Bob CollinsForum Communications is a fairly conservative media outlet whose editorials and endorsements have mirrored the tax policies of the Republican Party.
So it wasn’t insignificant yesterday when the company’s editorial in the Fargo Forum acknowledged when it comes to business, Minnesota — long painted as the anti-business state — has it over North Dakota.
And, it said, there’s more to an economy than taxes.
The uncertainties of agriculture and energy have always determined the strength or weakness of North Dakota’s economy. While there has been unprecedented economic diversification in the past few decades, particularly in Fargo and Bismarck, a collapse in oil country or a steep decline in commodity prices (some of both are happening) can have huge negative effects on the overall economy. Combine those factors with a small population that thus far does not have enough skilled and educated workers to fill thousands of good jobs, and the CNBC findings make sense. Minnesota’s population tops 6 million; North Dakota’s flirts with 700,000.
The rankings confirm that business growth is about more than low taxes. Job training and the amenities that higher taxes fund make a difference. North Dakota, with low taxes, does well. Minnesota, with higher taxes, does better.
The wake-up call was provided by CNBC, which last month declared Minnesota the No. 1 state for business in the nation.
The survey also acknowledged that the quality of the worker is more important.
To some degree, Minnesota benefits from a trend that we have sought to reflect in our study this year. Rather than just seeking the lowest taxes or the highest incentives, companies are increasingly chasing the largest supply of skilled, qualified workers. So states are touting their workforces like never before, giving the Workforce category—where Minnesota finishes a respectable 13th—greater weight in our study.
But Minnesota doesn’t just stumble into the top spot by accident. The state’s path to the top is marked by a carefully crafted and still controversial strategy by Gov. Mark Dayton, the first Democrat to hold the office in two decades. The hallmark of his plan is something most governors seeking to win the hearts of business would never dream of: a big tax increase.
Coincidentally, today’s Star Tribune editorial dismisses the CNBC study to the extent that its conclusion has little to do with the reality of the way the state addresses its transportation needs.
Republicans who now boast about “stopping the gas tax” bring to mind Oscar Wilde’s biting comment that some people know “the price of everything and the value of nothing.” But DFLers have explaining to do, too. They squandered an opportunity to act in 2014 when they enjoyed a majority in both houses. And the tepid support offered by Gov. Mark Dayton and the current Minneapolis mayor and her predecessor for the Southwest light-rail line has seriously damaged transit’s momentum. None of this is good news for the state’s economy going forward.
Not all states are so paralyzed by transportation politics. Twelve — nine of them with Republican governors and legislatures — passed major packages this year. Seven of those nine Republican states raised or expanded the gas tax. It’s not a perfect revenue source, to be sure. But without cannibalizing other government functions, a restructured gas tax is the fairest, most plausible way forward.
It’s interesting to note that while the Minnesota Legislature dithered over a few pennies per gallon, the market raised gasoline prices by a whopping 75 cents between January and June — with nary a ripple of complaint. Apparently, a market-driven price hike is OK even though the public gets nothing for it, but a slightly higher tax is abhorrent even if the public gets better roadways in return. Go figure.
“Minnesotans, starting about 50 years ago, pulled together to transform a mediocre state into an exceptional one,” the Strib said of the path to the high CNBC ranking, while decrying what it called “the politics of ‘no’.”
Related: Minnesota economy beats Wisconsin: 7 charts, 1 table
