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Budget, health rise as top 2011 business issues

How legislators solve a $5.4 billion state budget deficit looms as the top business issue for the 2011 session, says Bill Blazer of the Minnesota Chamber of Commerce.

"This year ... I'm hearing a lot about the state budget and how are we going to finally solve that problem," Blazer, Minnesota Chamber senior vice president for public affairs and business development, said last week in an interview.

Blazer was in Bemidji last week to hold a session with Bemidji Area Chamber of Commerce members to give the Minnesota Chamber's perspective on the 2010 session and ask for input on 2011 issues. It is one of 26 meetings being held statewide.

At each meeting, Blazer said, a presentation is given to contrast where Minnesota was in 1974 compared to today, "to show ... just how much the economy and our state has changed in terms of our demographics, rate of growth of the workforce, that fact that our businesses in '74 competed mostly regionally in the Upper Midwest. Today, they're all competing for markets worldwide."

Blazer said a Bemidji area business has 21 employees and sends products to 41 countries. "He's exporting to more countries than he has employees."

The companies coming out of the recession the quickest are those who customers outside of the United States, he said.

Most people at the presentations know those contrasts from 1974 to today, Blazer said. "But what's sad is that the policy makers don't. We didn't see much indication in the 2010 session that the policy makers were ready to embrace the need that we really do have to rethink how state services are provided."

The cost structure needs to be changed so that the state delivers the services but at a lower per unit cost, he said. "I don't think they're ready to embrace that the way business audiences think they should."

He predicted that candidates door-knocking around Bemidji will find that voters want more value, he added. "The average citizen expects them to deliver more value."

While a $5.4 billion shortfall looms, Blazer said that "nobody expects them just to cut because businesses, just like individuals, rely on a certain level of public service. To just eliminate the service doesn't help you be a successful business. You want the service delivered but at a lower price."

The Minnesota Chamber plans to launch an initiative for the 2011 session which proposes redesigning some of the state's major services, he said. The Chamber is currently looking at Medicaid, transportation and higher education.

Chamber officials learned a lot about the General Assistance Medical Care program for the indigent through the session-long debates, Blazer said. "You're going to provide health care to these folks, you just need to come up with a way that they get quality care that affordable to everybody else."

While Gov. Tim Pawlenty refuses to use authority given to him by the Legislature to enroll the state into an enhanced Medicaid system which will send $1.4 billion to the state for former GAMC care, the Minnesota Chamber is also reluctant to recommend that route.

"We may, after we've done our homework, but not right now," Blazer said. "We've seen some exciting proposals for redesigning Medicaid that we think would improve the quality of the care and make it more affordable. Our fear is that if you just jump into the federal Medicaid system that there won't be any desire or ability to reform if somebody else is paying for it."

While rural hospitals nixed the plan put in place, Blazer said there were good provisions to make GAMC better care and more affordable care.

"If you focus on getting people good care, quality care, you actually save a boatload of money," Blazer said the Chamber has clearly learned in its studies. "If somebody gets the tooth taken care of, then they don't get the abscess and they don't get the infection, and it saves everybody money."

Health care is the No. 2 topic in the state meetings, Blazer said. At one stop, a business said it laid off workers so fewer employees were in the health care pool, which saw premiums rise. "They got to keep their job, which is really important, they actually saw their take-home pay go down, because they were paying so much more for health care."

The Minnesota Chamber will also study state funding sent to higher education, he said.

The study will include "how we use state dollars in terms of the number of institutions that we support, how we do financial aid, and the trade-off between sending support to the institution versus enriching the financial aid programs so that you're focused more on giving aid to the young adults who really need it."

At the Bemidji meeting, Blazer said he was told that for the second summer in a row, there are more students taking courses online from Bemidji State University than there are physically attending classes.

"That doesn't necessarily say you're going to close a facility, but it does affect how much you invest in buildings," he said. "You put more into fiber optic cable and cameras, whatever you need to effectively teach a class online."

The idea is to give better higher education at a better value, he said.

The Chamber's transportation study is going, seeking a way to "get a bigger bang for the buck," Blazer said. The Chamber a few years ago did support the gasoline tax increase that passed over Pawlenty's veto.

"We've also got a study underway of public sector compensation and benefits, where we're trying to understand differences in both compensation and benefits," Blazer said.

That study should be done by fall. "That's the expense side of the equation for the public sector," he said. "We always debate programs but there aren't a whole lot of times where the Legislature digs in and looks at these expenses, like the wages and the benefits."

Another Minnesota Chamber initiative is to get local chambers of commerce to hold meetings to survey how local services can be delivered more effectively, he said.

"We have a vision of a local chamber convening a group that includes the business community but also includes the city manager and county administrator and maybe the school superintendent and they sit around a table and think about what could we do proactively to deliver services more effectively at a lower price?"

If changes are needed in state law, the Chamber would help foster those changes, he said. "Without those kinds of good local ideas, the Legislature's going to do what it will do, and you guys will pay."

Whether state aids to local governments are cut or not, he said, "there's value in trying to figure out how to deliver high-quality services at a lower cost.

"Our fear is that the Legislature will come in and see this $6 billion shortfall and will just cut here and there, and they won't redesign anything," Blazer added. "They won't make it any easier for Beltrami County or the city of Bemidji to deliver a higher quality service at a lower price because they just don't know how to do that."

The Minnesota Chamber wants to inject some of its own ideas, and would help lobby for necessary changes for good local ideas.