All of Us Face Budget Challenges Ahead

The messages of uncertainty continue. Housing market forecasts indicate a slowing (and maybe even price reductions) into 2023, business leaders are expressing nervousness. Contrarily, per the Wall Street Journal, “comforted by recent data, more investors are betting that the U.S. can avoid a deep and prolonged downturn.” And Steve Grove, DEED commissioner, said this past week that Minnesota's leaders should not be defensive of an economy that is humming along. "I mean 13 months of job growth. We added over 17,000 jobs last month. Lowest unemployment rate in the country," Grove said. "There's a reason for Minnesotans to be optimistic." Grove eyed the second quarter of 2023 for when Minnesota will fully return to pre-pandemic job levels. It needs about 35,000 more people working to reach that level. Minnesota does possess historically low unemployment rates, with Mankato leading the nation with a 1.3% rate this fall.
 
All of this in a context defined by a “silver tsunami” now upon us; birth rates that continue to decline since 2007; and today’s workforce that can live anywhere they like.
 
Whether we’re talking government, business, or personal budgets, what I know for sure is that we’ve got challenges ahead. The state has announced an historic $17.6B budget surplus going into the FY 2024-25 biennium, which requires real work to hammer out how to invest thoughtfully. Cities like St. Paul and Minneapolis are increasing their levies, putting renewed pressure on family budgets. This dynamic of local tax increases and statewide abundance sets us for a very interesting legislative session in 2023, indeed!
 
Governor Walz recently was interviewed by the Star Tribune and hinted in this article that “circumstances may necessitate grabbing tools – including tax cuts and direct incentives to businesses – that area rarely used by Minnesota democrats.” Now definitely is the time to use these tools. I agree with Doug Loon’s comments here: “the state’s massive budget surplus is an opportunity to update the state’s tax code to make Minnesota more attractive to businesses.” I also am looking forward to Governor Walz recommending significant one-time infrastructure investments using the one-time surplus money.
 
We’ll keep you posted.
 
See you in the trenches.
B​

• Ex-Minneapolis cop J. Alexander Kueng gets 3.5-year term in George Floyd death.
• John Bandemer, Director of Safety Strategies at the St. Paul Downtown Alliance, sends out weekly updates on a SafetyComms dashboard. This dashboard is designed to pass along information that is useful to members of a SafetyComms network such as recent crime stats, unsheltered encampment status, and social media channels. If you’d like to sign up and receive weekly updates, simply go to the SafetyComms sign-up.
• With 2 dead after shooting at downtown St. Paul light rail transit station – Twin Cities, feeling safe downtown isn't providing St. Paul much confidence. 

• The Federal Open Market Committee meeting begins Tuesday, with the press conference held Wednesday at 2 p.m. The Fed is expected to agree to a rate hike of 50 basis points, but lingering fortitude in the labor market may change those plans. 
• Nurses reach deals at Twin Cities and Duluth hospitals, avoiding strike.
• DEED: the Minnesota Department of Employment and Economic Development (DEED) announced the final component of the $97 million State Small Business Credit Initiative (SSBCI): the Small Business Loan Participation Program. SSBCI was part of the American Rescue Plan Act (ARPA) of 2021 and included $10 billion for state, territory and tribal business finance programs. This is the second SSBCI initiative – Minnesota received $15 million through the Small Business Jobs Act of 2010. 
• MN lost 90,000 workers during pandemic; now has one of the tightest labor markets in the country. State experts say the labor gap has been a lingering problem for years and the pandemic made that gap even wider. Minnesota’s big economic challenge: finding people to fill jobs.

​Because I so appreciate the Citizen League: I wanted to make sure you saw that Citizens League just released a new report.  This report explores why people run, decline to run, remain serving, or step down from office, and the impact on local government. See more in the email below and read the full report here.
 
Federal

• Government funding: Congress faces a Friday deadline to avoid a partial government shutdown. What we're watching: Lawmakers entered the weekend at a multibillion dollar impasse, and House Appropriations Committee Chair Rosa DeLauro (D-Conn.) said the House is not drafting a short-term stopgap measure to buy more time. If leaders can't come to an agreement on an omnibus appropriations package, she and other leaders — Democratic and Republican alike — have indicated the likely outcome will be a one-year continuing resolution, much to the chagrin of the defense community. 
• Can immigration avoid a cold winter in Congress? That’s the question immigrants and their advocates are asking as time runs out on the current Congress. The fate of Afghan evacuees, Dreamers, farmworkers and others hinges in the short term on whether crucial legislation can be passed before the new Congress takes over in January, with a split House and Senate making progress even more difficult. Several major immigration proposals are currently being debated in the final weeks of the year. This includes the Afghan Adjustment Act, protections for so-called “documented Dreamers,” and the possibility of a bipartisan compromise that would protect undocumented youth while cracking down at the border.

 
State

• Recounts confirm 2 state House Democrats unseated in northeastern Minnesota. This in heavily contested District 3A (Ely/International Falls) and 3B (Island Lake).

 
Regional

• Twin Cities property taxes jump, cutting deep into family budgets. Earlier article on St. Paul hosting a hearing on the proposed 15% tax hike – and how to apply for a refund.
• Saint Paul: After months of deliberation and community engagement, the Saint Paul City Council voted to adopt the city’s $781.5 million budget for 2023.  Highlights of the budget the council approved were the Reduction of Office of Neighborhood Safety services of $350,000, leaving a remaining ONS budget of $150,000 in addition to $4 million in American Rescue Plan allotment.  

Local 

• ​At least three St. Paul City Council seats will be open in 2023: Council President Amy Brendmoen and Council Member Jane Prince will not seek re-election, paving the way for a big shakeup in city leadership starting in 2024. The announcements, which follow former Council Member Dai Thao's resignation in August, mean there will be open races for at least three of St. Paul's seven council seats, all of which will be up for election in November. Read more.

 
Subscribe to our Chamber Advocacy Update to keep up with advocacy news.

• Visit Saint Paul’s Guide to the Holidays in Saint Paul!
• And we’re already looking ahead to January and our annual Breakfast With the Mayors on January 26.  Please join us!
• December's episode of B’s Table Talk featuring Ken Smith has been published on PodBean.

• It looks like many are hedging against a potential recession in 2023.  Want to know how?
• TCB 100: Innovators and Newsmakers to watch in 2023. Special shout outs to Chamber members: Amy Brendmoen, St. Paul City Council President; Jude Bricker, CEO of Sun Country Airlines; Darrell Brown, President/COO of Ecolab; Acooa Ellis, SVP of Community Impact at Greater Twin Cities United Way; Elizabeth Emerson, VP of Public Affairs at Goff Public; John Frawley, President of Minnesota Zoo; Tracey Gibson, VP and Chief Diversity Officer at Andersen Corp; Barry Gisser, SVP/CFO at American Public Media Group; Jazz Hampton, CEO of TurnSignl; Christina Hennington, Chief Growth Officer at Target; Eric Johnson, President/CEO of Aeon; Neel Kashkari, President/CEO of the Mpls Federal Reserve; Suzanne Rivera, President of Macalester College; Marc Lore and Alex Rodriguez, Owners of Minnesota Timberwolves; and Stephen Spears, SVP of Twin Cities Community Banking at Bremer Bank!​

• Final reminder: the launch of Twin Cities Vanguard Accelerator to support Black, Indigenous, and Latina owned businesses. Applications are due Monday, December 12! Apply here.  

• Sears stores in St. Paul, Maplewood, and Burnsville hit the market, the latest properties in a long string of such releases since 2015. The properties are owned by REIT Seritage Growth Properties. Sears, which once maintained 3,500 Sears and Kmart stores, recently emerged from bankruptcy with just 22 active locations nationally. 
• First affordable housing project in St. Paul’s planned Highland Bridge breaks ground. Residents at the Lumin will be 55 or older and earn 30% or less of the area median income. ​