,” he said.

The DFL, unions and nonprofits suggested that cutting taxes for corporations might not be wise.

Rep. Paul Thissen of Minneapolis said that it “does nothing to solve the state’s budget deficit. In fact it sounds like it may be heading a little bit in the other direction.”

Rep. Tim Mahoney of St. Paul said that many of the proposals did nothing to create jobs now, especially the environmental permitting changes. “The problem with regulation reform, the way our system is set up, no changes can take effect until 2012. We need jobs in June 2011 not June 2012.”

He added, “The only real job creator is a stimulus creator. We need some kind of a bonding bill that puts people back to work. I’m still trying to figure out how those regulations will fill that particular hole.”

Sen. Tom Bakk of Cook said, “The facts are that the income tax cuts for the wealthiest Minnesotans did not result in any new jobs,” he said referring to past tax cuts from previous administrations.

The Minnesota Budget Project, a project of the Minnesota Council of Nonprofits, laid out several reasons why corporate tax cuts may not create jobs: they don’t guarantee growth, and state taxes are a minor expense for corporations.

“In the real world, tax cuts have not brought about stronger-than-average economic growth,” wrote the MBP’s Scott Russell. “Check out Ohio. It eliminated its corporate income tax yet its economic performance has been average at best.”

He added, “The proposed tax cuts would create a deeper budget hole now and add to the challenge policymakers already face to close a $6.2 billion budget deficit. In an age of accountability and transparency, it raises questions about whether these tax cuts are the most effective way to promote job growth and shared prosperity in Minnesota.”

Minnesota AFL-CIO president Shar Knutson has strong words for the GOP jobs plan.

“Republican legislators showed middle class Minnesotans exactly where they stand today,” she said in a statement. “Their proposals would give big corporations a free ride all while lowering pay and cutting benefits for hard-working middle class families.”

She praised Mark Dayton (whom her group supported during the gubernatorial campaign), “Governor Dayton is already working on a jobs and infrastructure bill to help put Minnesotans back to work and a plan to balance the budget fairly.Republican lawmakers should be following the Governor’s lead in helping build a better Minnesota.”