Lori Sturdevant: Minnesota needs an economic summit

This old question is being asked with new urgency this year. Unfortunately, urgency isn't proving much of a catalyst for consensus. Witness these items from last week's notebook:

•On Monday, Gov. Tim Pawlenty told an audience of manufacturers that he knows just what they need: a batch of tax cuts totaling more than $270 million over two years. The biggest piece of that proposal would slash the corporate income tax rate from 9.8 percent to 4.8 percent over six years.

•Moments after Pawlenty left the podium, results were unveiled of a survey of 400 Minnesota manufacturing CEOs commissioned by Enterprise Minnesota, the former state agency formerly known as Minnesota Technology. The poll asked, what's your biggest business problem? No. 1: high health care costs. (See box.)

•Before the event, Enterprise Minnesota counseled me about the value of a high-tech business assistance program that stands to lose its state funding under the Pawlenty budget. Called the Growth Acceleration Program (GAP), it delivered matching training and efficiency grants and expert advice to small employers poised for job growth. It produced great results in the past two years with just $750,000 in tax money -- and would likely disappear if its state funding goes.

•In Monday's audience was Rep. Tim Mahoney, the St. Paul DFLer and union pipefitter ("I continue to attempt to get carpal tunnel") who heads a House panel that oversees economic development spending.

He said GAP is one of several small-but-mighty programs to assist Minnesota's most promising next-generation industries. They are all being starved in the governor's budget, he said. Give them as little as $10 million, "and they'll set us up for when we're done with this recession."

•Fast-forward to Thursday's Senate Tax Committee: Pawlenty's business tax breaks got a critical eye from an unexpected source, Republican Sen. Julianne Ortman of Chanhassen. Most of the governor's ideas would aid businesses that are making a profit, she noted. Right now, not many are. What struggling businesses need are customers with cash. "We should be looking at a tax rebate for individuals instead," she said.

•DFL Sen. Keith Langseth of Glyndon had a ready response: Cut taxes further, he said, and Minnesota would undercut the thing that job producers need most -- a well-educated workforce.

Tax cuts, or assistance to selected companies? Cash for consumers, or more spending on health and education? Macro or micro economics? Opinions are running strong, but what's needed, and quickly, are resolution and results.

This month, while the statehouse waits for a federal stimulus package and the next state budget forecast, would be a fine time for a high-level huddle on state economic-development strategy. This part of the state budget deserves the special attention of a summit meeting, and some guidance from outside experts.

As watchwords for the deliberations, I'll nominate the formula of Harvard economist and Obama adviser Lawrence Summers: Opt for job-creating moves that are "timely, targeted and temporary."

That translates into help for companies in Minnesota, not the whole world. A corporate income tax cut has much to recommend it, but it isn't targeted. Neither is it timely assistance to struggling companies.

Other Pawlenty tax cut proposals better fit the formula. For example, dropping the cumbersome rebate mechanism for the state's sales tax exemption on capital equipment would put more money into business hands sooner.

Programs like GAP are candidates for one-time funding, so they don't add to the long-term deficit problem. Here, the Rolnick Rule applies: Only add spending on efforts that yield a high rate of return.

This summit needs someone to convene it -- preferably a bipartisan pair of statesmen with proven ability to negotiate and see Minnesota through hard times. My nominees are the heroes of 1982: former Republican Gov. Al Quie and former DFL Senate leader Roger Moe. I don't know whether they'd take this on, but I know how much they love Minnesota. I bet they would.

Lori Sturdevant is a Star Tribune editorial writer and columnist. She is at lsturdevant@startribune.com.