Taxes will rise, some business lobbyists say

At least some members of the business community appear to be softening their hard line stance against tax increases.

At the Minnesota Chamber of Commerce annual legislative session kickoff dinner Wednesday evening in St. Paul, the group of business leaders will be listening closely to hear how Gov. Mark Dayton and DFL legislative leaders will approach this year's budget.

The executive director of the Minnesota Business Partnership, Charlie Weaver, is no fan of tax hikes. For years, he has lobbied against higher taxes. But Weaver is also a realist and knows DFL control of the Legislature and the governor's office means things have changed.

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"We're pragmatic enough to recognize the politics of the situation, but we just want to make sure that it's an informed decision when they do make the decision," Weaver said.

He says his organization, which is made up of more than 100 chief executives of Minnesota companies, is willing to concede that taxes will go up. Weaver's focus is now to ensure the tax hikes don't make Minnesota less competitive. He says requiring online retailers to collect sales taxes and expanding the sales tax to clothing are ideas his organization can back. He adds that the Business Partnership is opposed to Dayton's proposed income tax hike on top earners, but acknowledges it is likely to happen because it's a top priority for the governor.

"We hope to be at the table to talk about at what level. The governor may propose a 5 percent increase on the current level," Weaver said. "Maybe we're at the table saying that would make us number one in the country. Let's not do that."

While Weaver and the Minnesota Business Partnership seem to concede the fact that taxes will rise, the state's other large business group isn't yet. Laura Bordelon with the Minnesota Chamber of Commerce said Dayton and lawmakers need to prove they are willing to make significant spending cuts before considering tax hikes.

"We are not at this point looking at tax increases as a way to go. We are looking at the whole structure and how to make it competitive," Bordelon said. "We want to have that conversation as part of a whole tax-reform discussion rather than simply a revenue-raising discussion."

Kathy Tunheim, CEO of a public relations company and a senior adviser to the governor on the economy and job creation, said Dayton is committed to making the cost of government more predictable, which means he will propose a sustainable and fair budget that includes spending cuts and tax increases.

"This isn't about more taxes. It's about making the math work and making sure, like any business person understands, you have to be able to balance these things if you want it to be predictable," Tunheim said.

DFL House Speaker Paul Thissen said he will continue to reach out to the business community to discuss higher taxes.

"We're going to need them at the table just as we're going to need everybody. We're going to need farmers; we're going to need employees, ordinary citizens," Thissen said. "We're going to need everybody to pitch in and come up with the right solution."

Thissen also emphasized there will be spending cuts to help erase a budget deficit projected to be $1.1 billion.

Republican Rep. Greg Davids of Preston said Democrats will be on their own when it comes to raising taxes. Davids said Republicans will vote against any tax hikes and work to highlight the DFL votes for tax increases in the next election.

"I guess what we need to look at is how do we minimize the damage until two years from now and we come back in a majority in the Minnesota House of Representatives and clean up the mess that they made," Davids said.

The governor is expected to release his tax overhaul and budget by Jan. 22. DFL legislative leaders say they will wait until March before they release their budget proposal.

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