The Minnesota Chamber of Commerce and dozens of local chambers, including the Albert Lea-Freeborn County Chamber of Commerce, are lobbying for tax competitiveness for businesses this legislative session. 

Jim Pumarlo, communications director for the state chamber, said businesses face big challenges with Gov. Tim Walz’s budget, which calls for over $8 billion in total tax increases over the next four years.

The governor’s revised budget, released Friday, adds another $65 million tax increase on business taxpayers, on top of the $981 million increase for fiscal years 2020 and 2021 in the general fund.

The budget also calls for a 20-cent per gallon increase in the gas tax — which is a 70 percent increase in the current tax and would make Minnesota fourth in the nation — along with increases to motor vehicle sales tax and registration fees, and a metro sales tax increase.

In addition, the budget would reinstate the automatic property tax increases on business properties, which the chamber lobbied in previous years to take off and would like to see phased out completely.

Pumarlo said Minnesota is fourth highest in the nation for its corporate tax rate and fifth highest for its individual income taxes. The chamber states the Legislature should reduce corporate and all four income tax rates, with the goal of getting Minnesota out of the top five highest tax rate states.

“Government plays a role in providing quality services, but you have to look at balance and the structure,” he said, noting Walz’s budget puts roadblocks on business growth instead of giving businesses the tools to help them grow.

Sue Loch, director of The Children’s Center, who is also a member of the Albert Lea-Freeborn County’s governmental affairs committee, said tax competitiveness is especially important for businesses along the southern part of the state because some businesses are choosing to do business in Iowa, which is a more tax-friendly state.

Regarding Walz’s proposed gas tax, Pumarlo said businesses presently pay 50 percent of the gas tax collected, while motorists pay the other 50 percent.

With the increase of 20 cents per gallon, Minnesota’s gas tax would increase to 48.6 cents per gallon, making the state’s tax an average of 60 percent higher than the neighboring states.

“We clearly believe in investing in our roads, but we need to broaden the base,” Pumarlo said, noting the state needs to be strategic with its investments.

Rhonda Jordal, executive director of the Albert Lea-Freeborn County Chamber of Commerce, said increases to businesses in taxes would have a trickle-down effect on customers.

Pumarlo echoed that sentiment, noting the costs would affect employees, shareholders and consumers.

He said according to the Minnesota Department of Transportation, the gas tax is peaking and will be going down in coming years because of factors including the trend that fewer people are driving. He said the state chamber supports 100 percent of the sales tax on rental vehicles and auto parts going to transportation needs instead of the 100 percent on rental vehicles and 50 percent on auto parts presently in place. That increase alone, he said, would generate about $330 million a year. 

Jordal said one of the biggest issues being proposed at the Capitol is legislation that would create an expansive state-administered paid leave insurance program. Financed through a new tax on employers, employees and independent contractors, the program will fund partial wage replacement benefits for 12 weeks of paid parental and family leave and 12 weeks of paid medical leave.

“I don’t know how our businesses could survive,” Jordal said. “While we definitely support our community and the individuals, we have to make sure our businesses are stable and can continue to run.”

She said the governmental affairs committee at the chamber has sent a letter stating its opposition to the proposal.

The state chamber states the mandate would hurt employers and employees with a worker shortage, essentially allowing an employee to miss 24 weeks of work or 44 percent of workdays in a year.

The mandate is in addition to a separate proposal mandating employers provide paid sick leave for routine or minor illnesses.

According to the Minnesota Chamber of Commerce, almost half the state’s workforce works for small businesses and businesses should have the right to develop wage and benefit packages that fit the needs of their company and employees. The organization opposes “one-size fits all” mandates that are unfeasible for the variety of workplaces across the state.

Pumarlo, Jordal and Loch briefly also touched on the need for more child care in the area, along with the need for more workforce housing.