(00:00:00) Studio guest today is Minnesota State. Senator Jim Newland. Who is the minority leader in the Minnesota Senate. Here's what governor Rudy perpich had to say about our guest today. Just as the governor was leaving on his trade mission to Europe. I'm saying that Jim Leyland is a Benedict Arnold of Minnesota. And I mean that brand I've been saying that now for the last two or three days nothing positive always negative always negative. Where's the state going to go? What good do you accomplish by saying bad things about your family or your community? Your state doesn't make any sense. I would like to have something positive what we can really do. The governor's comment of course was prompted by the almost constant barrage of criticism that Senator uhland has kept up ever since the end of the regular session in may he says that Minnesota's business climate and economic climate is poor and he lays the blame for that at the feet of the dfl controlled legislature. And the governor. Well today you'll have a chance to question Jim you learned about the policies he would pursue if you were the majority leader. In the senate or possibly even the governor. Why have you criticized Minnesota so sharply it doesn't the old saying goal that sometimes saying something can make it. So giving Minnesota bad image. Well Bob if it were simply I that was doing the criticism. I think that would be one thing but if you look at the people in Moorhead for instance or the people in East Grand Forks or Marshall, or if you look at the people in Duluth, all of those communities under are under severe stress, they have great difficulty competing with those States just across their borders right at the end of their communities. The debate goes on in each of those communities the debate on whether Minnesota is competitive goes on in our small towns as they see their manufacturers leave for more favorable locations, South Dakota is tremendously competitive. And if you're producing a product and trying to sell it in our region or even in the world market price is what sells products once the quality is comparable. And if you have a high cost location your product simply cannot compete and that's why we see a tremendous job flight from Minnesota another 550 manufacturing jobs last month. Mm in July and I think in large response to the opportunity missed in the legislature the governor and the legislature made Minnesota less competitive. I think that's a situation that has to be reversed or we're going to have irreparable harm to our economy. We heared that just yesterday. The governor is now recommending repeal of the by Minnesota law which was passed in the last session a law that was intended to encourage Minnesota state agencies and school districts and so forth to where possible by things that are based in Minnesota. And of course North Dakota is now retaliated. Bob De it's a typical piece of legislation that I think shows the governor's good intention, but is lack of economic training. He says he thinks incorrectly that by erecting trade barriers around Minnesota that he can keep jobs in Minnesota. That was the ill advised by Minnesota ACT, which not only encouraged the university and state government to buy from Minnesota contractors. It forced them to it forced them into a higher cost situation and it harmed a lot of a lot of campuses on the University and it made state government all that more expensive during the session. The Republicans anticipated that other states would retaliate we publicly publicly debated that issue. It's frequently occurs in international trade that trade barriers are immediately reacted to by Leah Tori law and we saw this week North Dakota do exactly that Wisconsin has legislation before their legislature to do the same thing. And in economics when every state establishes state barriers like the by Minnesota law, all you have is higher costs and government and you tend to subsidize less efficient firms. It's a very bad concept. It's one that should be abandoned. It's one that the Republicans opposed in the dfl supported including the governor. Now the governor has changed his position and today I Dropped him a note asking him to call a half day special session in October to repeal the law rather than waiting for it to expire a year and a half from now. Well, that could be done in January during her Ian marched couldn't during the regular 84 session sure. It could be done in March and the the only question is how much harm do we do until March? I think that there is an opportunity now for South Dakota and Iowa to retaliate we've already infuriated the Canadians who have a negative trade balance with the United States and I think if we're going to send a positive signal to our employers and to the surrounding states, then we should once we the governor's recognized his mistake. We should just go ahead and very quickly corrected five minutes past 12:00 o'clock Jim you lenders with us. He's the minority leader in the Minnesota state senate. If you have questions today, we invite your calls to to 7 6 thousand is the number in the Minneapolis st. Paul area 2 2 7 6,000 for Twin Cities area listeners in other parts of Minnesota. The number is 1-800-695-1418 hundred six hundred 529700. And if you're listening in one of the surrounding states, thank you have some observations about Minnesota's competitive advantage or disadvantage vis-à-vis your state call us directly in the Twin Cities at area code 612 2276 thousand. We do have some listeners waiting, but I want to ask you before we take our first call the governor just got back from his from his trip, which he proclaimed success appears that efforts are being made to begin some international trade and Minnesota to convince people overseas that Minnesota is a good place to do business with the highly skilled labor force that we have the lack of a international tax on International companies isn't that in your view of a helpful step and process that you be encouraged? Well, there's a couple problems with the governor's approach. I do agree. The governor is good-hearted. He's spontaneous. He's enthusiastic. He's a booster of Minnesota all positive characteristics in all somewhat important functions to be performed by someone, but my concern is that 80% of job growth in Minnesota comes from our existing firms. If you have a climate in your state that does not allow them to grow and prosper you lose 80% of your opportunities for job growth. And that's what we've seen. We've tried to quantify the job departure. We think it's hi. We think it's accelerating and we think it can be reversed. But only if the governor would settle down stay home and propose some legislation that reduces the burden on employers rather than increases it like the last legislative session. We had the largest tax increase in history every place. We were uncompetitive. We became less competitive rather than more competitive but isn't he just by going overseas doing what like he says with private business does what other companies do to encourage growth and investment in their own their own products overseas? Well, he is going overseas in an encouraging foreign companies to come to Minnesota and produce Goods. To do that. I think first you have to be able to tell a foreign company that Minnesota has a competitive place to produce those goods. It's not sufficient simply to invite them here because most business decisions are made on return on investment on what type of profit you can make in the location you're going to Should a European firm want to come to the United States and produce a product in my judgment? Minnesota cannot wind up in the finals competing with them for that location. We did we had an interesting example of this Nationwide computer Consortium looking for a place to locate and you would have thought that was a perfect fit for Minnesota. We have a critical mass of computer production here. We have an excellent University and they said no the reason they said no was that our tax structure was too high that there are other places that had a critical mass of high-tech. There are other places that had excellent universities and there were other places that had competitive tax claimants. So the problem I have with the the way the governor's proceeding is rather than correct our problems at home and make us competitive and then go out to the world and say we've got a competitive place to to work and create jobs. He's a Or in our problem and trying to go out and sell Minnesota is a competitive place and I don't think he's going to be very successful. I hope he is successful. I hope in spite of our uncompetitive posture. He's successful. I doubt that he will be well sir. We have some very patient listeners waiting on the phone with questions for you. So if you slip your headphones on you will be able to hear our callers and we also have a couple of open lines at 2276 thousand in the Twin Cities area 2276 thousand in other parts of Minnesota one 865 to 9700. Let's go to the listeners in our first caller. Go ahead please you're on the air (00:09:55) but 1978. We elected a republican governor gave tax advantage to the wealthy and generally botched up the economy of the state. So badly that last year we had I think it was six sessions. Raising taxes during everything that the governor was forced to be against and now that somebody else is at the helm whoever is on the opposite side. Shall we say as is your guest is sniping just what a terrible job he does is if that for years never existed wonder how you can explain your criticism and the light of the past four (00:10:45) years. Well Bob, I think we did get less competitive under the queen Administration. I don't think we turned the corner. The Hallmark of that Administration was income tax indexing which tended to protect people's income taxes from going up simply because of inflation. He did achieve that but when he was confronted by legislature of the other party the formula adopted to respond to the recession was what Senator mole suggested be a three-factor formula, you cut expenses 1/3 of the shortfall you raise taxes one-third of the shortfall and you shift expenditures using accounting practice of to which I don't agree you shift your expenditures into the coming biennium by one-third and thus when you add those three thirds you address the shortfall. It turns out that two of those thirds are very unwise practices and make us less competitive the the one-third raising taxes and the one-third shifting expenditures. And yes indeed the governor did agree to that formula. I think it's part of the problem not part of the solution. I did not agree to that formula. All right. Another listener is waiting with the question for Jim Leyland. Hi, you're on the air. Go ahead, please. Yes. Can you hear us? Go ahead? Yes, (00:12:12) I am a resident of the area and I am very concerned about real estate taxes. In this area of the country. They're the highest in the state etcetera Etc. Now we're angry about it. My question is am I justified in feeling very uncomfortable about the rate of those taxes if you had any comments from other people up here. (00:12:40) That's a very astute question because Minnesota's property taxes are the highest in the midwest in our commercial property taxes are among the highest in the nation and it turns out that st. Louis County and Lake County are adjoining County to the East are the highest in the state of Minnesota. And unfortunately, the purpose budget is going to explode property taxes. There's been a substantial shift of State responsibilities back to property taxes. So we have the unique situation in this last budget where we had aggressive increases in corporate income tax personal income tax with the 10% surcharge. We had unemployment insurance premiums increased by 10% and we're going to see at the same time substantial property tax increases in Prior budgets. If there was a tax increase on income or on business, we had a decrease in property taxes this time there was both and I think in northeastern Minnesota where we have the highest unemployment in the state, we have the least ability to pay these escalating taxes. We might point out that you represent part of the city of Duluth. Not only that I represent Lakewood from which the caller lives. Well your constituents. Well, we have more listeners with questions. Go ahead please you are (00:14:01) next. Yes, mr. You want to talk these days is all about taxes and money and I guess it must get frustrating for you to deal with us dissatisfied customers out here in the public, but I driving home from work a few weeks ago probably months ago by now when the Minnesota tax dollar signs went up on the construction zones, and I did some some research to the highway department which sent me to the governor's office in your office and doing finding out where these signs came. I mean, why are we being insulted by having a signs put up? The information I got was that it was ordered by the governor and at a cost of probably in excess of $100,000. How is it that a governor a single person can order that amount of money spent without anybody else knowing about it or or having a say in (00:14:52) it? Well, that's an excellent question. I understand the idea itself came from the governor's public relations director and it was adopted by the governor. The the money came from the highway trust fund as I understand which is under the direction of the governor's appointment as the hit who's head of the Department of Transportation. And I imagine that there's some account which says they can put up signs on Highway projects and these told us for $100,000 that there were jobs being created. The interesting thing to me was not just the wasteful expenditure of the $100,000. But the fact that the signs were saying Highway construction and the gas tax increase creates jobs. It's untrue. If you raise gas tax a million dollars. All you simply do is take a million dollars out of the disposable income of the people in the metro area and Duluth and all over the state you take that million dollars from them. They were going to spend at the grocery store and for Home Improvements and for their children and you give it to the highway department and the highway department spends it for transportation needs. You create no more jobs, you simply create different jobs, and and that transfer is is appropriate in some instances because our highways are in bad shape, but the signs themselves were untrue that we had a net increase in jobs and it was a really foolish expenditure of money. It's about 16 minutes after 12, Jim you lenders with us today. I'm going to sort of state senator from Duluth who is also the minority leader of the Senate more listeners are waiting with questions. Hi, you're on the (00:16:31) air. Hi. I read recently in the paper that the governor of contemplating a trip to South Korea. I have a real concern about doing business with countries where the human rights violations are so horrendous as they are in South Korea, and I'm wondering if how you feel about that. (00:16:55) Well, I hadn't heard about his trip to South Korea. I know he was planning a trip to soon as he got back from this latest three-week trip. He announced a trip to England, Florida and California. For him to go to South Korea and suggest that they locate plants here would be a waste of a of his time and state resources because there's no way we can compete in labor costs with South Korea. Now, your other question is a moral ethical one. Should we deal with states that have substantial or countries that have substantial human rights violations? I think we should do everything we can to build up the economies of the less developed countries. We should reduce our trade barriers. We should help them create employment. We should help them to balance their economies so that they get away from class societies help them develop a middle class through trade. And as far as we can to eliminate the abuses that I agree with you occur in South Korea where the government is indeed very heavy-handed and Not unlike the Philippines treats its its critics very harshly. We have more listeners with questions and we'll take our next caller now. Go ahead please. (00:18:18) Yes. Yes indeed criticism. You also related what the solution to given a quiz problems should have been in you said you were against two-thirds of it you're against everything you give nothing positive for the state and those of us who are working people could see right from the beginning that's bit that the Republican party in this state was going to leave this steep downhill now, I think you Republicans should take responsibility for that instead of sniping at the Democrats and I for one think it's just great. It's just marvelous if we have a traveling Governor, it's great if he can raise his mind about Some of the small minds that it did it did it has to do so difficulties that way in in the state of Minnesota. Now, you said you were for the 1/3 solution understandable. What else would you do and you make General statements, but the Republicans ran us right down the rope and you did nothing to help your Governor. You did nothing to make your Governor. Wake up to the fact that he was he was running Minnesota down the drain. (00:19:37) All right. Thank you for calling man. Let's get Jimmy Rollins response now on what you would do differently. Well, the the governor does has not engaged in a debate on the merits of the issue whether Minnesota is or is not competitive. He's tried to characterize those who oppose what he's doing and suggest Alternatives simply as critics, whether those people are from a border Community or from a business that's leaving. He also has said they're unpatriotic. Because they've identified a serious problem which is unaddressed. I think what the governor and other should do is agree that a problem exists and then methodically start to resolve it. Now. How do you resolve it in our existing budget which ends two years from now? Using the department of finances figures. We are going to generate over a 300 million dollar Surplus and in the next two-year budget. Acknowledging that state functions will have an inflationary increase there will be a surplus of six to seven hundred million dollars and what I suggested to the governor and my colleagues is that we set aside this 1 billion dollars of surplus to provide tax relief to minnesotans so that we can drop out of the top categories in virtually every tax on Nationwide comparisons so that we can start to become competitive again these figures of 300 and 600 to 7 billion hundred dollar Surplus. Does that include the 250 million dollar Reserve fund or is that in addition to that know the 250 million dollar Reserve fund would be in addition to the 1 billion dollars, but God, let me just show you how you get to that billion dollar Surplus in this current budget. We taxed for 250 million dollars to create the budget Reserve. You only have to do that one. Unless you keep increasing the reserve that's a one-time expenditure. So two years from now, we won't have to make that expenditure and that frees up 250 million dollars that the tax system is generating that we won't have to spend there's a series of those types of expenditures because we were in a recession. We had a series of short-term programs and I assume that as we come out of the recession into a recovery, we won't need those short-term stopgap programs. Well, I suspect that you and your colleagues in the legislature will get far more enjoyment out of debating what to do with the Surplus then how to solve the deficit. Oh, yes. Yeah 23 minutes past 12:00 Jim Leyland is with us. We have more listeners with questions also a couple of open lines in the Minneapolis st. Paul area. The number is two two seven six thousand 2276 thousand and in other parts of Minnesota one 865 to 9700. Hi, you're on the air. May we have your question, (00:22:38) please. I have a short comment for. Help conduct a survey. Day, and I interviewed six people. One of the questions was who's been in power in the Minnesota Legislature for the past 12 years five of the six. People said the Republicans had been So your average man on the street out there thinks the economy in Minnesota is such a mess because the Republicans have been in control (00:23:14) right given the observation on that under Baba Center is an interesting misconception that over that time period there was one year when the Republicans in the dfl were tied in the house and there was a four-year period when the Republicans had the governor's office. Other than that, the legislature has been substantially controlled by the dfl both the house and the Senate continues today and now the the governors of course dfl so if you look at budget decisions the budget decisions have been almost unanimously dfl philosophy and I think that's part of the problem that we haven't balanced the responsibilities of state government with the tax generating capacity of the state. Simply we have to reach that balance and to reach that balance. We've got to make our tax generating sector of Minnesota healthy again. Otherwise, we simply won't be able to fulfill our responsibilities which I acknowledge. Our important education care of the elderly care of those who are in that middle sector who can't participate in our society, whether through illness or disability those are important state responsibilities, but if the state doesn't have a healthy economy, it can't fulfill those responsibilities. Another listener is waiting with a question. Go ahead please you're (00:24:38) next. Yes. I like your fun for a competitive Minnesota and I was wondering how long you think would be before it can get (00:24:44) started. Well At Last January our caucus the independent Republican Senate caucus sat down and put out a plan for the 80s. We tried to Think Through trying to return Minnesota to a competitive posture by 1889. We thought we'd give ourselves the decade because clearly it took a decade or two decades to get us in this predicament. I think we can start immediately. I think the governor and the other legislative leaders can say they want to dedicate the tax Surplus to tax reduction. Then we'll have a start we'll give some hope to our employers will give some hope to those small manufacturers who are thinking about exiting and allow them to wait and see if the legislature really will perform this time. We'll move on to another listener with a question. Go ahead and you're on the air. (00:25:36) Yes. I've heard about Senator you and you and your other Republicans in the Senate have a long-term plan. For Minnesota and I was wondering what is the what are the initial stages? What are the first things that you would do? (00:25:52) Well first amazing thing to me is that our caucus has a plan. The legislature is really a collection of unconnected ideas, which the governor probably can appreciate because sometimes he uses that method of making decisions himself and in my experience in the legislature, which is in its 15th year. It's the first time a caucus actually has a plan we put out our plan. We mailed it out to community leaders, it contained 229 different recommendations for legislative action both ways for the state to more efficiently and appropriately fulfill its responsibilities. And secondly ways we can make ourselves competitive again to assure that we have a broadening tax base. And for those who would want copies of that plan. If they drop me a note at the state capitol, I'd be happy to mail them out one and we'd appreciate their comments because we're in a process of review of the plan during this present time and we're going to put out a revised plan for next January 27 minutes after 12, Jim Leyland is with us and we have more listeners with questions your next go ahead, please. (00:27:03) Yes. First of all, I'm not employed and I'm calling from Minneapolis. The thing is I don't think any of us would complain about trying to widen Market from Minnesota products both in the US and abroad however, unless we have a climate in the state to increase our business potential. We're not going to have any products to sell either in the United States or abroad and I'd like the Senators comments in this place. (00:27:29) Well, some of the listeners may not know that I teach In the business school at UMD the School of Business and economics and I teach 8 credits during fall quarter of strategic planning, which is a business problem solving course most products. Once you reach certain levels of quality are sold on the basis of price. That's where Minnesota's falling down. If you have a very high cost environment you can't compete on price and there's only a few places that you can get away without being priced competitive. That's if you have a patent or if you have a special niche in the market or if you have some special relationship with your purchasers, if you don't have those three things you're down to price competition and that's where the failing is in Minnesota simply to go out and be a booster for Minnesota products ignores the fact that Minnesota the price of Minnesota products has gotten so high that we're having difficult difficulty selling them here. Respective of the marketing efforts that are going on. Another listener has a question. You're on the air. Go ahead, please. (00:28:39) Yes. Good afternoon, Senator, Ulan. Good afternoon. I had a quick question for you seem to be taking it on the chin this afternoon for quite a few of the mistakes of the Qui Administration, but I'd like to turn the topic just a little bit to a bit more of a political stance and that is I'd like to know why the Republican Party in the state can't seem to form a cohesive coalition to point out to the people of this state that in fact, the business climate in Minnesota is very poor, and in fact that the people who proposed raising taxes as a solution to that problem are not the Friend Of The Working Man, and I'm going to hang up and listen for your response. Thank (00:29:20) you. I don't know if who can be held responsible for the lack of public education on our competitive climate perhaps some of those employers who have left should have spoken out more clearly and more frequently and analyzed for the public help the public analyze the reasons for their departure. The need is clearly there. The public is beginning to understand that only if you have a competitive climate, do you have job production and opportunities for those who are here? That's actually one of the main functions of the debate. I've been conducting on this issue to raise the level of public knowledge. We have a very smart electorate in Minnesota. We've got the highest average education level of any of the 50 states minnesotans can make astute decisions. They need the information and I think for too long either because the public was About the issue or uninformed that they haven't participated in helping resolve resolve the Dilemma were in to speak to the problem. I think they're going to do that. And I think they're going to do that at The Ballot Box next November and two years from November. I mean a year from November when the house is up for election and two years from that time when the Senate is up for election. So we get more people who are sensitive to the problem as I've defined it and to the solutions as I've been proposing many more listeners on the line with questions for Jim you land you're next. (00:30:56) Thank you Senator Ulan I couldn't help but respond to the color of a few moments ago the lady who was most critical of the efforts that you and your colleagues in the legislature have put forth over the years. I simply wanted to comment that in observing your behavior within the Senate within the legislature over the last decade or so that that this state is indeed. Fortunate to have such an articulate leader in yourself one who gets the homework done and one who is involved in trying to educate the electorate in this state to point out the philosophy that we've lived with for many decades of high spending and high taxes and particularly during this period of time. I think it's extremely important that we have the kind of leadership that you're providing us that will help us get through these very difficult times and they wanted to express that to you and to thank you for your leadership. (00:31:54) Well, I appreciate that. It's in frequent enough and politics have anyone thank you for anything. But let me just comment that I think it's part of my responsibility to debate the major issues confronting our state and there's nothing healthier than conducting a public debate. It's a search for Solutions you get better Solutions, you get the public involved in developing those Solutions and you actually move forward and resolve the problems as her guest takes a brief ball will move on to our next listener with the question. Go ahead, please. (00:32:27) Are you doing you mentioned earlier in the show the poor economic situation of our border cities, including the city of Duluth and I would like to know what specifically you think the state government should be doing to help these cities and to turn the situation around. (00:32:43) I think we have to to lower the tax structure for all of Minnesota because I think the problem experienced in the border cities is just The Cutting Edge of the problems that will be experienced from border to border from the North Dakota border to the Wisconsin border and from the Canadian border to the Iowa border. I think it is a persistent chronic problem. That's getting worse. It's just shown up most dramatically on the border cities. So my proposal would be to dedicate the tax Surplus that we've identified would be generated to tax reduction for all Minnesota's all minnesotans, whether it's property tax personal income tax corporate income. Come tax our unemployment compensation fund which has a 350 million dollar deficit or reducing are very high workers compensation rates. I think we can dedicate this fund to making all of those burdens lower so that manufacturers and jobs wherever they are in Minnesota have the opportunity to stay here and to grow here Senator aren't the surrounding states uncompetitive with Minnesota in terms of the public services that are provided in terms of some of the elusive quality of life things because after all Minnesota does have a far greater population and far greater total gross State product than the surrounding states yet Bob you are right that in fact, I was talking to a fellow in Sioux Falls yesterday. I raised Christmas trees and I was selling him some Christmas trees over the phone and he said Jim I've got the the best of all possible worlds. I live in a very low tax state. He lived in Sioux Falls. Have a transportation company, which operates all throughout North the Upper Midwest and he said I vacation in Minnesota. I have a cabin in Minnesota. I fish in Minnesota. I hunted Minnesota. We have good air connections. And he said on I can make my living in South Dakota. We do have a nice quality of life. But as you review the studies on how firms locate jobs quality of life is about the 13th variable, whereas the attitude towards employers and jobs is second and importance and local tax burdens generally our third or fourth. So it's there. It's one of the variables. It's just not as significant as the ones where we are very uncompetitive. We are lots of listeners with questions. We'll take our next caller now, go ahead, please (00:35:12) Kennedy you and I have a comment that I think fits in with your last comment. I also have a transportation company trucking company that about five years ago. I moved to Wisconsin I now have employees in Wisconsin, Illinois and Ohio and I have no plans whatever to And in Minnesota, I am following Minnesota Mining example of expanding only outside the state borders. I continue to live here because my wife and I have friends and relatives and whatnot. And when I retire my wife and I will most certainly moved to a state that has lower income taxes and lower inheritance taxes. I would like to see that reversed and I would like to come back into them into the state of Minnesota, but I just can't do it right (00:35:50) now. Well Bob, I think the caller presents the Dilemma that those firms which can relocate have many incentives to do. So now some clearly can't agriculture cannot relocate wood fiber cannot relocate your local gas station cannot relocate your grocery store cannot relocate the service Industries are going to be here as long as there are people and the natural resource Industries and agriculture will be here forever. But those firms that have a discretion on where to locate 3M Transportation manufacturing there. You see the substantial relocation. You also see it in the elderly as the caller pointed out that people with a tanks income a taxable income after they retire have a great tendency to move to states with lure tax burdens, Florida, California, Arizona, Texas have been the most common and in fact minnesotans have parties down there in the winter. They have annual picnic. Gathering of the minnesotans mmm. It's also a little warmer in some people. So as to benefits they get a tax benefit and attend another listener with a question for Jim you'll and go ahead please (00:37:05) you made a statement about the Republican caucus planning through the end of the decade, but then you used the year 1889 and I was wondering if Republicans whether in the White House state house or the county seat or the city hall you have this point in tendency to think about a century behind the rest of the country and (00:37:30) world. I probably do 1889 was a tremendous year in Duluth. We had The Coincidence of mining starting up James J. Hill had just broken through the Red River Valley into North Dakota with the Great Northern Railroad. We were hitting the height of our lumbering with Norway Pine and white pine and the coincidence. Of those three factors produced just a tremendous burst of wealth and Duluth effectively with has the largest number of Tiffany stained glass windows per capita than any Community is though it is right then and the architecture followed the same way the explosion of wealth brought in Architects from all over the country the distinguished Architects from Chicago and New York came and built the Mean Street buildings in the homes and Duluth or designed them. So it y it probably was a Freudian our James J Hylian slip, I did mean 1989. Alright, another listener is waiting with a question. Go ahead. Please (00:38:30) calling from Minnesota and you stated earlier that you were very much opposed to increasing State spending and that our goal should be to reduce the amount of capital siphoned from the private sector into state government, but yet at the same time, You also suggested that these budget surpluses that you can see down the road should be used to subsidize property taxes now seeing as how property taxes are levied by local government where individuals have a greater control over or should have a greater control over what happens why subsidized property taxes when adding the subsidy would probably just make it easier for local units of government to raise these taxes without such a great outcry from local people. (00:39:20) Well the colour raises an excellent point that in the formula for Distributing property taxes, the formula gives incentives for local units of government to spend more money. If they raise their property taxes higher their state aid gets higher. So there's an incentive to spend more which the caller rightly identifies and is a change in the formula that's needed. I share his concern and I share his interest in making that change along with providing some controls on property tax. If we simply give local units of government and counties more money. All they will do is continue their level of property tax and increase the breadth of their services which in my judgment can't be sustained by the people providing those tax dollars today in Minnesota. Another listener has a question for Jim Leyland. Go ahead, please. Hello. Yeah. (00:40:17) Okay. Yes a comment, please. I am. Have businessmen and like some of the other callers I do put do plan to move the company out of Minnesota down to, Texas. And it's unfortunate because I'm following along with hundreds and hundreds of other business people that are have done and will be doing the same thing my question, please what can you do to educate the Liberals in The Facts of Life of the economic Facts of Life in this country today to to develop an environment. That's not to anti-business to hopefully bring in some business or at minimum hold some of the businesses here in the state. (00:40:59) Well, I think one argument that those people who are concerned about distribution of State revenues, which is an important function that the state does have responsibilities. It must fulfill them. Those people who have that as their primary concern must recognize that unless revenues are generated. There's nothing to distribute towards the state's problems and the state's obligations. So part of the educational effort that I'm engaged in is to explain to the service providers that indeed unless we have a healthy tax generating economy. The state can't fulfill its commitments and if the state can't fulfill its commitments we have elderly that can't live in dignity. We have children that are poorly educated and we have disabled people who cannot reach their potential that's the argument and the line of reasoning. I think that has to be made We'll take another caller now for Jim Leyland. Go ahead please you're on the (00:41:59) air Senator you ruined my question is when you're talking about reducing State expenditures you be reducing expenditures for the people you just listed the elderly and handicapped and children. What are you going to do with them? Let them eat jelly beans? (00:42:16) Well the in the fund I proposed the fund for a competitive Minnesota where we would take the billion dollars in tax surpluses that are generated that assumes that we will give inflationary increases to all functions of state government and that in and we will give to the Health and Human Services sector in an increase that's twice the level of inflation primarily because medical costs are escalating at a rate faster than inflation and the people eligible or needing medical services are increasing at faster than the rate of inflation. So in this proposal to use Tech surpluses, we are not talking about reducing the obligations of the state except for those that were one time in nature the creation of the budgetary cushion and a number of those other short-term jobs programs, which were recession oriented and which were not designed to continue during the during the Covering what would you get rid of first would you get rid of the surcharge? That's what I that's what I proposed in because the 10% surcharge on top of are extraordinarily High income tax put us in a in either second or third place in the nation on personal income tax high technology is very sensitive towards personal income taxes. All the professions are it's very job-related. In fact many of the chief executive officers who clearly can afford to pay the taxes that they pay choose not to and relocate. It's not a it's not a as simple as saying they are chained to Minnesota. There are other competitive places where even though they can afford to pay a very high burden choose not to and that's why the 10% surcharge is one of my is the top candidate for removal. I think it can be removed effective January 1st, 1984 and be Or by that text or plus we've identified and how about the sales tax? Would you drop that back to sick of 5? Well, the sales tax doesn't make us as isn't as critical a component in our competitive structure since it's a tax on purchases as other taxes for instance commercial property taxes are much more of a burden towards job creation than the sales tax is so I think that that returning the sales tax to 5% would be on our list of tax reductions, but it would be a much lower priority. It's a quarter to one already and we have more listeners with questions for Jim Leyland High your (00:44:56) next a very strong supporter of Jimmy. I have been using the same criteria that dimension for our local elections. I don't like to support mayor's or councilman who do not believe in going to the legislature in lobbying for reforming these taxes because we've had used the Twin Cities presidents of Corporations up here for breakfast seminars, and then they have told us they have branches to establish, but they couldn't establish them in Minnesota because of our tax structure. I just sit here and weep. I've seen Minnesota and it's good day and to hear the people we've got in our legislature mouthing off these things about their studies show. The taxes aren't important. It's just so sickening and I felt greatly elated at the fact that we've got such an excellent spokesman, but I am also a little bit discouraged because he's so articulate and so very polite to people to hear a woman calls. He had no positive suggestions and he's been just full of positive suggestions. Do you think that you have to become nasty in order to have people notice? You (00:46:14) know, I think I prefer to try to debate fact situations. I prefer to try to quantify our options rather than to make emotional reactions to them. But clearly the woman was within her her right to make her comment and the public has to understand that I am in a political office and some of the comments I do make our do we have a political component to them because it depends on the assumptions we make and how we evaluate issues in the priorities we have so I was not appalled by her comments and wish her well, most of the comments that we've heard today pale in comparison to some of the things they're set on the floor of the legislature near the end of the session wouldn't you say that's right. The people of Minnesota are much more civilized than the debate that goes on in the legislature or 12 minutes before one another listeners way to go ahead (00:47:10) please. I have a couple of questions the states of Massachusetts and California have taxes as high or higher than the state of Minnesota yet. They have managed to be the top states in the whole country in the high technology area. Something is wrong with your hypothesis about the tax structure versus the attracting of high technology. Number one number two the state of South Dakota who stack structure you seem to admire tremendously also has the lowest rate of compensation for the average worker of any state in the Union as you well know and I who go often to the University of Minnesota medical school for Medical Treatments and counter. There are a great number of North dakotans and South dakotans whose Medical School were installed long after the University of Minnesota's medical school and still is nowhere near the quality of that we have here in Minneapolis. I might come here rather than go to their own the quality of life here in the state of Minnesota is paid for by our taxes and it's darn good. (00:48:44) All right, sir. Thank you for your call. Let's get Senator you lose response. Thank you Bob. The gentleman is correct that Massachusetts and California do have an important infusion of high technology firms. And he's also correct that their personal income tax is very high there in the top five were in the top five. So we're similar there. But if you look at the other taxes, we're top in the nation and corporate income taxes. They're not it turns out on high technology jobs. You don't have as much of a burden with workers compensation costs because workers compensation costs, which are exceedingly high in Minnesota aren't as important to cost factor in high technology because the jobs are not dangerous. You also don't have as high a proportionate cost in unemployment compensation because high technology has been a growth industry with little unemployment as opposed to Manufacturing. Which flows with the business cycle and third we've got very high property taxes. They hit manufacturers much more severely than they hit high technology companies. So it's it's understandable to me that Massachusetts California and Minnesota all are high Technology Centers, but that they all are having trouble retaining their manufacturers. Another listener has a question for Senator. You don't go ahead you're on the (00:50:12) air. I know Senator unit you talked about the billion dollar fund that you would subsidized used to subsidize. The manufacture of how do you propose to replenish the fund over the years? (00:50:33) The gentleman use the term subsidized. I don't think one could call reducing our very high tax levels from their present rate to a lower rate as subsidizing. I think that's becoming competitive. And if you reduce taxes over the next three years of billion dollars what that says is that there will be a billion dollars less Revenue in the subsequent four years, but if it's a surplus then you don't have that Revenue to spend so you don't commit it. So you don't increase your expenditure level so you don't have to replenish the fund. Okay, another listener with a question, you're on the air. (00:51:17) Yeah, thank you. I appreciate what appears to be a fairly systematic view of a lot of the problems that the state has here and what I'd like to ask though is, how are we going to go beyond the problems once we get out of the hot water? What are the kind of things that are going to actually provide an atmosphere of excellence and Innovation and incentive for businesses that will get us beyond all of the problems. We've now had with suffering through the oil crisis and an inflation and recession in the state and particularly. I'm curious about your attitude with respect to what I see is major areas of improvement and that is in energy and transportation one idea is personal. Transit terms of Transportation Innovations. Do you see Minnesota taking any stamp here that will go. Beyond problem solving (00:52:27) Yes, I do and what minnesotans are very bright and minnesotans are very hardworking and minnesotans are very energetic. And what we want to do is allow them to stay here and in a competitive climate use their intelligence use their imagination use their Innovation to start small firms to expand their firms to do home Enterprises to use that imagination and government and what I feel is the crushing burden on that imagination and Innovation and Excellence has been the burdens that these small businesses have to face to open the door every morning. They have to pray every day that they're going to break even by the end of the day and many of them haven't been and they find by going somewhere else where the stress is less where they can spend more time being imaginative and Innovative and where they can have greater personal successes. So I think once worth through This period of a deteriorating competitive climate once we address the factors that make us uncompetitive and make ourselves competitive again, we'll have the same Spirit as an athletic team where we feel good about ourselves where we're strong. We're we're good competitors. We feel good about Victory. We play the game. Well and in The Innovation and Excellence will simply emerge without the government having to take a a hand in it. Are you also talking about the reduction in state government services that will occur if taxes are lowered. I mean most of what the state collects is funneled back to local governments and property taxpayers something like 75% of the people like those Services people like what they get, they like education the welfare budget a lot of it goes for people in nursing homes. What is the the spending side of that of that question now? I think the difficulty were in is that unless we Up the job Exodus. We are going to be in great difficulty for the state to meet its Financial Obligations to the public whether it's public school education. I'm a graduate of public school education. I teach at the University or whether it's providing services to those in need. We are going to have great difficulty Meeting those commitments if we have a continuous job Exodus in a narrowing of the tax base and we've seen that in Duluth to lose population was at a hundred and six thousand at the 1960 census. It was at a hundred thousand in the 1970 census. It was at 90 mm in the 1980 census and it's gone down further. We have trouble paying for our services right now. We want a better school system. We want more care for those in need. But if we have a shrinking tax base, we simply can't afford it. Now. What I think we have to do is say let's address the problem of Returning Health to the Minnesota economy and we have to do that becoming too by becoming competitive and the only way we become competitive is to start doing our economic exercises, which is to reduce some of those burdens we face then I am confident that the system is going to generate adequate resources for not only state government to fulfill its responsibilities. But for those who are working here to be in able to fulfill their family responsibilities and their other social responsibilities. Well, we haven't a lot of time left, but there is time for a few more calls. We'll take our next one now. Go ahead please. (00:55:59) Hi. I'm calling from Roseville and I just took an extended vacation this past winter in Texas and ended up working there a little bit and having never left the left Minnesota for very long. I got a little taste of what it is like in these other states this in the South and after being there for two or three months, I guess I come to conclusion that I Wait to see Minnesota try and emulate a state like Texas because you can talk all day about the tax structures, but I I would hate to see Minnesota end up in the inning a place like Texas where workers end up working for as much as well half. I am a sign painter and I worked there for a little while, you know, Austin and (00:56:47) all right. Let's get to Center uhlans responds quickly. Well, I don't know quite how to immediately respond Roseville is an important distribution Trucking center. It's one of the most vulnerable sectors in our society to relocate because those Roseville trucking companies operate in a multitude of States. They can easily relocate and it's one thing to say that we've got a nice quality of life and well paying jobs, but if you don't have a job and if your jobs under threat, then I think the responsibility of the governor and state government and the legislature is to make our Bob structure competitive otherwise a job paying half of what today's job pays in Texas is going to look unusually good we have time for one quick question and one quick answer. Go ahead, please. (00:57:37) Yes, Senator uhlans have you have you heard of dr. Eugene Lobo and his economic theories have you any idea about what that how that would impact on your suggestions? (00:57:51) You can give me 30 seconds of what his theory is I'll give you a 30 second answer 10 seconds. (00:57:56) The theory is that both conservatives and liberals. So to speak have got it wrong about what what economy is and what the source of wealth is. He says they both put the economy on a physical model where there's forces and impersonal things going around and he says it's stinking human beings that create an economy and it's not forces that created. (00:58:19) Well that's pretty deep economic theory to get into a 30 seconds. That's four. Our quarter, I think that's probably winter quarter. That's economics 807 or something. Thank you. Jim Ewan for coming in and visiting lab has been great to be on NPR Jim uhland is the minority leader in the Minnesota state senate. He is a senator from the Duluth area.