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Looking to the future

Taxes, regulations among state’s challenges, Minnesota Chamber of Commerce president says

MARSHALL — Minnesota businesses are facing some important obstacles to growth, ranging from workforce needs to high tax and regulatory costs. Those are among some of the priorities the Minnesota Chamber of Commerce wants to address in the upcoming state legislative session, said Minnesota Chamber President and CEO Doug Loon.

“First and foremost, we certainly want to talk about the tax environment we are in,” Loon said Wednesday. He said it’s still a little early to tell what the new legislature’s priorities will be, but a better picture will likely emerge after the next state budget forecasts.

Loon met with Marshall area businesspeople on Wednesday, as part of the Minnesota Chamber of Commerce’s statewide policy tour. He also shared some highlights of his policy tour presentation at the Marshall Area Chamber of Commerce’s annual awards lunch.

The most recent Minnesota legislative session had a couple of positives, although there were key bills that didn’t get passed, Loon said.

“A year ago, in February, they went into session and it was supposed to be a bonding year. They didn’t do bonding,” he told Marshall Area Chamber members. “They did not do much on the spending side or budget side, they didn’t do a whole lot of policy bills. But we did get a couple of things done.”

Loon said one important action from the last legislative session was the defeat of a proposed program that would allow workers up to 12 weeks of family leave and 12 weeks of paid sick leave.

“Tied to that (proposal) was a new state agency to run it and a new payroll tax to pay for it,” Loon said. “We defeated this five years in a row,” he said, but he thought the issue was still likely to come back to the legislature in the future.

Another important action that the legislature did take was to replenish Minnesota’s unemployment insurance trust fund without raising taxes, Loon said.

“This was a big victory. This would not have been possible without the support of local chambers and other business organizations around the state, who all worked together to move that forward,” Loon said.

Loon also spoke about some of Minnesota’s long-term economic needs. Workforce development ranked high among them.

“So our long-term forecast, the number one item on there . . . is we are not growing as a state. Our population is fundamentally flat,” Loon said. Minnesota’s economic growth has also slowed down. “We’re now trailing the rest of the country, on average, in economic productivity, economic growth,” he said.

Loon said Minnesota also has very low unemployment. Minnesota did see an increase in new business startups since the COVID pandemic, but about 65,000 Minnesota workers have not returned to the workforce, he said.

Loon said Minnesota faces some challenges when it comes to encouraging economic growth.

“We need to do something about our tax structure,” Loon said. Minnesota currently ranks sixth in the nation in individual tax rates, and second in corporate tax rates, he said.

Loon said it’s expected that there will be a state budget surplus in the forecasts for December and February. That surplus would give Minnesota an opportunity to have a conversation about structural tax reform. It may be a challenge to have that conversation, with Democrats controlling both the Minnesota House and Senate, he said. “But we have to start having this very serious conversation around taxes, and by the way, around the spending that goes with it.”

Another big challenge facing Minnesota’s economy is the system of environmental and permitting regulations in the state.

“We have very high standards” for environmental protections in Minnesota, Loon said. “We’re not suggesting that should change, because we need to protect our natural resources. But we have a system that wraps around it that is incredibly unpredictable and challenging for businesses.”

Moving forward, the Minnesota Chamber of Commerce wanted to look for possible solutions for changing Minnesota’s regulatory environment, and for meeting workforce needs, Loon said.

“A lot of these, I think, are bipartisan. They should be bipartisan,” he said.

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