Just across the Mississippi River from Hastings, MN lies
Prescott, WI. A town of about 4,300 people in Pierce County, Prescott is more
than a small border town filled with Packer and Brewer fans. Prescott is also a
textbook example of why you should never ignore what’s going on in the world of
politics. You see, Prescott is also home to a brand new industrial park,
sprawling with new construction.
In May of 2013, a new set of state business-to-business
taxes were approved by the Minnesota Legislature. One of the tax hikes added a
state sales tax to business-related warehousing and storage services. It
targeted all tangible goods that are sent through third party warehousing and
distribution. Essentially, you could argue that the majority of goods produced
in our state our consumed in our state would have been subject to some sort of
new tax. Minnesota had the dubious distinction of being the only state in the
nation implementing a tax on third party warehousing and distribution.
To say tax policy doesn’t affect business decisions is
ignorant at best, though admitted ignorance has been a common theme here in MN
that last four years. I won’t get real political here, but when several
businesses signed up to build new warehouses and distribution centers in
Prescott after the tax was passed, it wasn’t a coincidence. (In full
disclosure, our legislators eventually repealed the tax this spring, but the
damage was already done.) A few of these businesses pulled out, but United
Natural Foods (UNFI) is in the process of constructing a 300,000 square foot
distribution and warehouse that will add up to 314 new jobs and inject $37.8
million into the WI economy.
Think for a moment what that tax would have meant to their
business. Had they ignored what was going on at the legislative level, they may
have wound up building here in the wonderful city of Hastings. We have the land
available here for them, and we would have loved to see them set up shop in our
industrial park. You could argue Hastings was a better location because of our
vicinity to the cities and other major highways. Had they ignored our legislation
and built here, they also would have been saddled with the burden of paying
this extra tax that is not around in 49 other states. That would’ve had a huge
impact on their profitability, and it all could have been avoided (and was).
Taxes are just a small portion of the red tape and other
legislative issues that can impact your business. Different bills and
amendments get passed into law each year, sometimes under the radar, and it is
important to know how they affect you so you can plan for the future. Rather
than ignoring politics, you should be actively involved trying to put people in
office who are going to support your interests. As a small business, there are
many different trade associations or business interest groups who will do the
lobbying for you and keep you in the loop about what’s coming through the
pipeline. You could also have someone on your staff tasked with staying up to
speed on any and all laws and pending legislation that will affect your
business. Regardless of what you do, do something!
Before you vote this year, remember the story about
Prescott, WI. If you haven’t previously done so, make a conscious effort to pay
more attention and get more involved in your local politics. The future of your
business depends on it.
Andy Bertram CPCU, ARM-E
abertram@cobrown.com
651-800-6173
www.northriskpartners.com
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