Gene Merriam and John Hottinger on economic development and corporate welfare

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Former state senator Gene Merriam and state senator John Hottinger, of Mankato, discuss public money for economic development and corporate welfare in Minnesota. Merriam and Hottinger also answers listener questions.

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6 minutes now past 12 And good afternoon and welcome back to mid-day here on Minnesota Public Radio. I'm Gary. I can glad you could tune in this week is part of our special campaign coverage leading up to next month's primary election. We've been hearing from each of the candidates for Governor on the issue of Economic Development. What's the appropriate role for government and encouraging businesses to stay here movie expand here on Friday on midday ever going to be broadcasting all of those individual reports back to back so you can compare with the candidates have to say today. We're going to take a little broader look at the issue and try to ask the question. What is the appropriate role for government should State subsidies be tied to wage levels? What's corporate welfare, we hear that term used a lot. Those are just some of the questions we're going to be discussing this hour and joining us for Mankato is dfl state Senator. John Hollinger who is culturally send its corporate subsidy Reform Commission. And here in the studio is former state. Senator, Jeanne Miriam longtime chair of the state senate finance committee. And one of the states acknowledge experts in this field and we certainly invite you to join our conversation as well great opportunity to learn more about Economic Development the role of government in helping businesses. Give us a call to 276 thousand is our Twin City area number to 276 thousand or if you're calling from outside the Twin Cities 1-800. 242-282-8227 6001 800-242-2828 Center ottinger centromere and thanks for joining us today. We start with you is the use of public money for economic development purposes to help businesses that are relatively new development or has government been in this business for as long as anyone can remember call. Well, I think it's it's certainly been in this business for I think probably throughout the history of our otherwise capitalist. Societies we've had some government involvement to go back to that to that. The railroads got started with with large land grants from the federal government back a century-and-a-half ago. So sorry, it's not a new phenomenon, but I think it's it's really exploded in the last few decades. Any reason why I took off so much. I think that the economy is growing more complex and political leaders have grown more clever we've seen ways that the muffin things aren't very visible where government for a good purpose always starts for a good reason gets involved extensively in private Enterprise Center huttinger any idea. Is there any number that we can we can look at any idea how much government and the state government for example spends on economic development? Well, there are their estimates of up to as much as 1.6 billion dollars a year. Now those estimates are in contest, but without any question, we spend three to four hundred million dollars a year to the state or local government in either foregone taxes or indirect subsidies to businesses three to four hundred million Baseline and could go all the way up to about him one and a half billion depending on what you consider a subsidy and what you don't consider a subsidy. What should we consider a subsidy? And what shouldn't we went to the time on the corporate subsidy Reform Commission, which was a joint house-senate commission with that issue and came up with a relatively detailed description of what we thought as subsidy was included loans allow commercially available rates grants contribution of property or a contribution of infrastructure a tax increment financing is is one form of local. Development approach that the includes providing infrastructure. So we were trying to direct their definition two things that specifically benefited an individual business is opposed to their competitors does the most of the money that we make available the business most of the go to new business existing businesses big businesses small businesses who's getting this money very good data on that. I think that these are the publicly visible ones end up going to big businesses and they are the ones that are most controversial. We have a variety of programs that provide little boost to small businesses and it ain't the carpet steps to perform commissioner recommendations generally exempt add small businesses from some of the requirements that we think are to be put into the process for deciding whether a business subsidy should be given Center Merriam, is it possible that people who would otherwise Business Leaders? For example, otherwise rail against this kind of policy are in fact benefiting it not even really aware of it will certainly they're benefiting and envy even if they're aware of it. You know, they will say often times in a private conversation. Look, I believe it's wrong for government to get involved in this but as long as government is going to do this, I'd be a fool not to participate in to try to get my share and it would be a foolish. What are there any criteria at either one of you going to answer this question any criteria at all used to decide what's a good project? And what's a bad project? What's a good program with a bad program to support? I think that we had rings around the stage and and we got a very good response to that but we found where most local governments I did have criteria. They have some standards by which they trusted we heard the department of trade. Development has a very strong and very a detailed set of criteria, but we found some gaps in those criteria. And that's why we recommended that at least five criteria be used whether or not the other not the incentive of 300 would enhance economic diversity create high-quality job growth provide for job retention stabilize the community or increase the tasks base. We recommended at least two out of five of those criteria be met before any business incentive be granted a sound pretty commonsensical in a way or what other reasons are being used to give out corporate subsidies that don't include those five when we try and justify a public subsidy to business what we felt was necessary at the commission. Was it to become public involvement and scrutiny at the front end that there Value received in terms of that public purpose and accountability at the end. We found that in areas where there was the most controversy increasing tax base seem to be the only justification for it. If that's the case you really have kind of a zero-sum game if a business goes to Minneapolis is opposed to Saint Paul or the other way around Minnesota isn't benefited one or the other and increasing the tax base alone doesn't seem to justify the subsidy and maybe I can just jump in and an offer of a couple of examples of how how things have developed and maybe why they develop that way I think all too often elected officials at all levels from from the town supervisors and City Council Members legislators federal and state measure their own self-worth by Tech Tour results. How how things what can you point to in your own District? It's different because you had some effect on it, I think. Motivates to a great extent the public officials if we take the example of tax increment financing tax increment financing started in the late 60s early 70s what the Devolution of of the Great Society what funds federal funds are being withdrawn for urban renewal and I think that a well-designed well-thought-out program tax increment financing had its basic premise that without some economic stimulus that the urban scores would continue to Decay. So what we needed to do was to have some way of making providing economic incentive for that urban renewal to take place. So tax increment financing result. I resulted from that the objective and the idea was and I think a pretty good one is that if we target tax increment financing we can have the local government pay for the cost. Taking down the old structures leveling the ground preparing those Urban centers for being rehabilitated and renovated. And the way they would pay for that would be with the with the development that I otherwise would not occur because it was cheaper to go out in the suburbs and buy undeveloped the farmland or a marginal land and build your own a retail and end industrial facilities out there. So I thought it was it was conceptually well-designed the problem broke down in that the before too long. I'm texting from and finance was being with being used to develop that Farmland out in the exurban areas, like like the districts that I represent in and I think that's an example of where there was a well-designed a good conceptual framework, but it was just misused and end and there's just a lot of pressure on his local officials to cite the new facility. Whatever it is, I think, you know going back 25 years to when I sat on a city council and we should our first Industrial Development bonds. And I got into that I would I was shocked to find that the federal government would allow us to do that and provide that hidden subsidy with with the the lower tax rates. That should have been reserved for municipal projects. But say what can I do I've got I've got to compete in the same Arena as everybody else. Therefore we're going to issue this Industrial Development bonds, even though and an inn in the big picture from the national or state perspective and what we did in that one example was we attracted a industrial facility from the core city of Saint Paul out to the suburbs in Coon Rapids, and how was the state or the federal government better off and we did that. The local community was better on well arguably. It was better off. I think I think clearly it's been a it was a good economic same stimulus so that the suburban community but I would argue that the marketplace would have taken care of that and Duke. Where can I go ahead Center pottinger? The problem is that if you prevent war between the states, which is what the Minneapolis Federal Reserve Bank described it as wereworld patina minutes in disability. They're always going to be trade-offs that instance Coon Rapids one some other time Coon Rapids is going to lose and the net effect of all of that is that we are providing non-economic factors in how your communities develop that is not a productive part about, certainly from the state's perspective. Is that why we're talking this hour about Economic Development. That's her campaign issue that were focusing on this week leading up to the September primary. All the candidates for Governor have been asked about their views on the economic development. What is the proper role in terms of helping businesses in the state job creation the rest of it and today we thought we would take a broader. Look at this issue. So That though we can all hopefully understand what's being talked about a little better joining us a John Hunter who state center for Mankato choco chair of the Senate's corporate subsidy Reform Commission former state. Senator, June. Miriam is here course, he was the longtime chair of the state senate finance committee. If you'd like to join our conversation, give us a call to 276 thousand is our Twin City area number to 276 thousand outside the Twin Cities 1 800 to +422-828-227-6000 or one 800-242-2828 Richard your question place in the northeast Minneapolis. Not too far from Lawson software least where they are now my comment is first of all that I think it's a good idea for government to be involved in some cases in skin sponsoring or investing in corporate Health in our community. Money is taxpayers and if we're going to be investing at and we should get to know what we're getting out of it. And I don't think we get enough of that. There's no seems to me there's barely any public meetings held to discuss this is no contact with the public of when these kind of things are going to go through when I think that's really needed if we're going to track our own investments just like we went our own personal Investments, then you know, what you said about these I mean nine times out of 10 as I understand it that this this is the the magic words jobs at this going to create jobs going to bring jobs and development took Community, which we need those in our community specialist / outlying communities, but my question is what kind of jobs at least going to be jobs that that just keep people on the dependency rolls, and they go to work all day and they're still poor. Really going to be low paying jobs are going to be good paying jobs and I just don't think our government should be investing in work programs that put people are substandard wages. I just don't think we should be doing that and finally, let me mention Lawson software because I don't know what the deal is but they've got a really nice building here in Northeast Minneapolis here on Highway 36 and now they're moving over to St. Paul and st-charles going to benefit Northeast is going to lose and there's public money involved in that out. That's corporate subsidy. It seems to me isn't it? And I really appreciate you doing this program. I think it's a really important issue take your comments. All right. Well, thanks for calling in jobs should government only provide some kind of a subsidy tax breaks call them what you will to companies that pay big wages. When we don't quite extensively with in fact all of the issues, they call a just mentioned with the commission the commission's approach and it should be noted. The commission was really the brainchild and pushed very much by a group of progressive organizations called Napa and then and the Chamber of Commerce too widely Divergent points of view. I both believe we need to look at this and one of the issues we talked about was there are just two subsidies that are appropriate Justified to Sender. Miriam said especially based on the original concept, but the rationale of providing jobs unless there's also some criteria that they be high quality jobs. We thought it was an important distinction high quality being well paying is that what you defiled high quality English a good job from a job that doesn't have much of a future much of an income the ultimate recommendation of the of the commission dealing with what's become known as The Living wage. Was that a majority of the Commissioners believe that we ought to have some enforceable living wage requirements in subsidies for large businesses, but even those who didn't think it was appropriate for government to have a Richard guideline or even any kind of guidelines because I was far from Richard agreed that in the report that all of the Commissioners believe it makes a little sense in the present and kind of provide incentives for jobs paying less than 110% of the poverty level. That isn't should be one of the criteria we look at very clearly and determining whether it's a good public purpose to provide public tax dollars to assist an individual business. Senator Miriam, what about the issue that? Alfred zampa welfare people welfare recipients are supposed to go to work now and they may very well not be qualified for these higher-paying jobs. Shouldn't there be some effort made to to stimulate the growth? It Thug? If you weld a bottom of the economic ladder or I think that there should be an effort made to stimulate the education training and opportunity at the bottom of the economic ladder, but I would submit would get much more bang for our buck. If we did it directly and end dealt with training people and making them more employable better educated then by providing economic stimulus to Industrial interests and in hoping that they can't take care of the problem. I just think that there's a better way to get to the focus on that problem particularly right now at a time when we're looking at a labor shortage last month's up yet. Another record for Minnesota has low unemployment rate and yet I think and and maybe John can correct me on this, but I talked to some people involved in the legislative process and we're continue to another form of Economic Development subsidy were continuing to run programs that I existed at the time. We're looking at high unemployment and it's kind of the system were once the government institution starts a program. It's hard to get them out of it. What are the other issue that Richard raises here is the the business of follow-up of accountability that once one of these programs is proposed. He argues first of all of seldom to normal. Average citizens get involved in discussions about the wisdom of the program after the program is approved. The subsidy is granted no follow-up. No effort made to make sure that whatever state of public goal was was laid out that is actually met is that a fair criticism and represent of Clark offered bill that became law requiring local communities to give the state some information in terms of a follow-up. The commission has recommended a much stronger a requirement that when a business gets a public subsidy and when he Community Grant said that there be some reporting so that we have the opportunity to speak accountability. We also encouraged what is happening in the economic development Community some sort of clawback provision. That is if the company makes a promise about creating jobs or the quality of jobs, and they don't fulfill that promise. They should have to give at least some of the subsidy back to pain. And how close they came to the promised so we have we have encouraged much more information which is available to the public and sanctions for businesses to don't eat the promises. We also at the front end strongly emphasized the need for a local body or a stake body to vote on certain subsidies and they have public hearings on them. So the public can get involved and let their officials know whether or not they approve or disapprove subsidies that are about to be granted you think businesses would be less willing to accept subsidies of any sort from the government if they were confident and we're certain that somebody was going to be looking over their shoulder a year from now to make sure that they have met all their stated goals. I would hope that if a business is asking us to give them some of our tax dollars are they wouldn't have any qualms about letting us know how they're going to use it and how they were successful in using it. We ask that of virtually anybody else who seeks some sort of government benefit. We're talking to shower about to Economic Development specifically what role government should play in trying to help businesses. It is one of the issues that we're focusing on as we lead up to the primer primary election year in Minnesota. We've asked all the gubernatorial candidates to talk about this and you'll have those reports coming up on Friday back to back so you can compare where they cannot stand this hour. We're taking little broader. Look at the issue exactly try to find out exactly what we're talking about. What is corporate welfare, for example of term that you hear so much about and what is economically Belden. What form is that take? How much are we spending joining us former state? Senator, Jeanne Miriam longtime chair of the state senate finance committee. John hottingers John does. He's a state senator for Mankato and co-chair of the Senate's corporate subsidy Reform Commission. If you'd like to join our conversation to 276 thousand is the Twin City area number to call 227-6020 cities 1 800 to +422-828-227-6000 or 1 800. 242 to 828 think it's fair to say that often times when these kinds of discussions are held the underlying assumption is that there is something bad about subsidies and helping businesses. Yeah, I can't help but think for example are there was a proposal several years ago to get that big Saturn plant Saturn Automobile Plant here in Minnesota. And it seems like in retrospect had that we've been successful that would have been a real Boon to the economy would have been very helpful. Well, I expect Gary it would have been it was it was a very large facility and end perceived by the Minnesota Legislature who put together a very attractive package trying to induce that the location and in what ended up to be kind of a bidding war among the state of Tennessee was was rated below a number of states offers including ours in terms of the the offers were made their other market conditions that that the wedding favor that however, but again, that's one that that I would suggest the federal government as art roll-neck with the Federal Reserve argues in his Treatise on the war among the states that the John made reference to earlier. It's not it's not economically as a nation for us to be having this type of contest among the various jurisdictions weather pitting State against State Community against Community when the bottom line is it's going to locate some place because of the market conditions are dictating that but short of federal legislation aren't it isn't the state obligated to get into those bidding wars to try to make sure that at least we get our fair share of the pie. Well, as long as the state can do it and in and have some sort of discipline the type of things that Senator Hunter described earlier when you when you weigh those criteria, the problem is it that it's too easy to confuse the the means are the ends economic development is a means of a greater societal good and too often governments get involved as if it were the end. Very first of all, our rolnick is one of the members of the commission the commission was some Senators some house members a lot of public members and roll neck was one of them and spoke eloquently about the war between the states and we made a recommendation recognizing we can't do it alone. So we should explain two listeners on this roll neck is the basically the senior vice president at over at the 9th Federal Reserve Bank in Minneapolis for people who aren't familiar with Hulu yet. So that's good in an mr. Rolnick is that is a national figure on this issue, but we acknowledged that some of this we can't do it alone and and gave support to a congressman make a concept that we have some some federal legislation that deals with it, but we have to put it in perspective right now as being mentioned earlier real lowest unemployment. The state has ever seen. We are creating jobs through the use of other sorts of things like the education the training the creation of opportunity Jean talked about so whether or not it's necessary for us to get in Big Wedding Wars. Is this is this is not so clear where we help by providing and promoting are small and middle businesses that are in the state already. That's we have our first obligation to secondly I think the more critic sample of all the complications of public subsidy Southwest Airlines, very controversial proposal a couple years ago. We gave an additional assistance to Northwest Airlines. How we account and what we received from that becomes increasingly difficult to judge as we get into their current labor conflicts and their current other situations are very very important industry to the state. What is our role in relation to that industry and more importantly. What can we expect in return looking back at the Northwest Airlines if I remember correctly Sara Miriam you were Not a supporter of the bailout. That's that's an understatement. But here they are there profitable. They're doing well with God what 18,000 jobs out there at the Hub. There is there's a facility to facility is now in northern Minnesota and Duluth on the Range would the state not have not to revisit this issue in depth, but it seems to me that you could make the case that the state would have been remiss had it not stepped in to try to attempt to make sure that the airline survive. Well, in fact is I've heard the governor governor Carlson say as recently as a few months ago, how come we never hear from those critics of Northwest Airlines and that in that the arrangement now and I am no less. I'm not I'm not prepared to admit. I was wrong in 1991 by saying the state that did not belong in that arrangement. Without revisiting that whole issue. I think that one could argue very well that that the Northwest Airlines would have survived an Indy Brett's been stronger would still have a hub the question is I think in in my heart of hearts, he would have been the real winners. I think what we did was not save Northwest Airlines. I think what we did was made by Mr. Checking. Mr. Wilson, very wealthy Center hottinger. How do you sort that out at the legislature? How do you decide to who you're actually benefiting discussion and get some real hard economic impact it in fact, one of the frustrations with the Twins stadium debate was was getting the economic information to make some decisions about it. But we also and I keep going back to the commission cuz I think the commission did a very good job involve involving a public and the and the legislature is a set of criteria that are visible in the proposed. Against the criteria. Is there a public purpose and you're trying to find that which is much definition as you can but just as importantly with his much economic data to see the true impact to see if we are getting something in exchange for a subsidy treasure your question place and we've been able our city has been able to attract industry of with tax increment financing but unfortunately big discount retail businesses within 10-15 miles of us have devastated of small businesses in our town now, we're making a comeback slow, but sure but what can we do as small businesses in small towns to promote hair growth create job when tax dollars are going to bigger businesses that are working against us. Our town looks like a ghost town, but we still have industry come in. The things that make a small town of friendly place to live. It's hard to support a small business in a town like ours. We're lucky to have a grocery store. What can we do where where can the government play a part or even just guidance on how to help us bounce back from the devastation of Losing losing out to the big retail stores. Well, it does seem unfair to alter the economic conditions by giving assistance to the the organizations with the economic wherewithal they create and I am thinking a large discount stores headed to create their own economic situation that impact small businesses looking back at what's best for developing a business in Minnesota. Its policies that affect all businesses that help them grow and be Innovative and creative and get jobs. It's not very much giving a picking a winner and giving an advantage the one business that results in the disadvantage to their competitor. But if a community like Maple Lake at the residence in Maple Lake really do want to drive Auto outside of town and shop at the Walmart or whatever what's wrong with it, but we shouldn't be giving Walmart to substitute hurts too small business in town unless there's some other public purpose that's associated with it. The economic system would work fine Walmart besides they can make a profit night shouldn't take long at Kmart if some company decides that they can make a profit by building a store their crate to get them an incentive that gives them an economic advantage over another business. That's the question should the state level the playing field. The other direction that is to say let the Walmarts in the Kmarts fend for themselves because they are they have smoked chicken on McLeod and if you're going to put a Walmart in by golly, you're going to prop up the existing small businesses. And make a community-based judgment was Community involvement making sure you made some criteria. I think that's kind of the mid-level approach so that we end up making these decisions at least measuring it against him cry. Measuring it against them accountability and with a public having a much bigger involvement is what they want in their Community has done that because there's a much lower rate of Taxation on commercial industrial property to the extent of the first hundred thousand dollars of value within each County. So that is a kind of a hidden subsidy in favor of the smaller units as opposed to the larger concentrated units. Are you get into it at song is it almost seems again like the time about this the kind of a hidden subsidy in that instance for the smaller business that the legislature the legislative process is, it has some I conceived notion about how Society ought to be constructed and by golly we like those little businesses. So I gave them an extra tax break it don't you get in The Fairly muddy water here pretty quickly water policy decision. We're not making individual choices and individual communities giving one business an advantage of small businesses provide some economic or social value in Minnesota is a state but I think it's difficult when you target individual businesses. I think it would be healthy if if if they were greater public awareness and I think the 1st call or talking about when we be better off knowing exactly what was involved in the loss and move. I think if there were greater understanding and disclosure maybe would require every politician who requires a ribbon-cutting to explain to the taxpayers present how much of their money was spent to bring the facility there. I think what if they were greater awareness to be greater accountability in the end. We would have better use of economic stimulus or otherwise known as corporate welfare Square Place tree real short questions one. I hear a the discussion going back and forth as I think about it regarding the definitions of what is a public Good vs. A private good and I'd like them to address that if they would a to buy find it very difficult as she has communities of wrestling my own included here or the economic cost competing with us next community and that some of the things that we might lose the sense of community are control over our own growth and things of this nature are very difficult to factor in there a trade-off there. But economically I'm wondering whether not they're there are some values that can be placed upon the losses of those kinds of things. And lastly, I'm wondering is there a role for zoning that can be used here by local communities? And what are the limits of being able to do that? Does that excite the process what it is it a specific Town actually wants to get into right where it is. It can place names and how it competes with the next level of you know, some of these communities. Let's face it like states are becoming so closely attached and terms where those he cannot make it on his own. Sorry that you know, they become almost want to hear you but they still are two jurisdictions and fighting over of course the taxes and everything else. Public vs. Private good, how do you how do you weigh that? Well, the the commission's recommendations. I keep going back to the five criteria outline some criteria Plus in each of those instances a question that should be asked to determine the difference between public and private good and what the public benefit is Princeton Center creating high-quality job growth there about 6 questions. We think the community should ask like how many new jobs will be created. What will they pay? How do they compare to community wage levels how many jobs will be created without fraternities for for career advancement the economic trade-off one of the good things we heard in the hearings, especially in the metro area there a lot of communities that interface with each other that are cooperating in Economic Development issues. There is some recognition by Economic Development directors that all of the community's benefit if if the region grows so that that was one of the positive things we heard about the reducing some of the war between the cities part of Finally on the zoning question. I'm a I'm an advocate of community land-based planning where we we make some community-based decisions about how we roll our communities and I think that does help in foster a better economic outcome business climate now, there's a term we haven't heard much of lately. We used to hear it all the time specially when election time came around. What is the business climate? And is it any good in Minnesota? It seems like it's great given the fact that business is doing well jobs are virtually no unemployment. What is the business climate? I think the business climate right now is pretty good is is course. It's it's got a strong foundation and heavily buttressed by a strong National economy. I'm so we're hearing less. This is a direct result of that. We're hearing less articulation about the poor business claimant, but it's also if you if you look at some of the specifics for sale Minnesota, it has been years and has been for some time doing. Well not only compared to itself in it and the past but the surrounding states and and a most other parts of the country. So the national economy is good. Minnesota economy has been even better. It's a strong and diversified economy. So you're hearing less complain about the business climate and if it's quite frankly business climate often times was used as a buzz word. Meaning taxes are too high and workers comp costs are too high. And once in awhile unemployment cost thrown in an employment class really diminished as a concerned cuz it's a little unemployment. We seen significant reduction in workers comp in the last couple of years. So that issue has been diminished and the tax issue is is still around but but nothing like the concern that you heard a few years ago because of the actual the corporate taxes in and end the bite that's taken has diminished me what it was a few decades ago. They're not injure business climate to a pretty good now. I've always thought that the best way to judge that debate has to look at how your States doing and we have the lowest unemployment we've ever had if you draw a v from Maine to Texas and back up to the Oregon Washington area, we have more job creation than any of those States in terms of percentage of the jobs. We've grown more rapidly than any of our neighbors and I'm Minnesota's personal income growth, which is probably Most of us care about nose is growing faster than any state in the country that take home pay so we must have a good business climate the problem now in our business is we don't have enough people Minnesota's always built its economy and Education and Training and we have to be sure we continue to do that. Especially if the jobs become more technical oriented jobs become more service-oriented. So I think we have a very good record. If you look at the time is it supposed to the rhetoric and our business climate is is pretty hard to argue with bad when we doing so well in terms of Economic Development and not to talk about specific candidates here. But if I Canada for governor for Jeff Lourdes AGI, I think my major economic development program will be to take a big chunk of money and actually go out and recruit workers because we don't have any here in the state of Minnesota. Would that be a legitimate use of public money? Well, I think you would have to judge that buy any use for public money. And that is what are we getting exchange for that and is it worth it recruiting workers is it has an interesting concept maybe what we need to do is make sure that we increase the quality in the ability of the workers. We already have because those jobs that are going unfulfilled are often technical jobs that require higher levels of Education and Training so we can upgrade our Workforce and that might be a better investment but I would take a long time and then right now there's a apparently quite a shortage and if we want business to continue to grow why we need the workers now. I think we see business is doing that business is increasing pay in my area which is which is Job Corps in the census worker for the since we're we're not getting some development because we don't have workers at least competition between the businesses to provide incentives to workers whether it's health insurance whether it's additional training and that's the way the system should work. Question place a Monday city of Crystal Economic Development commission as a volunteer and I just had a couple comments about the tax increment financing in particular. Well, I don't know if you know where we're at. We're right next to Robbinsdale and Minneapolis where an older suburb and we're pretty small City and we're fully developed. So there's not a whole bunch of opportunity to make there is no opportunity now to just throw up a new building and have additional taxes revenue from new business is soap an example that I have that I thought was really tax increment financing well utilized was the Cub food shopping center right off of Highway 100. There was a bunch of older dilapidated buildings there and the city consult bought that property up in Consolidated it using tax increment financing and then this new Cub Food Put in there, which is really a benefit not only to Crystal but to Robbinsdale and parts of Golden Valley Minneapolis, cuz it's pretty cheap place to shop for food. What I'm wondering about though is the problem that I've heard in the past with tax increment financing. The beef Taiwan people had was that it was taking money away from other government programs. And in reality what I've found out in some of the research I've done is it never really took away the money they were already getting it only took away temporarily the future revenues from that improve property. So to me it made sense. No one was really losing out. They were still getting the same money. They were getting before until the the bond. I believe was paid off and what I don't understand is why they discontinued it because it was such a benefit to at least in our city. I saw such a real benefit to that. We have a couple other projects and it also is Used just real quick for helping redevelop some of these older homes here in town. And without that tool. Our tax base will be going down moderately priced City. So it's important to keep our property up. It's available and continues to be available and the criteria that the gentleman talk about May well fit within the criteria of the visits at the commission recommends shrimps and stabilizing the community help me in a blighted area or economically depressed are helping to restore increasing the tax base and creating jobs are Criterion. If they locally made a decision that that was an appropriate use of their tax dollars that decision can still be made to actually come and financing is not going away Cub Foods though in this case be required to pay everybody at least what is out of the current figure at $9 an hour. Why would say yes, but the court of the recommendation of the commission is that it's not a very wise decision to give subsidies that don't they $8 an hour. But let me make a couple of observations about about that project in particular that I don't know a great deal about except that I spent the first about 16 years of of my the first 20 years of my life in the crystal some of which in high school and college at work in the grocery business. I would submit that it makes very little sense fourth of all that was I think with the major portion of that project was the old Robbinsdale High School football field in it. And I don't think that we were looking at the decrepit decayed urban renewal project there and let me some it makes very little sense to do it for a Cub Food Store. Why should a Louver Thriftway Market? Have to use his taxes to pay for to buy down the cost of a prime real estate land on 36th in the Beltline in Crystal to bring in a competitor grocery stores are going to locate where buyers are that's going to happen. They're going to want visible locations the site those facilities. I would suggest that it did. It just doesn't make any sense that that use government money to subsidize the location of of of retail outlets like a Cub Foods unless there are very extenuating circumstances. I don't think are present here. If you're talking about putting one in a maybe Donna West Broadway where you want to go further into in the North Minneapolis or where there's a need for urban renewal maybe so but but grocery stores are going to locate where where people are and I don't know why government should get in the business of subsidizing one against another 2276 thousand if you'd like to join our conversation at a lot of time, Left but we're talking this hour about Economic Development the role of government in helping businesses. This is our campaign issue this week. We've asked all the gubernatorial candidates to talk about their plans for economic development and you'll hear those reports back to back on Friday during the day today without take a broader. Look at this issue 2 and a Define the terms a little bit but we're talking about state Senator John hot in here as well as co-chair of the Senate's corporate subsidy Reform Commission former state. Senator, Jeanne Miriam longtime chair of the state senate finance committee has joined us again. If you have a question to 276 thousand outside the Twin Cities one 800-242-2828 Richard your question place up here. We have a case where I have left is trying to take up that it's belongs to a Township to the north and is trying to take up the whole field Township. It's part of the States into that to them to help their business and yet we don't want you taking over here. We voted we had to fight to vote that we didn't want to be an actually voted against annexation 834 to 134 and still the state has the arbitrary power that there's a condition that decides whether they can and XR Township or not. That's not Democratic it all. Alright, thank you Richard know at least two things connected at all of the the subsidies for business and and the role of State local governments. Are they somehow entered connect girl this year? There's a different issue altogether. I think that they are connected because often times the motivation for annexation is is to either to Attacks base that's in the neighboring Township for municipality or to acquire vacant land when you've got a community that's pretty well developed in order to attract new businesses to that area. And I know what Jonathan haven't there been some hot annexation issues surrounding that down your way of late in and we made some changes last session in their friends since the commission that the caller talked about the Minnesota Municipal board in the legislature decided to eliminate some of those thousand in order to have more community-based mediation and arbitration of approach to those issues. So I think we're making progress on the direction to call it would like but yeah land-use question has become interactive with tax questions become interacted with subsidy question because we have tax policies that influence both growth and where businesses develop and we certainly have land use policy sit in That are metropolitan area needs different than rural areas. The needs a big Summit the Royal Summit in St. Cloud tomorrow to talk about development in rural, Minnesota are those two distinct categories or do they do the issues overlap much more developed statutory base on some of those questions in Greater Minnesota. We don't have as much legislation that impacts those decisions. So it creates sometimes different sorts of conflicts with the basic issues are pretty much the same there's some differences but there but there's significant overlapping in the issues are facing the relative scale can be different concerns about mass transit things that exist in metro area do exist in some of the regional centers, but but certainly not too much less extent David your question. Just a comment that I'm part of a small organization that competes very effectively with some Hospital named competitors here in the Twin Cities and I'm very skeptical of government subsidies for anything from the stadium to and I'm sure that this I wanted our major competitors could easily qualify because of the number of jobs that they provide but the other side of that is along with subsidies come a lot of very talk that makes me extremely nervous things like declaring what what wage jobs at businesses to provide and it has been my experience that all that does is is steer businesses away from zones that require a certain wages. You can't require wages wages are a result of skill sets and their value in the marketplace and you want to raise the skill levels of people. That's one thing that the regulations Accept any type of government intervention other than perhaps zoning restrictions, which which affect all businesses equally came down to is that if we're going to be giving public tax dollars way, we should have some expectation for turn and if a business isn't willing to do that we shouldn't be giving him a subsidy that should lead to more competitive decisions without having the government in government taxpayers subsidizing individual businesses. I think you're the most important ones because if they're followed and we reduce the level of subsidy and then we have a more competitive Marketplace. If if I might I just want to change the subject to a little broader scope and and and hopefully we can learn not just from our experiences here in Minnesota or in the nation, but what's happening elsewhere in the world in a great time with just happened to have been an article in yesterday's Wall Street Journal front page article that talked about Asia's deepening financial crisis. And one of the things that caused the problem in the first place government involvement in the economy. I hope that we spend some time understanding why it is that this capitalist system of ours is work so well and make sure that our government doesn't make it up before we run. I suppose I would be remiss if I didn't use the S word here stadiums. Is there something and sports? Is there something inherently different about government involvement in sports issues than other business issues? Other than politics but there's two things that are different one. Is that for a long time? It's been assumed that for the last few decades. Anyway, is that is that there's nothing wrong with publicly built and publicly owned stadia. Let the other Dynamic that we've seen is is is is the increasing wealth of the of the athletes that participate and increasing wealth and visibility of the owners and the resentment of the public as they see escalating ticket prices limiting access and recognizing that their tax dollars are going to pay for that. So I think there's growing resentment over that but only because of that exposure and of course that those those exponentially higher salaries and end in the games. Does it differ from other types of of corporate the subsidies? 4/32 well you brought up the elephant in the living room is heated jacket. I'd try to avoid it as much as possible in the kind of public input and I think the experience last year with the twins showed public input can affect those decisions, but we have a history of being a sports loving country that somehow permits that serve subsidy more frequently than we do other subsidies and it said, I think it's coming closer together is today a State Senator John Hunter from Mankato. He is the co-chair of the Senate's corporate subsidy Reform Commission former state. Senator, Jeanne Miriam joined us as well. This our former chair of the state senate finance committee part of our special coverage this week of Economic Development the issue of economic development that we've been asking all the gubernatorial candidates and their ideas. On the subject there, you'll be able to call you been hearing the reports through the week. We'll have the mall on on Friday. So you can hear them back to back and help you choose. So who you might want to vote for in September programming on Minnesota Public Radio is supported by Glenwood Inglewood water clean fresh pure and plenty of it home and office delivery available at 374 to 253. That's it for midday today Gary I can hear thanks for tuning in. On the next all things considered as a Northwest right deadline approaches are travel to and from the Twin Cities could get dicey, but will people turn to buses and trains. It's all things considered weekdays at 3 on Minnesota Public Radio k n o w FM 91.1 You're listening to Minnesota Public Radio. We have a sunny Sky Tapas 77° at Contra W FM 91.1 Minneapolis. And st. Paul should be sunny all afternoon high temperature reaching the low 80s partly cloudy tonight with a low around 60 and then partly cloudy tomorrow with a high from 80 to 85 degrees. It's 1


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