Last week, I stood alongside fellow legislators and business owners from around the state to call on Gov. Mark Dayton to repeal the warehousing tax. While the tax doesn’t begin until 2014, it is already costing jobs and expansion opportunities in our local communities.
To be clear, repeal of the warehousing tax has bipartisan support. DFL Rep. Ann Lenczewski, the chair of the Tax Committee stated on the floor that she expected the tax to be repealed next session. Other lawmakers have conceded that it was a mistake, and have stated their intention to explore its repeal when the Legislature reconvenes next February.
The warehousing tax is an added cost to businesses simply for utilizing warehouse facilities. The simple fact is that when you add cost along the supply line for any product, whether it be food, gasoline, shoes, or anything else, consumers see those costs passed onto them in the form of higher prices.
The warehousing tax was not heard at any point in session in any House committee. It was an infrequently-discussed provision in the Senate Tax plan that few expected would make it out of conference committee. When Democrats found themselves about $100 million short in piecing together their last-minute $2 billion dollar tax increase to pay for runaway spending, they added this provision on. The House passed the tax bill in the dark of night, the Senate passed the tax bill with just a couple hours of debate during the waning hours on the last day of session.
Minnesota is already starting to feel the impacts of the warehousing tax, even though it doesn’t begin for another year. Red Wing Shoes recently announced the delay of a $20 million warehouse facility. Other businesses I’ve spoken to have had to put plans on hold, taking a “wait and see” approach before deciding whether to add jobs or move forward with expansion projects.
When a tax that we’re already talking about repealing is costing jobs and economic growth in Minnesota right now, we can’t afford to wait to take action to correct our mistake. These expansion projects and jobs mean real opportunities for real people.
I was astonished to see the reaction from Democrats; the governor “shrugged off” our suggestion, with his chief of staff labeling it as a “stunt.” House Speaker Paul Thissen accused us of “rushing to judgment.”
Democrats need to explain to the people in communities around the state why they are “shrugging off” talk of repeal when this tax is already having a negative impact on our state. It’s completely unacceptable if even one job leaves this state because Democrats stubbornly refuse to heed our calls for a special session to repeal the warehousing tax.
The ball is in Dayton’s court now; I hope he does the right thing for jobs, the right thing for our local communities and businesses, and the right thing for the state of Minnesota, and calls a special session to repeal this misguided and unnecessary tax.
State Rep. Pat Garofalo, R-Farmington, serves District 58B, which includes the city of Farmington and surrounding townships to the south and east. Columns reflect the opinion of the author.