Manufacturing Voice E-newsletter

January 2007

The Minnesota Chamber of Commerce is the leading association for manufacturers in Minnesota. The health of Minnesota manufacturers is vital to our state economy and the Minnesota Chamber. Nearly one-quarter of our members are in the manufacturing sector. We are your voice and your advocate.

The Minnesota Chamber works on a broad range of issues that affects all businesses, but many of our issues are of particular importance to the manufacturing sector. This special newsletter is focused on those issues delivering value directly to Minnesota manufacturers.

GOVERNOR’S RECOMMENDATIONS
Several noteworthy items advanced in budget
Governor Tim Pawlenty announced his budget recommendations January 22. Several of his initiatives are positive news for the business community, and especially for manufacturers. Among the highlights:

Sales-only apportionment: The governor recommends accelerating the sales-only apportionment for corporate income taxes by three years. The new formula would take effect in 2011 rather than the existing 2014.

Capital equipment refund: The governor begins the process of converting the capital equipment sales-tax refund program to an up-front exemption for small businesses – those companies with annual gross revenues of less than $1 million and 20 or fewer employees – and for the forest products industry.

Clean Water Legacy: The governor’s budget funds the Clean Water Legacy with $20 million per year. The Legislature passed start-up funding in 2006, and the Minnesota Chamber will pursue additional long-term funding. The Minnesota Pollution Control Agency estimates it will take $80 million annually for at least 10 years to clean up “impaired waters” as identified by the federal Clean Water Act. Discharge permits into these waters will be denied for any new or expanding business unless a cleanup plan is in place.

LEGISLATION ON THE MOVE
The Minnesota Chamber’s strategies will be a blend of offense and defense this year, given the new political landscape at the Legislature.

On the offense…

Capital equipment exemption
There is early momentum to change the sales tax refund on capital equipment to an up-front exemption. Four bills have been introduced. This change has long been a priority for the Minnesota Chamber, and we are hopeful that surplus revenue will provide us the opportunity to make progress this year. We don’t need to tell you that the refund program ties up your valuable cash, is cumbersome and, frankly, is bad public policy.

The Minnesota Chamber worked with Senator Dan Larson, DFL-Bloomington, to introduce SF 146. A House companion bill also may be developed, but Representative Ann Lenczewski, DFL-Bloomington, the House Tax Committee chair, already has indicated she will hear the bills in her committee.

The other three bills, all identical in their intent, and their authors, are:
HF 139, Chris DeLaForest, R-Andover/no Senate companion. HF 206, Debra Hilstrom, DFL-Brooklyn Center/SF 117, Ann Rest, DFL-New Hope. HF 186, Sondra Erickson, R-Princeton/SF 159, Betsy Wergin, R-Princeton.

Join us March 14 at Business Day at the Capitol and lobby for the sales-tax exemption in person. Visit our Web site at www.mnchamber.com to sign up.

Sales-only apportionment
The governor’s tax bill – which includes the accelerated phase-in of the sales-only apportionment – was introduced in both the House and Senate: HF 304, Dean Simpson, R-New York Mills/SF 293, Julianne Ortman, R-Chanhassen. The law, first passed in 2005, bases corporate income tax on the percentage of a company’s sales to Minnesota customers and is an incentive for companies to expand in Minnesota while selling products to the nation and world.

On the defense…

Early indications are that efforts will be made to increase the statewide property tax, of which businesses bear the greatest burden. The Minnesota Chamber opposes any increase in general fund taxes. Our message: Squeeze every penny out of the surplus, and not the taxpayers. Policy-makers have plenty of money if they spend smart on statewide priorities.

Track your bills The Minnesota Chamber distributes a Legislative Update every other Thursday during the session to keep members abreast of priority bills at the Legislature. For daily updates on key legislation being lobbied by the Minnesota Chamber of Commerce, visit www.mnchamber.com and click on “legislative bill tracker.”

ENERGY
Energy costs are becoming an increasingly big-ticket item for companies, especially manufacturers. The Minnesota Chamber is advocating for your company on several fronts:

At the Legislature: The Chamber is advancing policies to ensure reliable and competitively priced electricity for customers. On the conservation side, the Chamber supports rewarding companies for greater efficiencies. On the supply side, all options must be explored for increasing base-load generation. Specific to renewable energy, the Chamber supports strengthening the existing Renewable Energy Objective so that, by 2025, 25 percent of the power sold to retail customers is generated by renewable sources. The current objective is 10 percent by 2015. We oppose a statewide mandate that imposes a “one size fits all” solution with little regard to reliability, cost or jobs.

At the Public Utilities Commission: Business customers of Xcel Energy are reaping benefits from the Minnesota Chamber's advocacy at the Minnesota Public Utilities Commission in 2006. Companies of all sizes should see an immediate savings - and will have the ability to anticipate future electricity costs and identify ways to save money by becoming more efficient - thanks to our formal intervention in the Xcel Energy rate case. The rulings also set precedent for future rate cases of other utilities before the commission.

Inside information on energy costs: The Minnesota Chamber is exploring a quarterly Energy Bulletin that will report on recent actions of the Public Utilities Commission and give specific steps that businesses can take to reduce their energy expense and/or minimize increases. The first bulletin was distributed January 24. It is being produced together with Larry L. Schedin, our consultant who assisted with the Xcel Energy rate case. In addition, he will be available to consult on company-specific practices on a fee-for-service basis. If you are interested in a subscription to this quarterly energy bulletin, please contact Mike Franklin at (651) 292-4661, (800) 821-2230 or mfranklin@mnchamber.com.

Shaping the debate: Looking for ways to reduce energy costs? Attend “The Future of Minnesota’s Energy – What’s a realistic solution for business?” The Minnesota Chamber seminar is set for from 7:30 a.m. to 1:30 p.m. February 21 at the Crowne Plaza Hotel St. Paul-Riverfront. Keynote speaker will be Patrick Moore, former leader of Greenpeace and today a nuclear power advocate. To register, contact Carole Keller at (651) 292-4676, (800) 821-2230, ckeller@mnchamber.com, or register on-line at www.mnchamber.com.

Share your energy-saving tips: As part of the February 21 seminar, the Minnesota Chamber will be distributing energy-saving measures implemented by businesses of all sizes and types. If you have a conservation practice you’d like to share, contact Jennifer Byers at jbyers@mnchamber.com.

PROBLEM-SOLVER
The Minnesota Chamber also works individually with its member companies to address issues that affect their competitiveness. If you have a specific state policy problem, are looking for a business partner or are seeking options to expand, contact our staff at Grow Minnesota!. Contact M.E. Head at mhead@mnchamber.com. If we can’t solve your problem, we’ll refer you to someone else who can help.

This web site is developed and owned by the Minnesota Chamber of Commerce. Any use or reprinting is strictly prohibited without prior consent of the Minnesota Chamber of Commerce.

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Manufacturing Voice E-newsletter