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The change in Minnesota politics wrought by the 2010 election created equal measures of optimism and concern among the business groups that lobby state lawmakers.

Business lobby gives mixed marks to GOP majorities

Charlie Weaver, executive director of the Minnesota Business Partnership, was disappointed by the veto of two GOP omnibus tax bills. “The second tax bill contained significant concessions from the Republicans,” he said. “It contained many proposals that Gov. Dayton supports, including the Mall of America TIF.” (Staff photo: Peter Bartz-Gallagher)

The change in Minnesota politics wrought by the 2010 election created equal measures of optimism and concern among the business groups that lobby state lawmakers. GOP control of the Legislature for the first time since the 1970s brought hopes that business-friendly initiatives like tort reform and tax cuts would get passed off the floors at last. Meanwhile, however, the election of a DFL governor who campaigned on increasing upper-bracket income taxes created trepidation.

“I’d say it was the best of times and the worst of times in the last two years,” said Charlie Weaver, a former GOP lawmaker and executive director of the Minnesota Business Partnership, a consortium of Minnesota CEOs.

Things got started in the winter of 2011 with a striking amount of bipartisanship. In fairly short order, the Legislature passed and Dayton signed two bills that would constitute the business lobby’s main victories of the biennium.  Over the objection of the Education Minnesota teachers union, Dayton signed a bill to create alternative ways for recent college graduates and mid-career professionals to be licensed to teach school. The other initiative, enacted contrary to the wishes of numerous environmental groups, set goals for the state Department of Natural Resources and Minnesota Pollution Control Agency to act on environmental permit applications within 150 days.

Laura Bordelon, senior vice president for advocacy at the Minnesota Chamber of Commerce, said those early successes set a positive tone.

“On two of our priorities we made some really nice progress last year,” Bordelon said. “Both successes made us optimistic that we would continue with those successes with the Legislature and the governor this year.”

A year of frustrations

In 2012 Dayton and the Republican majorities collaborated on an additional set of environmental permitting changes. But the year was marked mainly by frustrations, chief among them the failure to enact the GOP’s main education reform initiative, a bill to undo the state law that requires school districts to conduct teacher layoffs based on seniority, a practice known as “last in, first out” (LIFO).

“I think the governor clearly decided he wanted to choose the union and adults over kids,” Bordelon said. “That was a big disappointment for us.”

While business lobbyists aren’t the foremost influencers of education policy, state and local chambers of commerce have placed an enormous amount of emphasis on LIFO. Weaver said the LIFO veto was the biggest disappointment of the session for him. Weaver and other business advocates were also left smarting by Dayton’s veto of a tax bill containing business property tax reductions and investment tax credits.

“The second tax bill contained significant concessions from the Republicans,” Weaver noted. “It contained many proposals that Gov. Dayton supports, including the Mall of America TIF.”

Dayton said he vetoed the tax bill because it increased general fund spending and created a larger deficit in the next biennium.

St. Paul Area Chamber of Commerce President Matt Kramer, who, like Weaver, is a former chief of staff to Gov. Tim Pawlenty, said the discussion of tax policy throughout 2011 and 2012 yielded little in the way of structural improvement. He expressed disappointment that DFLers didn’t budge on the tax bill.

“For the vast majority of businesses here in an urban area, we need to look at the cost of doing business,” Kramer said. “I think the Legislature teed up a number of things. Governors have a prerogative and responsibility to look at the overall budget, so I totally respect what Gov. Dayton did. But from a business perspective, it’s disappointing that compromise couldn’t be found that would lead to something, whether it’s business property tax relief or employment credits.”

Tensions with GOP majorities

Despite the high hopes of the business lobby after the election of the Republican majorities, business organizations experienced a remarkable amount of resistance from conservative Republicans during the last two years on some important issues. In particular, business’ goal of creating a state-based health insurance exchange drew opposition from Tea Party Republicans opposed to “Obamacare” in all its guises.

Business groups in the metro area also met Republican opposition in their push to get $25 million in bonding money for the proposed Southwest Corridor light rail line between downtown Minneapolis and Eden Prairie. Todd Klingel, president and CEO of the Minneapolis Regional Chamber of Commerce, said the rejection of the Southwest Corridor was particularly hard to swallow because the project would leverage a great deal of federal money.

“It was particularly telling when you had the entire metro business community aligned with the public sector all across the metro saying please leverage these nine [federal] for every one [state] dollar, and let’s keep Southwest moving,” Klingel said. “And that jobs-oriented infrastructure fell on so many deaf ears at the Legislature, particularly in the Republican Party. That was a surprise.

“The fragmenting in the party is becoming more clear and more distinct and frankly more troublesome,” he added.

Some points of Tea Party accord

But it’s not the case, Weaver said, that business groups and the Tea Party are eternally divided. They were both aligned on what was probably the most important issue for all business groups: solving the $5 billion budget deficit without raising taxes.

“On the one hand, we disagree with our friends sometimes,” Weaver said. “The health care exchange is an example. We didn’t agree with them on the Vikings stadium, either. But at the end of the day, their strength on spending and trying to rein in state spending was critical to having a surplus.”

Another budgetary accomplishment hailed by the business community, Weaver said, was the health and human services bill passed during the special session in July 2011. It reduced the growth in state spending on subsidized health care.

“They got a little bit of control over the human services spending,” Weaver said. “That is the dragon that is eating up everything else. If we’re going to avoid future budget deficits, they have to get control of human services spending. Still a ways to go, but they started.”

The Vikings stadium push revealed another point of contention between business and the anti-establishment element in the Republican caucuses. High-level Minnesota business executives, along with building trades unions, threw their weight behind a concerted effort to pass a stadium in downtown Minneapolis this session. But the bill faced opposition from a coalition of legislative Republicans, including members against the expansion of gambling and a contingent opposed to any new government spending. In the end it took a bipartisan coalition of supporters drawn mainly from DFL ranks to pass the bill.

“It was a roller coaster,” Klingel said. “But it did prevail. It’s important not just to the metro area but the state of Minnesota from a business perspective. [There are] the jobs that it creates, of course, but also our place in the world as we try to continue to grow and make this one of the vibrant communities of the future.”

In the case of the Vikings and other issues, Kramer observed legislation advanced in clever ways that avoided the extremes in both parties.

“In an extraordinarily strange way, it shows how centrist we could be,” he said. “When you see these very odd alliances that break stereotypes and find ways to work together on process and on bills — to me, what it keeps reinforcing is that there is a massive amount of centrist behavior that can be leveraged for mutual success. What we’ve done is on both sides of the political spectrum is we’ve allowed the edges of both ideologies to drive non-compromise. What I see as positive is all the things that did get done with a very centrist approach.”

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