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Minnesota Rep. Tom Rukavina of Virginia tells fellow House members Tuesday that his economic development bill makes a lot of cuts, but is the best funding package he could put together in tough economic times. Staff photo by Don Davis - Minn. State Capitol Bureau

State economic development funding falls

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ST. PAUL - Minnesota's economic development programs fall victim to the state budget deficit.

"We cut, we cut, we cut," Rep. Tom Rukavina, DFL-Virginia, said. "We can't create jobs when we are cutting, but we did the best that we could. ... I wish I had a lot better bill, but I had to cut."

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The Senate voted to cut economic development funding 38-28 Monday night. The House did the same on Tuesday, 74-57. In both cases, some majority Democrats joined Republicans in opposing the measure.

Minnesota economic development programs would be trimmed $21 million in a year when many programs are facing cuts in light of a $4.6 billion state budget deficit.

Examples of the cuts include housing, 3.5 percent less than the current state budget; historical society, 6.2 percent less; tourism, 3.5 percent less; and the state arts board, 16.6 percent less.

The House-Senate compromise funding proposal cuts state economic development funds from $284 million being spent in the current budget to $263 million in the two-year budget starting July 1.

The bill raises fees $900,000.

Usually, the economic development funding bill is called a "jobs bill." That is not what House Minority Leader Marty Seifert, R-Marshall, called this one.

"It's a jobless bill..." Seifert said. "There is more money in this bill spent on arts than economic development."

Rukavina said his measure adds $11 million to help the state's unemployed.

Sen. David Tomassoni, DFL-Chisholm, said the measure is a true compromise. He said the conference committee improved the bill from the one 49 senators supported last month.

"It has more money for job creation, it has more money for housing," Tomassoni said.

The most heated discussion came on a provision that forgives a loan to the Xcel Energy Center in St. Paul. It would forgive a $35 million loan payment, which Republicans said amounts to providing state funding for a sports arena.

"How can you guys talk about kids losing health insurance with tears in your eyes and not care about this?" asked Sen. Dick Day, R-Owatonna.

Rep. Denny McNamara, R-Hastings, said it is not fair to force taxpayers around the state to pay for a new hockey rink at the Xcel when they face other economic problems.

Rukavina, however, countered that the new ice rink would bring the state more money than the forgiven loan payment.

The bill also:

• Mandates state and local governments to buy uniforms and safety equipment made in the United States.

• Orders state and local governments to give preference to businesses that pay wages 150 percent of the federal poverty rate, an effort to reward better-paying employers.

• Requires the University of Minnesota to form organizations at the Twin Cities and Duluth campuses "to foster an environment ... conducive to the purposes of higher education and a vital community."

• Designates hockey as the official state sport.

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Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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