Minnesota Chamber: ‘Do no harm to businesses that are already struggling’
In a free-wheeling chat covering a myriad of topics with Minnesota Chamber of Commerce President Doug Loon and two American Crystal Sugar leaders, Loon returned to a common theme, and what he said is at the forefront of the chamber’s message to legislators in St. Paul this session: Do no more harm to Minnesota businesses big and small that have already been harmed by the COVID-19 pandemic and are trying to claw their way back.
The “premiere issue” the state chamber is focusing on right now that Loon says would do more harm to businesses involves the pandemic-inspired Paycheck Protection Program (PPP), which started as loans to businesses so they could keep employees on the payroll during shutdowns, lockdowns or other business restrictions, but became forgivable loans/grants if participating businesses properly followed PPP parameters.
The federal government late in 2020, Loon said during the discussion via Zoom, decided not to tax the forgivable loans, but now the State of Minnesota might. Given the lateness of the federal decision, Minnesota is in catch-up mode, but the uncertain outcome in St. Paul is creating uncertainty in the business community, he said. Minnesota, along with several other states who have already decided not to tax the PPP loans, is considered a “tax-conforming” state, meaning its tax laws typically conform to the federal governments. But that’s not a given on the PPP-taxation issue, Loon explained.
“That could be an unexpected tax liability in 2021, so we are anxious to conform to bring some level of certainty,” he said. “The blueprint for economic recovery, the number one thing, is to do no harm to businesses when they’re struggling. …We see (potentially taxing PPP loans) as fundamentally unfair.”
Loon fears that a resolution on the PPP taxation issue will become part of end-of-session negotiations later in the spring. “That’s fine on some level, but it’s coming too late; taxes are already due,” he said. “…This is important to all of the business community, not just those that took loans. It slows the rate of recovery and that’s why this is the thrust of what we’re trying to do: Do no harm and get the recovery fully underway.”
Lisa Borgen, vice president of administration for American Crystal and a member of the Minnesota Chamber Board of Directors, said from her Moorhead office that doing harm to Minnesota businesses can have more dire consequences in border cities like Crookston, with what is seen as a more business-friendly state only a few miles away in North Dakota.
“Whenever you have issues like this, it negatively affects the business climate on the Minnesota side (of the border),” Borgen said. “We need to be business-friendly, we need to have what our neighboring states have. We lose higher earners, too, because they know North Dakota taxes are so much lower than Minnesota. So that affects your business base, and your population base.”
American Crystal did not participate in the PPP initiative, she added, when asked by the Times.
Pandemic’s impact at Crystal
Asked how the pandemic impacted the company as a whole, Crookston factory manager Ryan Wall said the sugar beet campaign was fairly close to normal, but it was taxing on employees. With around 280 workers on site, if 10 or 15 were missing various shifts, the impact is significant, he said. For several months, shifts were short on staff and more overtime was paid, and the longer shifts and increased hours were hard on some employees.
“We got through it, we processed beets and made sugar, but there was more stress on other employees,” Wall said. “Overall, I’d say it drove morale down. People were not at work because they were sick. Others had a fear of getting sick. It was a difficult time.”
Borgen noted that American Crystal mandated mask-wearing “long before the government” mandated them. It kept employees safer, she said, but wearing a mask while working for several hours and having to social distance from co-workers at break time was “very stressful.”
“They didn’t have the luxury of working from home,” Borgen said. “I will say the resilience of our workforce was astounding. We had a lot of people who were sick, but we were able to determine there was no spread through our plants, but it was from outside activities. People had positive attitudes, they were happy to continue having a job and a paycheck, and we are appreciative of our employees for all the hard work they did. People were on their home, and that goes to their dedication.”
Tax concerns as a whole
Not surprisingly, the Minnesota Chamber’s tax-related concerns go beyond the state possibly taxing PPP loans. The state agency typically advocates for a less burdensome tax climate on Minnesota businesses, and is trumpeting that horn again during the 2021 legislative session. This time around, the state chamber is citing the state’s projected budget surplus, healthy reserves, and new federal money, much of it one-time in nature, coming into the state as a result of the pandemic in making the case in their documentation that the state is “flush with cash” and doesn’t need to raise taxes.
“This is not the time for a long-term, permanent tax increase on Minnesotans,” Loon said. “We have clearly identified some short-term investments that could and should be made, in things like child care, broadband and infrastructure that don’t require a permanent tax increase. That’s an important distinction. Now is not the time to burden businesses with additional costs.”
On the child care front, when asked if the shortage in and around Crookston impacts American Crystal’s workforce, both Wall and Borgen said that many of their employees are younger males who maybe aren’t starting families yet, so the impact isn’t great. But both also said the child care shortage hinders the company’s ability to attract and recruit different demographic groups to their workforce.
“People with young families, we’re not even a consideration for them because of our shift schedules,” Wall said. “They don’t even apply for jobs at Crystal, even though we pay well. It really hamstrings our ability to find new people.”
Borgen said in her opinion society needs to make a sea change in how it views child care. “It really should be part of the education of a child from birth until the end of their education,” she said. “We can get a lot of education value out of child care if we’re willing to look at it differently.”
“You add up what we’re hearing statewide on child care, and it comes down to the fact that there must be something broken in the business model,” Loon added.
Crystal’s ‘top issue’
Asked what issue American Crystal leadership bends Loon’s ear on more than any other issue, Ryan said that, specific to the Crookston factory, it’s “consistency with regulations on the environmental side.” Mentioning the Minnesota Pollution Control Agency, Wall said it’s about getting feedback and answers quickly, and having policies enforced consistently statewide.
“I’d lean on the (Minnesota) chamber and say this is a big deal for us,” he noted.
Borgen agreed, especially on the consistent approach by regulators no matter where in Minnesota a business is located.
“We have invested millions in being environmentally better; we follow the regulations and we’ve done a lot,” she said. “It just seems like every year there’s something more. We want to be good community citizens with good, clean air and water. We’d feel better if some of our regulators agreed with that. …Don’t keep moving the goalpost.”
Workforce development, new graduates
Loon, Borgen and Wall all pointed to the importance of the Minnesota Chamber helping Minnesota industries with workforce development, and, specifically, convincing new high school graduates or technical school students that they can learn and develop valuable career skills in a short amount of time, and then earn a decent, livable wage from day one on the job at places like American Crystal.
To help move that effort along, Loon said the state chamber launched Business Education Networks to create that awareness among students and parents and connect them to the business community. “We create an awareness circle around the student,” Loon said, adding that efforts are underway in around 20 Minnesota cities.
“Every community is a little different; like, in the Brainerd area the focus is around culinary arts because of all of the resorts and hotels,” he explained. “In other towns, it’s manufacturing.”
Ryan serves on a subcommittee to help the initiative along, and recently American Crystal hosted two four-hour sessions for agricultural and industrial technology high school teachers. One session was held in Moorhead and another was held in Crookston.
“We brought them in, had lunch, and talked about Crystal and career development, pathways, benefits, and we toured the facility,” Wall said. “That was our way of marketing Crystal to people who interact with kids on a daily basis. That’s the base we pull from.”
The sessions generated some interest, but Wall said the effort needs to be taken to the next level. “We need to create that pool, where you come out of high school with some ag or industrial tech classes or you have your tech degree, then you come and work for Crystal,” he said.
The sessions did have a direct impact on some of the teachers in one particular area, Wall noted.
“A couple of the teachers asked about getting an application,” he recalled. “They said a lot of the jobs we were talking about paid more than they make as teachers. And that’s not just within our management group; even our hourly (paid) careers are excellent living wages. You can provide for your family.”