Look no further than new University of Minnesota Regent Dave McMillan and MnSCU Chair Scott Thiss to see two past chairs of the Minnesota Chamber Board of Directors in key roles in Minnesota’s higher education system. McMillan was Chamber chair in 2009-2010, and Thiss was chair in 2003-2004. Both were strong board chairs who were incredibly well respected both inside and outside the business community.

While the Chamber’s primary focus is moving public policy through the legislative process, many times we seek other ways of influencing state agencies and boards. We have business leaders in a variety of roles on state task forces, commissions and boards. They bring a business perspective that in these difficult financial times is clearly needed.

Thiss is leading the MnSCU Board as a new chancellor takes the helm this summer, and McMillan joins the Board of Regents as a new president begins his role with the university. Pivotal times for both institutions.

Higher education plays a critical role in developing Minnesota’s future workforce which is why the business community pays such close attention to the work of both of these systems. From my perspective, as past chair of MnSCU, the U and MnSCU could not have asked for two better leaders willing to serve these institutions.

Does that seem odd to anyone? The last time I checked, a “democracy” works like this. You run for office – you win or lose – then you deal with the cards you are dealt. If your party is in power, you work on your priorities. If your party is not in power, you do your best to protect your interests and work even harder to find a middle ground. Both are done inside the Capitol. 

Apparently not in Wisconsin. In Wisconsin, if your party loses power, you pack your suitcase and slip off to a cheap motel in Illinois.

One of the newspaper stories today quoted an aspiring teacher who was talking about what a great learning process the “protest” in Madison has been for the young people involved. What lesson are they learning from the legislators who have fled to another state to avoid providing a quorum on a key vote? The lesson for some will be, “When the going gets tough, run away.” I, for one, did not know that was even possible. Now politicians across the country have a new tool in their toolbox – “the escape clause,” for lack of better words.

The Minnesota Legislature and Governor Dayton are poised to discuss similar issues relating to public employee compensation and benefits. A debate that quite frankly is overdue. I hope that conversation takes place in Minnesota and inside the walls of the Capitol where the debate belongs.

The Legislature and Governor Dayton all seem to agree that job creation is a critical priority of this legislative session. That is clearly good news.

So when the Governor, right out of the gate, publishes an Executive Order focused on streamlining Minnesota’s environmental review and permitting process, we thought we were off to a pretty good start. Then he released his proposed budget. Though we anticipated his emphasis on raising taxes, his proposal still sent a chill to Minnesota’s job-providers. If passed, Minnesota would have the highest personal income tax rate in the country. From my perspective it would be a pretty tough sell to attract new companies, much less keep existing ones, with that sales pitch.

Now I recognize that Governor Dayton’s proposed budget won’t pass and that the negotiating process has just begun. That said, when his budget fix makes the Wall Street Journal, it clearly sends a message to job-providers around the country and world that this is going to become an even more expensive place to do business. While Wisconsin Governor Scott Walker and other governors across the country are reaching out to job-providers, our governor is clearly telling them “you don’t pay enough.”  In New York, Governor Andrew Cuomo wants to balance his state’s budget without tax increases. New York has one of the highest personal income tax burdens in the nation and is right around the top 10 in corporate income tax burden. Minnesota is about fifth highest in personal income tax burden and 12^th or 18^th highest in corporate income tax burden, depending on which measure you use.

It is easy to pick on the rich – many of whom have taken huge risks to build successful companies. But the reality is rich people can live where they want. My guess is they won’t want to live in a state with the highest income tax in the country, especially since there are plenty of places with lower taxes and quality of life that’s at least as good, if not better. This to me is depressing. In my mind, we should be doing everything we can to keep our successful folks as Minnesota residents – not only would we keep their job creation, but also tax dollars, charitable giving and other forms of community support.

Some public officials will continue their mantra of “they are lucky to be able to do business here.”  That may have been true in the ‘70s when our competition was the Dakotas, Iowa and Wisconsin. Today our competition is global, and many businesses can locate where they believe they can be most profitable. Representatives of other states and foreign nations are routinely here recruiting them. Based on early reactions to the Dayton budget, the economic and job growth we need to address the state’s priorities won’t be here. That should give all of us pause.

The business community remains optimistic that important policy can be enacted into law this year. As one example, witness the bipartisan support in the Legislature, and positive actions from Governor Dayton, for streamlining the environmental review and permitting process. We’re seeing similar positive signals in such areas as alternative teacher licensure and removing the ban on consideration of additional nuclear power.

That said, the elephant in the room this Legislature is the state budget. It’s imperative that policy-makers focus on balancing the budget within the available revenues. On that note, it was discouraging to hear the Governor deliver his State of the State message and underscore that that the state must invest – read: increase taxes – if it is to remain strong.  He is expected to stick to that same theme when he delivers his budget message this week.

The Minnesota Chamber remains four-square behind the efforts of the legislative majority to focus on statewide priorities and not spend beyond the expected revenues. Depending on the February forecast, that number should be somewhere between $32 and $33 billion. In my house, that is a lot of money. 

We suggest that policy-makers focus all of their time and energy on spending that money wisely and spending it on the priorities that they believe will help our state prosper – and accomplish that work by April 15. Moving the financial decisions up in the process and postponing some of the policy decisions to later in session sends a strong message to Minnesotans that policy-makers are focusing on the most important issues we all face. Following that, if some folks think the Legislature missed a priority, they have the opportunity before the session adjourns in May to bring their priorities forward with a suggested way to pay for them.

It’s imperative that we change the approach to the budget. The available revenues should be plenty if we focus on priorities and become creative in the ways we deliver services. Rest assured, I’m not saying the job is going to be easy – far from it. But it can and must be done to keep Minnesota vibrant for all its citizens.

The Dayton Administration and Legislature face a daunting task in balancing the state’s general fund when spending requests outstrip expected resources by $6.2 billion. That’s why the Minnesota Chamber believes all spending must be on the table – including aids to local government.

Local Government Aid, in particular, is destined to undergo dramatic change. Don’t take our word for it. Witness the fact that many local governments are adopting budgets with reduced or no state aid. They recognize that state government is facing its own financial challenges and no longer can be relied upon as a stable partner. Changing demographics are the primary driving force. A graying population translates into more Minnesotans demanding state services and a shrinking base of working taxpayers to pay for the programs.

Cities, in conjunction with local taxpayers, are in the best position to decide their scope of public services. That’s at is should be. But LGA is not intended to guarantee all Minnesotans the same level of public services at an equalized tax rate. That’s impractical and shortsighted given each city’s distinct circumstances. Instead, LGA should assure adequate services at reasonable tax prices for all Minnesotans.

Advocating at the Capitol for the status quo is a nonstarter in today’s challenging economy. The Minnesota Chamber instead advocates an approach that will at least foster a productive debate. We support restructuring  – not eliminating – LGA. We’ve listened to our members and are sensitive to the impact of LGA on local budgets. Our revised policy seeks to restructure aid programs so they help local governments find ways to collaborate and increase efficiencies, thus easing a transition to reduced state aid. We also will work with local government to eliminate state mandates that drive up their operating costs while tying their hands for delivering services. We are open to considering alternative, accountable local government revenue sources.

Minnesota must look forward and stop clinging to the past. The Minnesota Chamber stands ready to partner with policy-makers in building a budget using the money that we know will have in the next biennium. We can succeed if we focus on statewide priorities and rethink how we deliver public services. It won’t be easy. We all must share the pain, including the business community. Completing this assignment is essential for Minnesota to address its most pressing problems and build the infrastructure necessary to develop and grow our economy.