Thursday, June 27, 2013

County Board Notes-June 25, 2013

A part of the OACCT's Public Policy efforts for 2013 is for volunteers from the Public Policy committee attend both City and County meetings and report back on items that are of interest/concern to business.

County Commissioners reviewed 26th Street Access Agreement Amendment from City Council (no major changes to agreement).

SDA (Health & Human Services redesign efforts): Mower County voted not to participate in SDA; Waseca County will vote next week. Remaining interested counties will have to review and discuss options to SDA before moving forward further.

Wednesday, June 26, 2013

Help Repeal B2B Taxes

Business to business taxes in 2013 session
The Minnesota Chamber was successful in defeating over $3.6 billion in new business to business taxes proposed in Governor Dayton’s original budget that would have extended the sales tax to virtually all business transactions including advertising, accounting, legal, repair, architectural, engineering, graphic design, management consulting, marketing, scientific research and development, security, computer services, plus many other management and consulting services.   Unfortunately, three new business to business transactions were included in the final 2013 omnibus tax bill.  These new B2B taxes were insisted upon in the final deal by Senate DFL Majority Leader Bakk and agreed to by Governor Dayton and House DFL Speaker Thissen.  These new taxes will result in tax increases of $314 million in FY 14/15 and $449 million in FY 16/17.
 The three new business to business transactions now taxable in Minnesota are as follows:   
·         Labor service charges for repair and maintenance of business equipment effective July 1, 2013.  This will raise $152 million in FY 14/15.
·         Purchases of telecommunications equipment by telecommunications providers effective July 1, 2013.  This will raise $66 million in FY 14/15.
·         Storage and warehousing services of business related goods effective April 1, 2014.  This will raise $95 million in FY 14/15.
The new B2B taxes do not apply if it is a service done by an employee or by an affiliated companyThe new sales tax is the state rate of 6.875% plus any local sales tax.
The Minnesota Chamber opposed these new B2B taxes and strongly advocated against their inclusion in the 2013 session.  We will advocate for repeal of these taxes in the 2014 session as the new B2B taxes will:
·         Result in extreme competitive disadvantage for businesses impacted by this new fixed cost of doing business in Minnesota that is not imposed in most other states.
·         Make Minnesota an outlier both regionally and nationally.   There are important economic reasons why almost all states have chosen not to impose a retail sales tax on business inputs due to the economic distortions and inefficiencies that are created by the pyramiding of the sales tax on business services and purchases and the detrimental impact on a state’s economy and business climate.
·         Harm small and mid-sized businesses especially hard as our small businesses are less likely to be able to do these new services in-house and thereby avoid the sales tax.    
·         Ultimately harm consumers and workers as the final incidence of this regressive tax is passed along through higher prices for goods and lower wages and fewer job opportunities.

400 Robert Street North, Suite 1500, Saint Paul, MN  55101|  651.292.4650  |  www.mnchamber.com


·         Undermine job creation and undermine other important public policy goals.  For example,
o   A new $24 million Job Creation Fund was created in 2013 session in order to encourage industries including storage and warehouse to locate in Minnesota.   This new tax not only puts our current warehouse and storage businesses at an extreme competitive disadvantage that will likely result in job losses – it will also make it extremely difficult to recruit any new facilities to Minnesota.
o   The tax bill results in very inconsistent policies such as changing the current upfront exemption for capital equipment to a refund in order to encourage more capital equipment purchases at the same time imposing an additional cost of 6.875% sales tax (plus any local sales tax) on the labor to repair and maintain that equipment.
o   Another competing and inconsistent policy is the telecommunications equipment tax that will make it more expensive to build Minnesota’s telecommunication infrastructure.  This tax goes in the opposite direction of recommendations by Governor Dayton’s   Broadband Task Force and the $500,000 for creation of broadband development office to encourage more investment of high tech equipment and capacity in Minnesota. 
What is taxable under the new B2B taxes? 
Labor service charges for repair and maintenance of business equipment including farm machinery, medical equipment, electronic equipment, capital equipment, computer and industrial equipment.  This includes but is not limited to photocopying machines, printers, televisions, and scientific instruments.  This does not include motor vehicles, furniture and fixtures, ships, railroad stock and aircraft.  This does not include services provided by own employee or affiliated company.  This is effective for purchases after June 30, 2013.
Storage and warehouse business services.  This includes all business related storage and warehousing activity including agricultural input storage, petroleum storage, storage/warehouse at Port of Duluth, and distribution centers.  This does not include agricultural products, refrigerated storage, electronic data, mini-storage for consumers.  This does not include storage and warehousing if own your own facility and services are done by your employees.  This is effective for purchases after March 31, 2013.
Telecommunications equipment applies to purchases by the telecommunications service providers on the machinery, equipment, fixtures used in receiving, initiating, amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring telecommunications services used by telecommunications, cable television, direct satellite service provider in providing telecommunications service.  It includes repair and replacement parts.  This is effective for purchases after June 30, 2013.

The Minnesota Department of Revenue is providing further guidelines on implementation that will be released over new few weeks and months. 

Please contact Beth Kadoun at bkadoun@mnchamber.com or call 651-292-4678 if you have any questions.  If you would to be involved in a coalition to repeal these new B2B taxes please contact Jennifer Byers at jbyers@mnchamber.com


400 Robert Street North, Suite 1500, Saint Paul, MN  55101|  651.292.4650  |  www.mnchamber.com

City Council Notes-June 18, 2013

A part of the OACCT's Public Policy efforts for 2013 is for volunteers from the Public Policy committee attend both City and County meetings and report back on items that are of interest/concern to business.

Financial Director Rhonda Moen was presented with an Award of Financial Reporting Achievement.

Legislative Update from Senator Vickie Jensen.  We've covered much of what Senator Jenson updated the Council with but not the Local Sales Tax option.  Per Senator Jenson the City Council can decide on a local sales tax option without state legislative approval.  The Chamber should be involved if any local sales tax option is considered as early in the process as possible.

In economic development news, a 3.2% liquor license was approved for Target's expansion and the Right-of-Way Access Agreement on 26th St was also approved.

5 year capital improvement plan approved.

Bids for selling $3,890,000 in General Obligation Bonds by mid July was approved.  Note that City has a very good AA2 Moody's financial rating.

The Owatonna Arts Center has secured $1,300,000 in financing for their expansion project at West Hills and were authorized to advertise for bids.  Note $500,000 was from a local sales tax option for the elevator of this project.

Tuesday, June 25, 2013

County Public Works Task Force Update

June 18, 2013
For more information, contact Tom Shea at 444-7431

Task Force reviews changes to scale down Service Center

Owatonna – Citizen members of the Steele County Public Works Service Center Task Force worked Tuesday, June 18, to cut costs from the proposed new county highway building.
The community clearly rejected the scope of the 2012 proposal, members said, and the county board must present a less expensive project if it wants public support.

The task force has been meeting since January to identify a satisfying solution to current and long-term highway department facility needs. In fall 2012, the County Board tabled a vote to build a new facility on
Crane Creek Road/old Highway 14 after the project ran into criticism from business and private citizens questioning the cost and scope of the project. The county has been leasing temporary facilities since the September 2010 flood left its Hoffman Drive home uninhabitable. The Hoffman Drive was originally built in the 1930’s and has been the county’s base of highway operations for over 40 years.

Present at Tuesday’s meeting were: Margaret Michaletz, Jim Schafer, Steve Kath and Tony Louris, as well as County Engineer Anita Benson, Highway Maintenance Manager Beth Brady, Deb Brandwick from Oertel Architects and Scott Quiring of Amcon Construction Management.

They reviewed the original plans and discussed the benefits and costs of each component. To slash costs, Brandwick marked out areas for cuts: reducing size of wash bays, removing veteran services parking, shrinking office space, reducing the conference room and lobby and shrinking the maintenance bays. Also taken from the project would be two separate storage sheds. These adjustments would shed millions of dollars from the project, she said.

Some discussion ensued regarding the benefits of the original plan. Kath said the county should keep its most important amenities. “But you need to first set a budget and then make decisions. I’m not here to tell you what you need; that’s your call.”
Michaletz voiced similar opinions, noting to Brandwick and Quiring that they were not given a budget when they started. “It has to be a reasonable amount.” She also cautioned about building for future needs.  “You don’t know the future – how life can change,” she said.

Benson noted the highway department wants a “durable, long-term solution.”
She and Brady said the design components were aimed at enhancing efficiencies, by having the whole highway department under one roof, vehicles parked by supplies and under a secured roof and wash bays to extend the life of trucks and plows. But there are compromises that can be made, they said.
Schafer also said county citizens want something that will last. He recommended that the task force present two to three alternatives to the county board. “Our job was to explore options and I think we’ve done that, but the county board has to make the final call,” he said.
Brandwick and Quiring said they would present new drawings at the next meeting of the full task force, set for July 18 at 3 p.m. The full task force includes the private citizens representing each county district, as well as city and county staff and elected officials.

Wednesday, June 12, 2013

County Board Notes-June 11, 2013

A part of the OACCT's Public Policy efforts for 2013 is for volunteers from the Public Policy committee attend both City and County meetings and report back on items that are of interest/concern to business.

Right of Way Access Agreement: an agreement draft for the county and city to enter in an agreement to allow full access on 26th St. at the intersection of Landmark Dr. and CSAH 34 (26th St.); added to draft a 5-year review provision; City Council will review at their meeting next Tuesday.

Health & Human Services Service Delivery Area-Design Phase: four counties are included (Mower, Dodge, Steele and Waseca); next steps include refining work plan, timetable and budget for the detailed design phase and Steele County's consideration of a resolution that includes a shared vision, enter into a detailed design phase and commit to a joint powers arrangement and to allocate funding ($902,120 Steele County portion).

Public Works Building update: task force thought it would be too many 'what if's' with the two existing sites to do remodel projects; task force recommending to build on land off of old Hwy. 14; they have working sessions set up to discuss size and scope of project; end of August is timeline to have task force make recommendation to the Commissioners.

Thursday, June 6, 2013

Task Force recommends building on purchased land

The Steele County Public Works Service Center Task Force is recommending that Steele
County build a new highway department facility on its purchased land on old Highway 14.
However, the price must be lower than the proposal a year ago, task force members emphasized.
The recommendation will be presented to the Steele County Board at its June 11 meeting.
The task force has been meeting since January to identify a satisfactory solution to current and longterm
highway department facility needs. In fall 2012, the County Board tabled a vote to build a $13
million new facility on Crane Creek Road after the project ran into concern from business and private
citizens questioning the cost. The county has been leasing temporary facilities since the September 2010
flood left its 40-year-home on Hoffman Drive uninhabitable.

The task force – made up of city and county staff and elected officials, along with five private citizens –
met June 4 to review costs associated with three options: buy and remodel the current leased buildings
at 900 NW 30th Place in the industrial park, buy and remodel the vacated Caterpillar building on South
County Road 45 or build new on old Highway 14/Crane Creek Road.

Deb Brandwick of Oertel Architects and Scott Quiring of Amcon Construction Management presented
revised estimated costs of each site, after touring both existing facilities. They estimated costs of $11.2
million to purchase and remodel the Caterpillar building and $9 million to purchase and remodel the
location currently being leased. Buildings at both sites are 30-plus years old. Task force discussion and
consensus was that neither site appeared to be a good investment for the county based on the age and
work flow constraints.

County possession of the Caterpillar building would remove $2.5 million of tax base from Owatonna
Township rolls, township leaders wrote in a resolution forwarded to the task force. The township
recommended the county build on its purchased site.

Margaret Michaletz, a private citizen task force member, said it was time to move forward. “We’ve had
one common thread throughout these discussions with taxpayers: it must be reasonable. We’ve learned
enough; it’s time to spend energy on shrinking the proposed building.”

Chair of the task force and County Commissioner Bruce Kubicek recommended the group meet again in
a work session on June 18 to redesign the proposed building. He expressed hope the redesign work be
done by August.

Discussions at that meeting will include proposed cuts and changes. The challenge will be prioritizing
needs after analyzing the cost benefit on labor efficiencies and materials life cycle savings, county staff
noted. The next full task force meeting is scheduled for 3-4:30 p.m. July 18.

Wednesday, June 5, 2013

City Council Notes: June 4, 2013

A part of the OACCT's Public Policy efforts for 2013 is for volunteers from the Public Policy committee attend both City and County meetings and report back on items that are of interest/concern to business.

Legislative Update from Representative John Petersburg to Council
LGA Increase to Owatonna of an additional 700,000 estimate, 80 million more to the program.
61 cities in Minnesota do not get LGA
Cities and Counties Exempted sales tax.      
$1.60 increase in cigarette tax per pack (Minnesota=2.08, Iowa =1.36, SD=1.53, and ND =.44)

Marriage Bill
Daycare workers Union Authorization
Tax Bill    2.1 billion in new taxes
                300-600 million in new fees
                Spending increase by 3.1 billion
                1300 new State jobs

Legislature adjourned to Feb 25th 2014



Other City Council items
Second reading on Amendment to Off Street Parking, will reduce the number of required spaces for offices and other business uses from present requirement of 1 per 200 square feet  to 1 per 300 square feet.

Approve cable TV franchise audit.  Hire Lewis & Associates to audit Charter books, the City gets 5% of gross revenue from Charter, audit is done to make sure that Charter is in compliance.  A three year review will cost $8500 for the audit