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The Minnesota Chamber of Commerce has been flummoxed in recent legislative sessions not so much by their usual sparring partners in the Democratic-Farmer-Labor Party but by a new coterie of conservative Republicans.

Growing pains for the Minnesota Chamber of Commerce

The shift in the politics of business advocacy has come at a time when Chamber President David Olson is entering his third decade at the organization. (Staff photo: Peter Bartz-Gallagher)

The exit of veteran lobbyist Tom Hesse marks a turning point for the business-backed group

The Minnesota Chamber of Commerce has been flummoxed in recent legislative sessions not so much by their usual sparring partners in the Democratic-Farmer-Labor Party but by a new coterie of conservative Republicans.

On significant issues for Chamber members, such as applying the sales tax to Internet purchases and creating an exchange system for buying health insurance, some Republican legislators have taken shots at big business alongside big government.

The new wrinkle in the politics of business advocacy has come at a time when the Chamber’s top two leaders, President David Olson and Vice President for Public Affairs and Business Development Bill Blazar are entering their third decade at the organization. Thus the organization is grappling with internal and external factors that will affect its strategy going forward.

The Chamber in August 2011 implemented a new strategic plan that is, among other things, geared toward pushing the group’s membership above 3,000 and strengthening its influence among policymakers. But there are signs that moving forward can’t happen without some changes that upset the order.

Last year, the Chamber hired GOP policy pro Laura Bordelon away from Medtronic, where she was a lobbyist, and placed her in a newly created position as the Chamber’s senior vice president for advocacy. Before joining Medtronic, Bordelon was a high-level official in Gov. Tim Pawlenty’s office, serving as his director of legislative and Cabinet affairs. By a couple of accounts, Olson actively recruited Bordelon, a move that comes with the downside of alienating any Chamber staffer who had their own eyes on ascending to the top spot some day. That downside appears to have materialized with the departure on August 10 of Tom Hesse, who had been with the Chamber for 17 years and was its vice president of government affairs. A spokesman for the Chamber said Hesse’s job was eliminated due to overlap from the new senior vice president position that Bordelon filled. The Chamber is now hiring a tax and fiscal policy director to monitor the budget issues that were Hesse’s specialty.

Asked for an interview about the new strategic plan, a Chamber spokesman responded with an email of the new plan’s general bullet points and didn’t respond further. Other informed sources who lobby on business issues at the Capitol would only speak on background.

Hesse’s departure will change the usual way that the business community articulates its messages to tax and finance committees at the Legislature. Often, Hesse and the Minnesota Business Partnership’s Jill Larson testified together, forming what one veteran lobbyist termed a “one-two punch.”

“It’s not going to be the same without having the two of them together,” according to the veteran lobbyist.

Tax reform talks

­­­Hesse’s departure leaves the Chamber looking for a new point person on what could be one of the most important issues at the Capitol in 2013. Department of Revenue Commissioner Myron Frans has been traveling the state giving presentations on tax reform, and Gov. Mark Dayton is expected to announce a major tax reform initiative for next year’s legislative session.

“The governor is going to propose significant tax reform in 2013,” one contract lobbyist said. “What will the business community’s response be, and who will be the most impactful in regard to that debate about tax reform?”

Beyond the day-to-day enterprise of lobbying is the need to have someone groomed for future leadership that can not only be entrusted with implementing a policy strategy but apply some savvy when it comes to elections. Some Capitol hands observe that candidates recently have gotten elected with the Chamber’s support only to buck the group on issues like the health-care exchange and the so-called Amazon tax on Internet purchases, said one Republican lobbyist. The health care industry wants to get moving on the business opportunities that accompany the exchanges. The Amazon tax is a top concern for some of Minnesota’s biggest retailers like Target and Best Buy.

“They’ve been frustrated by some legislators who tout themselves as pro-business but when you go down the list of the Chamber’s positions they haven’t supported them,” a Republican lobbyist said. “There needs to be an understanding that if you’re going to be a Chamber-endorsed candidate we expect you to support some of these positions.”

Beyond specific initiatives, the Chamber needs to find a way to be at the forefront of big issues that produce deep divisions among lawmakers and interest groups and are the subject of negotiations between the governor and legislative leaders.

“It’s always going to be important to take on some of the narrow issues like sales tax on Internet and be effective on those issues too. But it seems to me that the really big players are the ones who are really big players on really big issues,” the contract lobbyist said.

That level of influence is difficult for an organization like the Chamber with a diverse membership to wield given the moderate versus conservative split in the Republican Party. An example is the override of Pawlenty’s 2008 veto of a transportation bill that included an in-crease to the state’s gas tax. The Chamber’s endorsement gave the so-called Override Six group of House Republicans the cover needed to vote with House DFLers to push the bill through. But the Chamber’s endorsement of the gas tax also alienated conservative Republicans that didn’t like seeing their own governor get overriden.

‘Multi-headed monster’

Part of the path forward for the Chamber is working to elect supportive legislators, a trend that has been on a downward slide as the friction within the Republican Party has intensified. That is a challenging endeavor because political spending among business PACs has proliferated and fragmented in recent years. Both the Chamber and Business Partnership have their own PACs and in 2010 they were major donors to the Coalition of Minnesota Businesses PAC.

The U.S. Supreme Court’s Citizens United ruling, which allowed independent expenditure PACs to receive and spend corporate money, has added another dimension to political spending. And the right-wing of the GOP has emerged as a player in fundraising through the Freedom Club State PAC.
“It’s very much a multi-headed monster right now,” the veteran lobbyist said. “There are all kinds of different efforts out there and they all want to do it their own way.”

In 2010, the Coalition of Minnesota Businesses stood out in spending on legislative races. The coalition, however, didn’t report any money raised for the year in its pre-primary report. The big kid on the block this year so far is Minnesota’s Future, which reported raising $275,000 in direct corporate contributions before the primary. The Business Partnership’s PAC raised $140,000 for the year as of July 23 and had 209,900 in the bank. The Chamber’s Leadership Fund raised $61,800 as of July 23 and had $47,000 in the bank. During the 2010 legislative session, the Chamber created the Pro Jobs Majority fund that, like Minnesota’s Future, accepts donations directly from companies’ treasuries. Pro Jobs Majority raised $99,425 for the year through July 23 and had $230,000 in the bank as of that date.

The diversification of business-backed PACs suggests that business groups are challenged with uniting in their strategy or taking different approaches. “I think it’s inevitable that the two organizations [the Chamber and the Business Partnership] will not always agree on who it should be spent to help or hurt, and then on how to spend it,” the contract lobbyist said.

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