Changes in technology, globalization, demographics and mobility are having profound impacts on our economy and our lives.

Will state legislators support new thinking about state policy to help us navigate this new world?

Today’s workforce is not constrained geographically. Workers can go wherever it makes sense – whether taking a job in Minneapolis, Walker, or Colorado. We need new thinking and new approaches to many state policies to ensure Minnesota can continue to claim its position as a “State of Great” in this rapidly changing world. Without some changes, we risk a lot.

Minnesotans have always had a great deal pride in their state, and it’s not hard to see why. Among the state’s many enviable qualities are:

• A highly educated, increasingly diverse workforce.
• A diversified economy and a high concentration of Fortune 500 companies and other large, innovative businesses.
• A generally high-performing educational system and a reputation for nation-leading reforms (e.g. charter schools, PSEO).
• A remarkably high quality of life and world-class artistic and cultural institutions.
• World class health care providers, a healthy population, and among top in the nation for the percentage of our citizens covered by health insurance.

But as the multiple crises of the last few years laid bare, our state faces many acute challenges that
threaten our economic future and tear at the social fabric. As Minnesota emerges from an extraordinarily difficult year unlike any in recent history, it faces daunting challenges:

• Disruptions related to COVID-19, even as the pandemic wanes.
• Academic achievement gaps that are among the nation’s worst, further exacerbated by inequities brought on by distance learning.
• A volatile and turbulent economy, and a policy and regulatory environment that threatens our ability to recover.
• Persistently high costs to access health care.
• A public safety crisis that affects the quality of life and the safety of our citizens.

Minnesota’s Large Homegrown Businesses are a Vital Part of the State’s Economy

• Minnesota’s high concentration of large businesses is a major factor in our state’s high standard of living and economic strength/resilience.
• Lawmakers should be looking for ways to encourage these companies to stay in Minnesota, retain and add jobs here, and thrive. Instead, proposed tax increases and new regulations would harm hometown businesses and put them at a competitive disadvantage.
• Minnesota companies pay $15+ billion in wages and benefits and $14+ billion in state and local taxes, accounting for more than 37 percent of all state and local taxes.
• Minnesota’s largest employers are a vital component of the state’s economic success, employing thousands of Minnesotans and supporting small and mid-sized businesses as customers of those businesses.
• Minnesota employers account for about half of all charitable grants in Minnesota, giving hundreds of millions of dollars every year to health, education, and cultural programs

Improving Education

Minnesota’s children are at risk. Students fell far behind during the first year of the pandemic, and they have not caught up.

Data Shows that students’ math and reading levels were far behind normal levels at the beginning of the 2021 school year, with the largest shortfalls among Black and Hispanic students as well as economically-disadvantaged students.

Reading proficiency is plummeting – our students are now scoring below Mississippi across the board, and three out of five students in Minneapolis cannot read by the end of third grade.

Our students are experiencing an academic crisis, compounded by mental health issues resulting from 2-plus years of pandemic disruptions.

Education disparities are now worse than ever, yet proposals to fix the system are blocked by special interests.

The Coalition of Minnesota Businesses has a plan to turn things around.

It’s time to focus on students and meeting their needs. We owe it to each and every child in Minnesota to provide them with a world-class education to prepare them to be ready for their futures, whether that’s college or a skilled career.

We know how to do this. We’ve seen other states do it, and it is time that Minnesota takes this education crisis seriously. We need to reset the education system to affirm that all children have the right to a quality education, and then we need to deliver it.

We must prepare every child for success in kindergarten. We must teach the science of reading so every single child reads well by the end of third grade. We must set high expectations for schools to prepare students, and we must hold the system accountable for results.

Minnesota’s children are our future, and they deserve a world-class education that prepares them for success in the State of Great.

Balanced Tax and Spending Policies

Innovative and diverse Minnesota businesses are the backbone of the state’s economy. But past success does not guarantee future prosperity, and Minnesota’s tax code and business climate create burdens that may hinder long-term economic growth. Policy decisions should be made with a global view and address present-day challenges with solutions that will enhance Minnesota’s future competitiveness in the global economy.

Globalization, technological advances, demographic changes, and other forces are causing fundamental changes to the economy that make existing state spending trends unsustainable. Reforms are necessary to position the state for greater economic growth and reduce the effect of economic shocks on the state budget.

Minnesota businesses and entrepreneurs are faced with some of the nation’s highest tax burdens. The state’s tax structure deters business expansion and relocation in Minnesota and discourages companies from locating high-skill, high paying jobs here. Our anti-competitive tax code contributed to Minnesota ranking 45th out of the 50 states in the Tax Foundation’s State Business Tax Climate Index. As Minnesota competes with other states and countries for future investment and job growth, lawmakers should be mindful of how Minnesota’s tax and business climate compares to our competitors.

Minnesota has an antiquated and burdensome tax structure that forces Minnesota-based businesses to shoulder a heavy and growing load while they compete in a dynamic worldwide economy. Our tax code was developed to meet the needs of the 20th century’s goods-based economy, but our outdated tax system now creates barriers to business investment and job creation in our mobile, global, knowledge-based economy. In addition, Minnesota relies disproportionately on volatile revenue sources like high personal and corporate income taxes, which has contributed to the unpredictable fiscal forecasts that we’ve seen in recent years. Reforms are needed to construct a simplified, streamlined, 21st century tax system that will generate job growth, promote private-sector investment, and create stable and sustainable budgets.

The public sector must innovate to maintain essential services and a high quality of life. Developing new and better ways to set budgets, deliver services, and meet public needs will improve the business climate. Spending growth in the largest areas of Minnesota’s general fund budget, including health and human services (HHS), is accelerating far faster than the economy. Although HHS spending growth has been mitigated somewhat through recent reforms, the state is expected to continue to see double-digit increases in the near future. Spending restraint and further reforms will be necessary to address this issue.