Capitol Notebook: Committee OKs Tax Breaks For Three Rural Industries

A legislative committee’s decision to give Perham and Jackson industries tax breaks set off debate Thursday about a rural economic development program.

A House committee approved a bill allowing expanding businesses in Perham and Jackson to enroll in the Job Opportunity Building Zones program that provides tax breaks to some rural businesses.

The House jobs committee passed the plan on a split voice vote, sending it to other committees before it receives a full House vote.

The bill began as one to allow Tuffy’s Pet Foods and Industrial Finishing Services in Perham to be relieved of most taxes in the next several years. The committee amended the bill to include AGCO in Jackson.

All three plants plan expansions. Together they would add more than 1,000 jobs.

Wayne Caughey of Tuffy’s Pet Foods’ parent company said a planned expansion would double the Perham plant’s capacity. Already, the pet food firm has increased from 35 workers to 160 in a decade, and boosted production from 20,000 tons a year to 120,000 tons.

Without tax relief, Tuffy’s could go elsewhere.

“The alternative we have … is looking at facilities in other areas of the country,” Caughey said.

Tuffy’s sister company, Barrels of Fun snack foods, received JOBZ help in 2004, which Caughey said helped increase annual sales from $35 million to $100 million.

President Steve Campbell of Industrial Finishing Services in Perham, Deer Creek and New York Mills said his company received JOBZ help in 2005.

“The business climate has changed so much that we need to invest in new equipment,” Campbell said.

Rep. Rod Hamilton, R-Mountain Lake, convinced committee members to allow tax breaks for AGCO to expand its farm tractor production in its Jackson plant.

But Rep. Tim Mahoney, DFL-St. Paul, criticized JOBZ, a program promoted by  then-GOP Gov. Tim Pawlenty.

Mahoney said that eliminating many taxes on new and expanding businesses can cost up to $64,000 per job.

Rep. Bev Scalze, DFL-Little Canada, said the overall bill by Rep. Mark Murdock, R-Ottertail, and Hamilton’s amendment favor a few businesses over others.

“The state should not be setting different rules for one or two or three businesses,” Scalze said.

Mahoney warned committee members that as the Murdock bill advances, other legislators will want to add projects in their areas to the tax-break list.

“This is the Christmas tree for JOBZ,” Mahoney said. “The cost to our state will start to escalate.”

 ‘Just in case’ bill

Rep. Keith Downey, R-Edina, wants Minnesota legislators to pass legislation to prepare the state in case the federal government does not fulfill its funding obligations.

“The situation here is pretty simple: The federal government is broke,” Downey said. “As Washington continues to borrow and deficit spend, we need to take steps to ensure Minnesota can fund its priorities and serve our citizens in the event the federal government is unable to deliver on its funding obligations.”

The bill requires state agencies to prepare plans in case expected federal funds are not forthcoming.

 Gay marriage fights

A hearing today about a proposal to place a gay-marriage ban in the Minnesota Constitution likely will draw a large crowd.

Gay-rights group OutFront Minnesota Thursday encouraged its supporters to pack the meeting room.

The proposed constitutional amendment would define a marriage as being between one man and one woman.

While most Republicans support the concept, one group came out against it on Thursday.

Minnesota Log Cabin Republicans say they are disappointed by the amendment.

“In 2010, Log Cabin Republicans celebrated when the GOP took control of the Minnesota House and Senate,” Log Cabin official Ken Smoron said. “We looked forward to Republican legislators obeying a voter mandate to put a laser focus on the out-of-control spending at the State Capitol. It is deeply disappointing to see members of our party turn away from that mission in favor of a divisive social agenda.”