Though the East Grand Forks and Grand Forks communities may seem to operate as one, Paul Gorte is reminded that they’re separated by more than a river.
The two state governments operate differently and it makes staying competitive sometimes difficult. Gorte, economic development director for the East Grand Forks Economic Development Authority, said he’s pleased the Minnesota Legislature maintained tax credits to its border cities.
Two representatives from the Minnesota Chamber of Commerce traveled to Grand Forks to chat with the western Minnesota business community about 2019 legislative outcomes.
Jennifer Byers, vice president for grassroots and chamber relations, said the Minnesota Chamber holds nearly 20 such meetings every year.
“The purpose of these meetings is to get input on emerging issues and what we see coming ahead,” Byers said. “The East Grand Forks-Grand Forks Chamber is a really strong partner of ours.”
Gorte said efforts, such as the Border-Cities Enterprise Zone Program, provide property tax credits, sales tax credit on construction equipment and materials and other credits to businesses in cities on the border of Minnesota and North Dakota.
“These are the kind of things that help businesses,” Gorte said. “They help us stay competitive with neighboring businesses in North Dakota.”
In the beginning of the legislative session, the Democratic-controlled House of Representatives and Minnesota Gov. Tim Walz proposed an excess of $12 billion in tax and fee increases over four years, Byers said.
“We beat back most of that. Some businesses will see a slight increase in taxes as a result of federal conformity, but the major tax increases that were proposed will not move forward,” she said.
Minnesota’s corporate tax rate is 9.8%, said Beth Kadoun, vice president of tax and fiscal policy for the Minnesota Chamber. This is the fourth highest rate in the nation.
The individual income tax rate is 9.85%, which is the fifth highest in the nation.
“We have been hearing a lot of concern about tax rates when we’re traveling,” Kadoun said.
A concern that many Minnesota cities along the North Dakota border share are the disparities in the business climate and the fuel tax, said Barry Wilfahrt, president and CEO of the Grand Forks-East Grand Forks Chamber.
“It’s about the business climate and having Minnesota maintain a competitive business climate,” Wilfahrt said. “The closer the Minnesota and North Dakota climates are to each other, the better off it is for the border communities.”
One of the bills proposed this legislative session was a 24-week paid leave mandate, which would allow employees to use 12 weeks of paid family leave and 12 weeks of paid medical leave in the same year. The proposed program would impose a 0.6% tax on income, with employees and employers sharing the burden.
“So a very massive mandate on employers,” Byers said. “Employers are pretty floored and amazed to hear that the state government wants to impose on them a 24-week mandate.”
While the measure passed in the House of Representatives, it did not go any further this year, she said.
“And, of course, we want employers to give leave programs, and most do, but the mandate makes it a one-size-fits-all policy,” Byers said. “So what works for a five-person office versus American Crystal Sugar is different. We really believe that this isn’t a one-size-fits-all situation.”
Many members of the business community in attendance expressed that such legislation would hurt their business.
“We’d all have to raise pay to keep competitive, because the program would take a chunk out of employee pay and they’d be taking home less,” Wilfahrt said of 24-week paid leave.
Later in the month, the Minnesota Chamber will go to Mankato, Alexandria and Lakeville.