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Coverage of Minnesota Supreme Court judicial election candidates Lorie Gildea and Dan Griffith.

GOP pitches broad, business-friendly bill

Through two sessions as a minority member in the Minnesota House of Representatives, Rep. Ron Kresha, R-Little Falls, was chief author of just 13 bills. None of the freshman Republican’s offerings even received a committee vote.

Three weeks into his second term, Kresha is carrying what looks like 13 bills rolled into one. Many, many committee votes await.

The House Greater Minnesota Economic Workforce Development Policy Committee took a cursory look at House Republicans’ chief economic stimulus proposal Thursday afternoon. The hearing lasted 90 minutes, though thorough review might take five times as long.

Indeed, even outlining House File 1 is an arduous task; it might be simpler to list which parts of state law are not in the bill.

Over its six articles, the legislation proposes significant changes to environmental law and permitting; tax credits for business owners and employees; housing; and the way state agency’s make rules and impose fines.

“Our best potential to grow jobs and increase wages,” Kresha told the committee, “is to help alleviate the barriers for companies attempting to start up or grow in a highly global competitive environment.”

The bill’s debut was the first step in what will undoubtedly be a lengthy and winding path for Kresha and its various boosters — a group that is nearly as wide-ranging as the bill itself. Lobbyists for the Minnesota Chamber of Commerce, the Minnesota High Tech Association (MHTA), the League of Minnesota Cities (LMC) and the Greater Minnesota Partnership (GMNP) appeared on Thursday, each pledging support for a specific plank of the bill or, in the chamber’s case, multiple parts of the push to cut taxes and regulations on businesses.

At times on Thursday, it became clear that the bill’s scope is a challenge even for its author, as Kresha occasionally deferred to research staff to explain a provision or answer a member’s query. Kresha also made it clear that the ambitious proposal was still in draft form, saying there is “broad agreement,” but still room for improvement.

Tax policy

The proposal carries a significant impact on state revenues, thanks to a suite of tax reductions, credits and exemptions. Under the most novel idea in this section, which has been christened the “New Markets Jobs Act,” a new program would allow the Department of Employment and Economic Development (DEED) to back investments in mining, manufacturing, high-tech or timber projects, starting in 2017. The bill also includes a cut in the tax rate for “pass-through” business income for individuals who own corporations, and the return of a refundable research-and-development (R&D) tax credit; similar propositions have already been heard in the House Taxes Committee.

Mike Hickey, director of the state chapter of the National Federation of Indpendent Businesses (NFIB), testified that the tax revisions could “mitigate” damage done by the new fourth-tier income tax bracket of 9.85 percent.

“The vast majority of businesses in your community are these ‘flow-through’ companies, and they’ll benefit from that provision,” Hickey said.

Another section of the bill would seek to induce more Minnesotans to enter science, engineering, technology and math (STEM) careers, or take work in long-term care facilities. Those people who take a position in certain economic zones with a high rate of vacancies could receive up to $5,000 in income tax credits for employees with four-year degrees, while a rebate of up to $2,500 would be offered to two-year degree holders.

Permit approval

On the regulatory front, the bill’s permitting section would aim to slash the current approval period in half.

In 2011, goals for permit approval from the Minnesota Pollution Control Agency (MPCA) and Department of Natural Resources (DNR) were set at 150 days. As part of Gov. Mark Dayton’s “unsession” in 2014, permitting goals for a simpler, “first-tier” set of applications were reduced to 90 days. Kresha’s bill would cut that goal period to 45 days.

Rep. Kim Norton, DFL-Rochester, asked if Kresha had run this idea by the Dayton administration, explaining that her own wish to see the permitting timetable reduced to 75 days had been rebuffed.

“If we couldn’t do 75 [days] last year, I’m worried about imposing 45,” Norton said.

Kresha replied that he had held an initial meeting with an assistant commissioner of the MPCA, adding that much of the permitting process amounts to “mere formalities” and “paperwork.”

Rep. Tim Mahoney, DFL-South St. Paul, criticized the bill for a “continued watering down of regulations and review,” and said Kresha should exempt urban areas from the fast-track permitting.

“If you in Greater Minnesota want to loosen up those regulations, I think that’s a great idea — go ahead and do it,” Mahoney said. Later, he warned: “The more you loosen those regulations, the more problems you will have.”

Agency rules

The bill would also give the Legislature greater authority to stop the implementation of state agency rules it deems egregious, and would broaden the terms for rejecting proposed or existing rules. If approved, the Legislative Coordinating Commission (LCC) could strike agency rules that come with a “substantial economic impact” or that go further than current federal regulations on the same topic.

State agencies are also the subject of the bill’s final section, which would redirect fines assessed by the state into the general fund, rather than agency budgets. Some 5 percent of the resulting revenue would then be made available to help desirous businesses reach compliance with state law. Kresha said the measure would ensure that agencies were not imposing undue or excessive fines to make ends meet.

“Maybe it’s a hard-line approach,” Kresha said. “But if these agencies are balancing their budgets on the backs of businesses, and how they get aggressive with their fining, I think that’s a policy we need to look at.”

After a number of supportive testifiers and some questioning from legislators, the bill was laid over, with committee chair Rep. Bob Gunther, R-Fairmont, explaining that it would next be parceled out and heard by relevant committees. Gunther told members they would get their chance to vote on the bill “either on the [House] floor or here, and I would hope it would be here.”

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