Action needed on key economic policies as session draws to a close

By Doug Loon
President and CEO
Minnesota Chamber of Commerce
It is May 16, and the required adjournment of the Legislature is May 19. This week at the Chamber, in addition to tracking progress at the Capitol, we also released an important and very timely report from the Minnesota Chamber Foundation called Fueling Prosperity through productivity and innovation. You'll find that the report has some interesting data to share, and it's relevant to the work happening at the Capitol this weekend leading up to the required adjournment on May 19.
Two things in the report: Minnesota's productivity performance and labor supply have grown slower than the nation's average over the past few years.
This is something we've been talking about as we view our economy as underperforming and not reaching its true economic potential because of some headwinds. This has resulted in a decline in our per capita income and GDP growth, which are two important measurements of any statewide economy. In particular, tech and skilled service sectors account for a large portion of productivity gains in the U.S., and that's also true in states like ours. But they're growing faster in other states that are fueling productivity growth. So, we need to look at advancements in AI and also federal efforts to increase domestic investments, which could, in the future, increase our opportunities right here in Minnesota.
So, you might ask, what do we do? We can lean into the moment to make sure that some of those investments and deployment of new technologies come to Minnesota to benefit our statewide economy for workers, employers and communities.
That's why this is a perfect reason for the Legislature to act on key pieces of legislation pending this week as we approach the end of the session on Monday evening. Based on what we're seeing today, there's a likely chance there will be a special session. But they're going to race toward the deadline of May 19 to see what they can accomplish and what’s left over, specifically in a few key areas: the budget, the bonding bill and any policy changes.
There are opportunities for us to come together to produce meaningful, bipartisan results for the state's economy. In particular, we at the Chamber, along with the rest of the business community, employer groups, and employees, are calling for a few key changes, especially to the paid family and medical leave law that kicks in January 1, 2026.
We've talked extensively about that in previous podcasts. That mandate will inhibit and restrain the state's ability to grow and reach its productivity goals. It's a significant drag on the economy in the form of taxes, new regulations, and unfunded mandates on the backs of the business community and employers – both public and private.
We also want to streamline the permitting process. A true bipartisan effort is underway at the Capitol to uphold our strong environmental standards while allowing for job creation and economic growth through good projects that meet those standards. The current system in place in Minnesota is too slow and creates too much uncertainty. We can do better. The bipartisan bill moving through the Legislature in the final hours of the session can go a long way toward improving outcomes for Minnesota industrial projects.
Lastly, let's enhance our research and development tax credit. This will encourage investment in R&D here in Minnesota. There are over 43,000 R&D-related jobs in the state, and 75% of the investments are in manufacturing. These are high-skill, high-paying jobs that benefit communities across Minnesota. But we're falling behind. The bill pending with the governor's support can go a long way toward closing that gap.
These are just a few of the policies we’re working on at the Capitol to improve the private sector economy and our future here in Minnesota. We’re not going to get there by raising taxes, but we can take steps now to improve our performance and reduce barriers to success by coming together in these final hours and, if necessary, in a special session as well.
As always, thank you for your continued support for the Minnesota Chamber and all you do to support Minnesota’s business community. Stay tuned for progress from the Minnesota Chamber of Commerce in future episodes of the Minnesota Business Podcast.