Paul Thissen: Innovation in Action

Minnesotans value higher education, and we all agree education is key to remaining competitive in today’s fast-paced global economy.  But college tuition in Minnesota has been rising for years, and with it, student loan debt.  More Minnesota students are borrowing to go to college and those that borrow do so at amounts greater than the national average. (Source: Minnesota Office of Higher Education)

Repaying those debts can dramatically affect where a graduate will live and work and what career they will choose. And for smaller Minnesota communities, this can add up to a real brain drain.

That’s why I authored legislation to support low- and middle-income college graduates so they can continue to live, work and pay taxes in Minnesota.  Under the Education Opportunity Credit, any Minnesota student who earns an associate or bachelors degree from a Minnesota college with a student loan can receive a 50 percent tax credit on tuition loan repayments. The degree can be from any Minnesota two- or four-year college or community college, public or private.

Minnesota is facing a dramatic shift in population. More Minnesotans are retiring, leaving a smaller workforce pool to support an aging and dependent population. This legislation will help us retain the skilled and educated work force necessary to remain competitive and attract well-paying jobs. And only Minnesotans who live, work and pay taxes in Minnesota after graduating will benefit.

Minnesota’s past success is largely due to our highly trained and motivated work force.  Helping Minnesota college graduates to live and work in our state ensures the Minnesota promise works for everyone.

Minnesota’s looming retirement boom will have a great impact on small business ownership throughout the state. As business owners prepare for retirement, they will seek buyers for their businesses. The Hiawatha Fund, a nonprofit investment fund in Southeast Minnesota, is looking to identify upcoming ownership transitions for small businesses and farms and work to keep those businesses locally owned and managed.

In my community, Plainview – a town of 3,000 near Rochester – I learned of a small business owner who was ready to retire and put his specialty industrial services company up for sale.

Two prospective buyers approached the owners, but because the buyers were outside Minnesota, the company’s work in Plainview would eventually be phased out. Although a small business, the annual $525,000 payroll was not insignificant to the 12 employees and their families, or our community.

In addition to the loss of jobs, the outside sale of the business would put two buildings on the market, and profits would leave Plainview.

Through the Hiawatha Fund, we asked the owners if they would consider a third sale option structured to maintain local control. The owners agreed, and since then a transition plan outline has been presented.

If the business would have been sold to outside owners, the current owners would no longer have a stake in the company. Proceeds from the sale of the business would be taxable and they would need to find a new investment to reinvest the proceeds.

An outside sale would mean an increase in unemployment in Plainview, and a promising young manager who worked for the company would likely be required to move, further depleting the pool of leaders in our community.

However, a sale to local investors would allow the current owners to continue as members of the board of directors, providing new owners with their valuable knowledge, and they could hold company stock as a retirement asset, gradually selling as needed over time and deferring taxes.

Local ownership also would allow the current employees to keep valuable jobs, the buildings would stay occupied, and profits would stay local. Equally important to Plainview, the talent and local commitment of the existing owners and staff would stay in the community.

Identifying business transitions is an important role of regional development groups. Starting this process well before a sale allows a broader range of tools to be used, and structuring the sale in a series of steps or phases over a period of several years will make the transition more manageable.

By maintaining local ownership, the profits are reinvested in the community, business owners enrich the community leadership pool, and decisions are made with more sensitivity to regional realities.

Minnesota, with its large rural areas, has a broadband problem.  In short, too many people have limited or slow access to modern communications technologies that are shaping modern life.

In rural areas, our broadband is basically limited by two factors: expanding broadband access is very expensive and low population densities offer few incentives to profit-maximizing companies to invest in those communities. 

Fortunately, the Federal Communications Commission has opened the door to new technologies that will lower the cost of offering broadband in rural areas.  “White spaces” are unused chunks of radio spectrum that are now available to the public.  Much like anyone can use Wi-Fi to create a wireless network in their home, rural communities will be able to create much larger wireless networks.

This FCC decision opens the path to achieving a Minnesota where all citizens have access to the educational and economic development opportunities from the ongoing communications revolution.  However, the FCC decision is a necessary but not sufficient precondition to expanding broadband access across Minnesota.

The private sector will not, perhaps cannot, offer every Minnesotan the high quality broadband access we need.  Just as we relied upon our government to build the roads that enabled economic prosperity in the past, our government continues to have a strong role in ensuring everyone gains access to broadband – our current and future digital roads. 

Small communities require expert assistance and technical advice that the State can help provide.  The State can also assist communities financially, by supporting bonding efforts or even making loans available to communities with solid plans to offer fast broadband access.  Over time, these networks will pay for themselves, but they need some help on the front end. 

Relying solely on private sector solutions has left millions across America behind.  With white spaces and smart government initiatives, we can make up for lost time. 

Minnesota state government’s financial volatility has been referred to as a roller coaster. There are rising surpluses then falling deficits then flat periods then rising surpluses and steep deficits. Right now, Minnesota’s economy and financial system have surpassed the good times and are headed down very rapidly.  What can we do to control the roller coaster?

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