Minnesota Secretary Of State - Pioneer Press Editorial: Business is good, but there’s risk, legislators
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Pioneer Press Editorial: Business is good, but there’s risk, legislators

April 14, 2018


Pioneer Press: Editorial: Business is good, but there’s risk, legislators

 

There’s encouraging word about the strength of business conditions in the Twin Cities — and the expectation that they’ll remain strong — in a report last week on state economic indicators.

But the data — for the fourth quarter of 2017 — suggest two key warnings for state lawmakers, who returned to St. Paul this week and have just six weeks to finish their work. There’s risk:

  • In delay in rewriting Minnesota’s tax code to conform to new federal tax law.
  • In losing focus on the importance of workforce issues and the pipeline of future workers that will allow businesses to grow here.

The useful perspective comes from King Banaian, dean of the School of Public Affairs at St. Cloud State University. Its research institute issued the report last week with the office of Minnesota Secretary of State Steve Simon.

“The uncertainty we face going into the end of the legislative session with regard to tax conformity is something that’s going to weigh on people’s decision to launch new businesses and try to capitalize on their new ideas,” said Banaian, a former member of the Minnesota House, where he represented the St. Cloud area as a Republican.

“I’m mildly surprised that we’ve heard as little as we have on that issue from the Legislature,” he told us. With a delay, “you’re putting a drag on business creation just because you’re increasing uncertainty.”

Talk of tackling tax conformity in a special session also is “a bad way to go,” Banaian suggests. The sooner Minnesota entrepreneurs get information about what their tax liabilities for 2018 will be, “the more quickly they’ll make decisions about whether or not to create new businesses and, with that, potentially hire additional workers.”

As for workforce shortages, Banaian — who notes they appear more pronounced in Greater Minnesota that in the metro area — observes that the ability to add workers is critical to keeping businesses growing. You can’t create additional output — or sell more — if you don’t have “access to additional workers,” he told us.

In the Twin Cities, according to the report, employment increased by 3.8 percent during 2017. The regional unemployment rate was 2.7 percent in December, considerably lower than the previous year, and indicating a very tight labor market, according to Banaian.

Among its data, the report shines a light on business filings: In the Twin Cities, there were 10,466 new business filings with the secretary of state in the seven-county metro area in the fourth quarter, representing a 12.4 percent increase from the previous year. The office reviews and approves business filings and commissions the reports to provide a perspective on business conditions and deliver a tool for entrepreneurs to better understand their region, according to a statement.

Among the filings, those for business incorporation are “usually good predictors of where we would see new employment opportunities,” Banaian said, noting that the numbers also include other kinds of filings, including name changes and creation of sole-proprietorship businesses that would generally be less likely to involve job creation.

The report — at sos.state.mn.us/business-liens/economic-and-business-condition-reports — notes that well-traveled roadways often are a predictor of new-business formation. Much activity occurs along the I-94 corridor, Banaian explains, noting growth in the east metro, for example, in Woodbury and extending beyond into Cottage Grove and Inver Grove Heights.

Statewide, nearly 60 percent of new business filers completed a voluntary Minnesota Business Snapshot survey. Results for the Twin Cities indicate that 37 percent of new filers are women; more than 15 percent come from communities of color; 9.4 percent are from the immigrant community; about 5.1 percent are veterans; and more than 2 percent are from the disability community.

It seems likely that enterprising people like them — those creating new businesses and expanding current ones — are more likely to hold off in the face of uncertainly, including a cloudy tax-conformity climate.

Overall, the report highlights indicators that signal progress and the potential for more. Don’t jeopardize it, lawmakers.

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