Tax bill a hot topic at business roundtable

MARSHALL – There was both good news and bad news coming as a result of the Minnesota Legislature’s spring session. While Republican legislators said Wednesday that Minnesota’s budget and economy have been turning around, area residents said they’re still frustrated with taxes and barriers to business growth.

Minnesota House Minority Leader Kurt Daudt, R-Crown, was in Marshall on Wednesday afternoon as part of a business roundtable hosted by the Marshall Area Chamber of Commerce. Daudt was joined by assistant minority leader Kelby Woodard, R-Belle Plaine, and Rep. Chris Swedzinski, R-Ghent, as well as by representatives of local businesses and Marshall city officials.

Daudt said he wanted to gather feedback on how the session has affected Minnesota businesses. The Legislature is currently in an “interesting” position, he said, with Republicans in the minority of both the state House and Senate. Even without that control, however, Republicans were able to help curb some spending this session, he said.

There have been some positive outcomes from Minnesota lawmakers in recent years, Daudt said. He said Republican policies put in place since 2011 have helped increase state cash flow and turn a $5 billion deficit into a more than $3 billion surplus, and the state’s economy has grown.

“The entire situation has improved for the state of Minnesota,” Daudt said.

But even with that improvement, both Daudt and businesspeople Wednesday said there was plenty in Minnesota government that didn’t make sense, including the 2013 tax bill. Jon Knochenmus said he wanted to know more about the warehousing tax included in the bill. Would businesses like Ralco Nutrition be affected?

“If you rent or lease (warehouse space), you will be,” Woodard said. The warehousing tax places regular state sales tax on items in warehouses or storage. Woodard and Swedzinski said the tax was introduced late in the session, and only now are legislators starting to understand how it could affect consumers and business owners. It could be far-reaching enough to affect propane stored in a leased propane tank, Swedzinski said.

The tax bill had a long list of new taxes that could have a negative effect on Minnesotans, the three legislators said. Sales taxes were extended not just to warehoused goods but to information technology services and telecommunications and electronic and commercial repair services. Minnesota’s new fourth tier income tax also makes the state’s tax rate the second highest in the nation, Daudt said.

Knochenmus said he’d like to see better communication of issues like this from lawmakers.

“It would be nice to see everything you’re talking about listed out,” he said. “This is government out of control.”

High taxes make it difficult to do business and recruit quality employees, especially when you work close to the South Dakota border, local businesspeople said. Scott Williams of Bisbee Plumbing and Heating said it’s not easy to compete with businesses from South Dakota, especially when he has to pay excise taxes on work done outside Minnesota.

Efforts to recruit businesses to South Dakota are “just unbelievably aggressive,” said Marshall Area Chamber Director Cal Brink.

Marshall Mayor Bob Byrnes asked about the possibility of getting state bonding dollars next year for the MERIT Center and Amateur Sports Center projects in Marshall. The projects have had a bipartisan history of not being included for bonding, he said.

Daudt said because this year wasn’t a bonding year, it was less likely for the sports center request to be approved. Things were looking much better for next year’s bonding bill, with the House majority giving a commitment to including the project, Daudt said.

A second business roundtable, with a view from the other side of the House aisle, will be Friday at noon, at the Marshall Chamber conference room. Minnesota House Speaker Paul Thiessen will lead the roundtable.