Corporate clapback: The state’s richest companies are working Walz, Legislature hard
Inside the Minnesota State Capitol. Photo by Max Nesterak/Minnesota Reformer.
Minnesota’s most powerful corporations and biggest hospital systems are furiously lobbying Gov. Tim Walz and lawmakers as the legislative session enters its final days, hoping to stave off what they say would be devastating new regulations and taxes.
In the past two weeks or so, executives from Medtronic, General Mills and filtration company Donaldson Company, Inc., have met with Walz about issues including a proposed ban on noncompete agreements. The companies fear it would facilitate theft of trade secrets.
They’re also concerned about a paid family and medical leave bill, which has passed both the House and Senate. It would require Minnesota companies and their workers to each pay a 0.35% payroll tax to fund 12 weeks of paid medical leave and another 12 weeks of paid family leave.
Tax experts from Target, UnitedHealth Group, General Mills met with Walz’s Chief of Staff Chris Schmitter and cabinet commissioners about a controversial provision — now abandoned — that would have forced companies to report their overseas income to compute their Minnesota taxes.
A Walz spokesman confirmed the meetings, though they weren’t on his public schedule.* This week, Walz’s public schedule shows meetings with Target and UnitedHealth Group executives, and another with Allina Health CEO Lisa Shannon.
A spokesperson for House Speaker Melissa Hortman, DFL-Brooklyn Park, said she, too, has met with a number of company executives about paid family leave and the corporate tax provision, including General Mills, UnitedHealth, Ameriprise Financial and Takeda — a Japanese pharmaceutical research company.
Target, General Mills, UnitedHealth and Donaldson did not return the Reformer’s request for comment. A Medtronic spokesperson released a statement saying the company has appreciated meeting with Walz and lawmakers about policies under consideration this session.
“Medtronic has always engaged with policymakers around our significant presence and history in Minnesota, as well as the importance of maintaining a strong ecosystem for innovation and medical technology in the state,” a spokesperson said.
Meanwhile, the Mayo Clinic has threatened to send major investments to other states unless it gets relief on two bills, one related to nurse staffing and the other that seeks to rein in health care costs.
To be sure, Walz frequently meets with executives from the state’s largest companies, who employ tens of thousands of Minnesotans, often in high-paying jobs with good benefits.
“The governor and his staff meet regularly with leaders of Minnesota’s businesses, nonprofits, and labor organizations to understand their perspectives and hear firsthand how the work at the Legislature will impact Minnesotans’ lives,” spokeswoman Claire Lancaster said.
But a new sense of urgency has emerged among corporate leaders, as the DFL-controlled Legislature nears the end of an amphetaminic session with major ramifications for business.
On at least one issue, the big corporations have won: Sen. Ann Rest, DFL-New Hope, announced Saturday that a provision to capture corporations’ foreign revenue is dead, at least for now. The provision would have required corporations to pay income taxes based on their global profits, rather than the portion they declare in the U.S.
Rest announced worldwide combined reporting no longer has the Senate’s support (just a few days after she said it had the necessary 34 DFL votes). This came two days after the Wall Street Journal editorial board wrote an article excoriating the proposal.
Though her announcement came days after intense pushback from corporations — which claimed worldwide combined reporting would unleash retribution from other countries — Rest told the Reformer her decision to walk back the measure wasn’t to appease the business lobby.
Asked if corporate influence played a role, Rest called the assertion “bull—.”
“That’s not true. That’s so far from the way in which my mind works,” Rest said.
Rest, who was first elected to the Legislature in 1984, said after speaking with Senate colleagues on the taxes conference committee, she decided worldwide combined reporting had too many uncertainties, would not be a reliable source of revenue and would likely result in companies suing Minnesota.
“During these sessions, I don’t usually sleep very well, but I have all kinds of things going on in my head and I just finally said, ‘We’re not going to that. So let’s start now in finding better sources to meet our needs and our goals,’” Rest said.
A senior administration source said they conveyed concerns to Rest about implementation.
Rep. Aisha Gomez, DFL-Minneapolis, said worldwide combined reporting is still good policy despite pushback from corporations.
“It doesn’t matter how many CEOs descend on our state to complain, how many bad-faith arguments from right-wing foundations get picked up by the mouthpiece of corporate America … Worldwide reporting is good, fair tax policy,” Gomez said in a tweet Wednesday.
Businesses lobbying this session
It’s not new for business and multinational corporations to lobby Minnesota lawmakers on bills they find problematic. But some lawmakers this year have been unwilling to meet with lobbyists, telling their aides to turn away lobbyists and refrain from scheduling appointments with them.
Rep. Pat Garofalo, R-Farmington, said that’s problematic.
“Republicans should meet with the unions even when they disagree with them, and Democrats should meet with businesses even when they disagree with them,” Garofalo said.
For first-term Rep. Samantha Sencer-Mura, DFL-Minneapolis, being lobbied was one of the things she was unfamiliar with when she first started. Now, Sencer-Mura said she’s more impressed by grassroots lobbying efforts compared to large corporations.
“Hearing directly from folks impacted is powerful, and it makes you feel like it’s not necessarily about just who has the money or who knows how to navigate the system, but it’s also about who shows up and is willing to raise their voice,” Sencer-Mura said.
Many left-leaning grassroots organizations, like ISAIAH, are seeing their years-long advocacy efforts pay off with the DFL trifecta — even though they can’t spend sums like the more than $3 million the Minnesota Chamber of Commerce shelled out lobbying the 2022 Legislature, for instance.
ISAIAH has been at the forefront of garnering support for the paid family and medical leave bill now on the cusp of becoming law.
“Far too often corporations have an oversized say about what communities should or shouldn’t have — what communities are deserving or undeserving of,” said JaNaé Bates, ISAIAH communications director. “We’ve really been able to get done a tremendous amount of things that have been stuck for the past decade.”
Lawmakers are trying to wrap up the session early, which gives businesses even less time to influence change. The Mayo Clinic seems to have gone above some legislators’ altogether to influence policy by issuing its ultimatum to Walz. One of the bills Mayo Clinic is opposed to and cited in its ultimatum is the Keeping Nurses at the Bedside Act — a union-backed bill aimed at improving nurse staffing levels to reduce burnout and improve patient outcomes.
Rep. Sandra Feist, DFL-New Brighton, the bill’s author, said she respects lobbyists who represent big businesses, because they are often subject experts. She said it’s disheartening, however, when businesses like Mayo — technically a nonprofit though as rich and powerful as most Minnesota corporations — try to influence policy through raw power.
“It’s frustrating when these interests don’t even need to make a policy-based rationale, and they are trying to achieve their goals through sheer force,” Feist said. “I feel like that disrespects the Legislature and disrespects this process.”
“I think a lot of these business groups thought that the Democrats were just going to talk about doing this crazy stuff — but not actually doing it — and now that they see that it’s actually happening, they’re scared and justifiably so,” Garofalo said.
*Clarification: Walz’s public schedule indicated a meeting on April 4 with the Business Partnership — which represents the state’s largest companies, including Medtronic, General Mills and Donaldson — though the names of the companies and subjects to be discussed were not detailed.
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