News Cut: February 16, 2010 Archive

Fact Check: Why businesses leave Minnesota

Posted at 10:53 AM on February 16, 2010 by Bob Collins (19 Comments)
Filed under: Economy, Politics

Unquestionably, Minnesota is one of the highest-taxed states in the country for business, and that fact is being used by lawmakers who see cutting those taxes as the first step in creating and maintaining jobs.

Usually, anecdotal stories of companies folding up shop in the state are used to prove that taxes cause companies to leave Minnesota. But there have been few -- if any -- comprehensive (and objective) studies asking them why they left.

On Minnesota Public Radio's Midmorning broadcast this morning, a caller asked why taxes couldn't be raised to give Minnesotans a "21st century education" (whatever that is). That, the caller said, gives Minnesota an advantage over other states.

Rep. Marty Seifert, R-Marshall responded that politicians aren't the ones to answer that question, but "it's best to ask the people who create the jobs."

"We lost the world headquarters of State Farm out of Woodbury. In my area, we've lost divisions of Schwann's, Viessman Trucking, Anderson Trucking, Luverne Bumper Company, Luverne Fire Apparatus, Hill Stainless Steel, and the list goes on and on and on. Can can talk about Dayton Hudson and divisions of Honeywell. The reality is if you raise taxes and these folks leave, there'll be no one to educate."

Seifert is correct that State Farm moved out of Woodbury, fewer than seven years after building a huge campus in the city. Fifteen-hundred jobs were lost in the city; 350 of them moved to Mendota Heights. But he's wrong that it was because of the state's business climate. He's also wrong that it was the world headquarters of State Farm, a company that calls Illinois home. The Woodbury office was a regional service headquarters for six states.

Before the company consolidated its operations in Lincoln, Nebraska, the company announced the two sites would combine, but at the time it didn't say where. Area officials offered tax breaks to State Farm, but the company rejected negotiations, saying the decision wasn't about taxes, it was about efficiency to save $26 million.

The theory that taxes prompted the move tends to ignore Nebraska's business tax ranking at 33rd in the nation. That's better than Minnesota's, but not by a lot.

Dayton Hudson became Target, which is still headquartered in Minnesota. It sold its department store chain to May Department Stores, which eventually sold it to Macy's, a company based in New York, another high-tax state.

This isn't too suggest, of course, that taxes aren't part of the mix. But to the original question of the caller, it's unclear what the balance is between taxes and other factors.

Meanwhile, there were plenty of people e-mailing their commentaries during the show on the subject of the state budget Here's a sample:

From Saginaw, Mn.

As a former employee of MSOP in Moose Lake, I here nothing of finding cuts within the state system. Currently in MSOP, consultants are utilized when there are qualified people within the state. Directors of a health facility, do not have any health care experience. They have been taken from the DOC system, where the emphasis is incarceration not patient wellness. It is a needed evil to have such a facility, however I think it could be managed more efficiently. Note the employee turnover in the last 4 years, also I think the taxpayers would like to know the amount of wages earned by the directors/consultants. How many state employees were laid off versus terminated in recent years? Look into cost overruns during the last construction phase, and see if the same expenditures are projected to the new construction phase. Thank You

From Alexandria:

Tax breaks might keep companies here, but how does cutting public services, education, health care impact the quality of living and the workforce? What happens when our most qualified and our best educated don't want to live here because the standard of living decreases? People don't come or stay in Minnesota just because of the jobs. They come and stay here because of the overall standard of living.

From Rochester:

If lawmakers are so concerned about lower corporate tax rates why aren't state tax laws conformed with federal depreciation tax deductions to give small business the same faster write-off for capital expenditures that they enjoy for federal tax purposes?

(Photo: Loopnet)

In search of Hollywood

Posted at 12:29 PM on February 16, 2010 by Bob Collins (1 Comments)
Filed under: Politics

If you didn't know any better, you'd swear that the partisan gridlock in Washington is something new. Sen. Evan Bayh, of course, is the latest politician to blame partisan rancor for the failure to get something done. "Brain-dead partisanship," he called the system in Washington, while announcing he's done with it.

The Atlantic's James Fallows has had it with pols using this as an excuse. For Bayh, in particular, he suggests naming names.

Unlike everyone else up for election this year, you don't have to worry how this or that bout of truth-telling will look on Election Day. Let 'em bitch! You don't need an interest group to endorse you or a civic club to applaud you any more. Do you think hyperpartisanship is destroying the Senate? Why not call out people -- by name, by specific hypocritical move -- when you see them doing what they should be ashamed of? I guarantee that the press would eat this up. Why not a ten-month public seminar, through the rest of this year, on who is doing what, and how it could be different? Do you object to personal "holds" on nominations? Make it an issue! You have an idea of some issue where Republicans and Democrats might agree? Be specific about it and see what you can do. Again, if I know anything about the press and the melodrama of public life, I know you could turn it to your advantage -- and the public's, Mr. Smith style.

But Congress has been sending the disillusioned home for generations. Sometimes, it keeps them from even trying.

Here's Mike Ciresi's take when he announced in February 2006 that he wouldn't run for the Senate:

"I'm an individual who likes to get things done. The more I watch what was going on in Washington over the past few months, I felt that as soon as I got there, it would be very difficult -- with the way the Senate is presently composed and the way the process is -- to get things done. I think the Democratic Party needs to stand up and say what it stands for. And it's not doing that; it's not getting the leadership out of the Senate, and I think the inertia is overwhelming."

Back when deficits were the #1 issue, former congressman Tim Penny also gave up. In retiring from Congress at the end of his term in 1995, Penny said the pork-barrel brand of politics was a system too ingrained to change. In his co-written book, The 15 Biggest Lies in Politics, he documented the differences Republicans and Democrats don't have in exploiting the system to stay in office and spend money.

When announcements like Bayh's come, this clip gets a good workout in the media:

Perhaps politicians go to Washington looking for Hollywood, only to be disappointed when they find Washington instead.