Job, tax plans could benefit rural Minnesota
ST. PAUL – Rural Minnesota businesses could hire more employees and afford to stay in the state with some extra state help, some lawmakers say.
Minnesota legislators have introduced plans to create an internship program, offer special business tax credits and pay for some employee training in greater Minnesota, all aimed at strengthening the rural economy.
Sen. Kent Eken, DFL-Twin Valley, said his proposed internship program would help young professionals realize there are career opportunities in rural Minnesota.
His program would provide business tax credits helping companies pay college interns up to $4,000 each.
“We’re trying to keep more young people in our communities and help employers as well,” Eken said.
The up to $11 million requested for the program in the next two years would cover about 2,400 internships, Eken said. The students must get academic credit for their work as well as being paid.
“It’ll give them reasons to stay,” President Bruce Ahlgren said of the Coalition of Greater Minnesota Cities.
Rural Minnesota cities still are recovering from the recession, said Ahlgren, also Cloquet’s mayor. He said internships were among the first things businesses dropped to keep afloat.
Another proposal is aimed at helping companies struggling to find the right applicants fill jobs, bill author Sen. David Tomassoni, DFL-Chisholm, said.
“What we’re hearing from businesses is they can’t find qualified people,” he said. “This is about creating a training program that will be nimble enough to meet the needs of the economy and employers.”
He proposes reimbursing businesses for some employee training costs. Eligible companies must pay employees at least $13 an hour by the end of their first year and be located outside the Twin Cities metropolitan area.
Tomassoni said the measure is focused on high-skill jobs.
“I think it’s a pretty creative way of doing this,” he said.
Sen. Vicki Jensen, DFL-Owatonna, proposed a broader plan she said would not only bring in new jobs, but also will help businesses stay in greater Minnesota and retain jobs. It would replace the Job Opportunity Building Zone program.
Jensen would give rural Minnesota businesses some sales and property tax exemptions when they expand or come to the state and offer income tax credits based on pay and the number of employees, encouraging new hires.
“We need tools in greater Minnesota,” President Barry Wilfahrt of the Grand Forks and East Grand Forks Chamber of Commerce said.
He said there are business incentives in neighboring North Dakota that can draw companies away.
Jensen said while there are other job and economic development programs in the state, she wants some specifically focused outside the Twin Cities metropolitan area.
“I’m not willing to just sit back and cross my fingers this (other) legislation will work in rural Minnesota,” Jensen said.
Outside employment, leaders of cities that border North Dakota say they are struggling just to keep businesses.
“It’s a different situation right on the border than it is in the rest of the state,” Eken said.
He proposes adding $1 million to the pot for border cities to help businesses, on top of a program first established in 1984 giving Breckenridge, Dilworth, East Grand Forks, Moorhead and Ortonville extra funding from the state to use for tax reductions.
Eken said North Dakota has unique advantages, including an influx of money from the oil industry.
“There challenges aren’t necessarily new, but they are intensified,” Moorhead City Manager Michael Redlinger said. “This is really about staying in the game and keeping these businesses on as level a playing field as possible.”
The program does not include all western border cities. Eken said the determination depends on the proximity to the border and size of competing city.
All the proposals are being considered for an overall tax plan.
Eken also proposes a program to set property tax rates for businesses along the North Dakota border, including rental housing, at the lowest effective tax rate in the bordering city. He said that will keep Minnesota’s property tax rates competitive.
“We have the issue with competition in North Dakota, which really is an anomaly,” Eken said, compared to other borders throughout the country.
Eken said the other bill would keep Minnesota’s property tax rates competitive with North Dakota’s.
Republican Sen. Roger Chamberlain of Lino Lakes said he does not think the border cities have a special need for such programs.
“The excuse that North Dakota has oil doesn’t hold,” he said. “What’s good for the border cities, why isn’t that good for the rest of the state?”
He said the Democrat senators’ proposals make the case that business tax credits
and exemptions create jobs and said that should be applied throughout Minnesota.
Talking about the internship program, Sioux Falls, S.D., native Moriah Miles, Minnesota State University Student Association chairwoman, said she originally saw her move to attend school in Minnesota as temporary. But she was offered a job and decided to stay here, she said.
“There are many students who come here with the intent to go back” to other states, she said, but if opportunities are readily available they might stay in Minnesota.
Senate Tax Committee Chairman Rod Skoe, DFL-Clearbrook, said he is considering expanding the internship program statewide.
“My main concern is we bolster economic development in greater Minnesota cities,” Eken told the committee Monday, but added he would be open to widening the program scope.
On other border cities program, 150 businesses in Moorhead alone benefitted in 2012, Redlinger said.
“It’s really a win-win for Minnesota when these businesses stay,” he said. He said many want to remain in Minnesota, but the incentives from North Dakota can be tempting.
He said Minnesota cities need even more money to compete. “The disparities between the border cities have grown for some time now.”
Jensen said program such as angel investment credits, which provide a break for those who give money to startup companies, work well in the metropolitan area. But she said more than 90 percent of that funding goes there rather than to rural Minnesota.
“Greater Minnesota needs different tools,” Ahlgren said.