As part of its review of Minnesota’s
public-policy process, in October 2017 the Civic Caucus began a
series of interviews with major announced candidates for the office
of Governor of Minnesota. The interviews are centered on what can be
done to keep Minnesota and its people competitive in a number of
This interview with Keith Downey is the first in that series.
Keith Downey, former Minnesota
Republican Party Chair
Reduce taxes, cut state
government, offer complete school choice
Interview October 6, 2017
John Adams, Steve Anderson,
Janis Clay (executive director), Pat Davies, Keith Downey, Paul
Gilje, Randy Johnson, Paul Ostrow (chair), Dana Schroeder (associate
director), Clarence Shallbetter.
According to gubernatorial candidate Keith
Downey, Minnesota must:
Focus on the private-sector
economy. To improve Minnesota's business climate and make
Minnesota more competitive with surrounding states, Downey believes
the state must reduce the tax burden and fix the regulatory
Constrain the size and growth
of government. He pledges to reduce state government by 15
percent in his first term as governor.
Address the failure in the
urban schools and beyond. He says we must fix the achievement
gap, largely by using complete school choice programs (allowing
parents to choose either public or, if their children are in failing
schools, private schools for their children) and by refocusing on
technical training in high schools. He opposes state-funded
universal preschool for four-year-olds and agrees with the idea of
making the role of teachers central and diminishing the roles of
superintendents and principals.
In the area of transportation, Downey says
he would focus on funding roads and bridges and favors using some of
the general fund to do that, rather than relying exclusively on user
fees. He believes the Twin Cities area does not have the population
density for light-rail or heavy-rail transit. He says the state
spends way too much money on health care and human services and not
enough on core infrastructure.
When discussing the current legislative
process, Downey says the governor should use the power to veto as a
way of pushing the Legislature to abide by the Minnesota
Constitutional mandate that bills be limited to a single subject.
Keith Downey is a Republican candidate for
governor of Minnesota. He is an independent management consultant
and, since May 1, 2017, has worked on a consulting project for an
investor considering expanding a business into Minnesota.
Downey is former chair of the Minnesota
Republican Party, which he led from 2013 until April 2017.
Previously, he served two terms (2009 to 2013) in the Minnesota
House of Representatives in District 41A in Edina. He served on the
House Ways and Means Committee, of which he was vice chair; the
House K-12 Education Finance Committee and Policy and Oversight
Committee; the Tax Committee; the Finance Subcommittee for the Early
Childhood Finance and Policy Division, on which he was the ranking
minority party member; the Higher Education and Workforce
Development Finance and Policy Division; and the State Government
Before entering politics, Downey
a partner with Virchow Krause Consulting and had also worked for
Unisys and Epic Systems.
He was a management consultant to
business, as well as to state and local government. From 2004 to
2007, he served the Minneapolis Regional Chamber of Commerce as a
board member, executive committee member, public-policy committee
chair and representative to the Hennepin County Southwest
Transportation Corridor Policy Advisory Committee from 2006 to 2008.
In 2008, Governor Tim Pawlenty appointed him to the board of the
Minnesota Academic Excellence Foundation.
He received his Bachelor of Business
Administration degree in Management Information Systems in 1983 from
the University of Wisconsin in Eau Claire.
Continuing its focus on Minnesota's
competitiveness, since September 2015, the Civic Caucus has been
undertaking a review of the quality of Minnesota's public-policy
process for anticipating, defining and resolving major community
problems. On November 27, 2016, the Caucus issued a report based on
As a management consultant in Wisconsin
and in Minnesota, Keith Downey gradually began to do more
public-sector projects for state and local governments. He
worked on three very large projects implementing the Help America
Vote Act requirements in Wisconsin, Indiana and New Jersey, with
several smaller projects in other states, as well. In addition, he
performed project work for a number of state and local governments
in a variety of different areas.
"More and more, I began to see that
government just wasn't working," he said. "When you look behind the
curtain at the government, you realize how tough it is to get
anything done, much less carry out its mission. I felt like I needed
to get more involved."
In 2008,Downey ran for the Minnesota House
seat then occupied by Rep. Ron Erhard (R-Edina). He defeated
Erhard for the Republican endorsement and went on to win the general
election. He served two terms in the Minnesota House, from 2009 to
"That was when we had the big budget
deficits," Downey said. "Most of my time in the Legislature was
spent on business and tax policy and how you actually reform state
government. I was very much a reformer and very much opposed, even
some within my own party, and outside, especially by the
In 2012, Downey lost his bid for election
to a redistricted open Senate seat in the southwestern suburbs. He
became chair of the state Republican Party in 2013 and served until
April 2017. He said he was able to improve the finances, operations
and public reputation of the party, so it is much more credible
"My entire career has been about fixing
things," he said. "Even though I held a highly political position
for the last four years, I'm much more of a policy wonk. That guides
me in this race."
The theme of Downey's gubernatorial
campaign is "Make Minnesota work for everyone." He said the
theme stands for what he wants to do and where we need Minnesota to
go. Even though he's had great opportunities and success in
Minnesota, there are lots of frightening trend lines, he said,
including job growth, the economy and the pockets of people who
really don't see their opportunity in the state. "Government is
coming at people and not from them," he said.
Downey's campaign has three key policy
Focus on the private-sector
economy. Tax and regulatory burdens are key there, Downey said.
Constrain the size and growth
of government. He said we must shrink state government in order
to be able to provide the private sector economy room to grow and to
be able to offer tax cuts. He pledges to reduce state government by
15 percent in his first term as governor.
Address the failure in the
urban schools and beyond. "The achievement gap is just killing
us," he said. "It's just a cancer. We cannot leave that many kids
behind in our urban core and expect our state to be healthy."
Downey said he was on all the education
committees in the House. "We keep pouring more money in and even
throwing more money at failing schools," he said. "I think we're
upside down in that." He said we must fix the achievement gap,
largely by using school choice programs and refocusing on technical
training in the high schools.
The electorate is not in the mood for
policy. Downey said there is a loss of trust in government,
along with a loss of confidence in institutions in general. "We're
losing our Minnesota ethic a bit," he said. "There's a spiritual
undertone to a lot of this. So many people have kind of lost hope."
"I can talk about the budget and the
business climate and education till the cows come home," he
continued. "But what really connects with people is when I tell them
I believe in them and that I trust Minnesotans and not a bigger
government, and that we actually have a chance to reinvigorate that
good old Minnesota ethic. When you talk to people like that, all of
a sudden, the political equation changes fundamentally. Connecting
with people at that more visceral, human level is the essence of the
campaign this year. There's a loss of confidence in the American
dream and our opportunity here. That's who I want to be in this
campaign--the person who connects with people at that level."
2. Business Climate.
What needs to be done to ensure new
investments and support small businesses and entrepreneurship in
Minnesota, whether in mom-and-pop shops or in the largest
corporations? An interviewer asked that question and Downey
responded that Minnesota must reduce the tax burden and fix the
regulatory environment to the point where Minnesota is more
competitive with our surrounding states. "Will Minnesota choose to
participate in federal tax reform?" Downey asked. "Or will Minnesota
continue to live in the past?" He said those are the easy political
"To get down to brass tacks on policy, we
must look at the economic engine that starts with entrepreneurship,"
Downey said. "The micro-businesses, like those up and down Lake
Street in Minneapolis are crushed by the maze of regulations,
reviews and inspections and the contradictory requirements at the
county to municipal levels."
To support the startup phase of
businesses, he worked as a House member in a bipartisan fashion and
also with then-Governor Tim Pawlenty to address the need for angel
investment capital with the
Angel Investment Tax
The program, which has currently allocated all its available
resources, provides a 25-percent tax credit to investors or
put money into startup companies focused on high technology, new
proprietary technology, or a new proprietary product, process or
service in specified fields.
Downey said after the angel investor
stage, it's very difficult in Minnesota when new companies get to
the stage of needing venture capital. "Venture capital has almost
dried up in this state," he said. "There used to be a very vibrant
venture capital community 10 to 15 years ago. Now, there's virtually
He said when companies get into the stage
of institutional investment rounds and scaling up, they often move
to other states, because the cost of doing business in Minnesota is
high. "With a depleted base of startups and early-stage-growth
companies in Minnesota, we're now left with growing, midmarket
companies and the legacy Fortune 500 companies, which aren't growing
here," he said, noting that the state has gone from 27 headquarters
companies to 17. "They're diminishing and we're not rejuvenating
from the bottom up."
Rather than asking whether taxes are too
high or too low, we should be asking whether we're getting what
we're paying for. An interviewer made that comment and asked
what Downey means when he talks about the state being competitive.
Downey replied that competitiveness can be measured by GDP, income,
the quality of the workforce, the quality of life and return on
investment potential, all relative to the surrounding states and
"In the grand scheme of things that make
us competitive, the one thing that is killing us is return on
investment," he said. "Site-selection people for businesses looking
at Minnesota say if the cost of doing business here is too high,
companies won't do a deal here. Over the last couple of decades,
we've started to lose on that." He said it'd be impossible to
recover from that if we don't act on it now.
The demographic reality in Minnesota is
that fewer people are coming into the workforce than are leaving it;
we have lots of jobs and not enough people. An interviewer made
that remark and asked Downey how he would address that demographic
reality as governor. Downey responded that Minnesota is a net
out-migration state, with its population growth coming almost
entirely from immigration and refugee resettlement.
The Center of the American Experiment
looked at job growth in Minnesota, Downey said, "and, shockingly, 34
percent of our job growth is in social services and education. So
one-third of the job growth here has come largely from
"This is a tough conversation, but we need
to have it," he said. "We say we're so short on workers, but we just
left a generation behind in Minneapolis and Saint Paul who aren't
equipped. We've totally ripped vocational-technical training out of
the high schools." He believes we should incentivize charter school
formation around vocational-technical training.
Are concessions to a company like Amazon
worth it? An interviewer asked that question and asked what kind
of investments we need to make.
Downey replied that to attract business to
the state, we need to make investments in the fundamentals and not
use incentives. We need to support public infrastructure--roads,
sewers, water--under private investment. "I'm glad to partner with
people on that," he said. "But when you are reduced to throwing
money and incentives at people, it's not good. Sure, we might get
Amazon to come here, but what's the long-term cost? Then Target and
Best Buy are wondering why they don't get the incentives."
"I would love to be in the position of
being governor and going out and selling this state to business," he
continued. "I would present to them why this is an awesome place to
be. I don't think one-off tax breaks and little gimmicks are going
to be part of that."
"We have some fundamental business-climate
issues we have to change here. The more underlying, fundamental
things in Minnesota are positive, but the more near-term, 10 to 20
years of deterioration in our business climate, aren't. We have to
address them. I'm not sure public policy is the answer to all of
them, but it's an answer to a lot of them."
How should we look at transportation
funding? An interviewer asked that question and commented on the
current struggle over transportation funding. He said we have relied
on user fees for roads and bridges and have relied on the general
fund to cover transit-operating deficits. We've now decided to get
more transit money from users through fare increases. And costs are
soaring for transportation for the elderly and the disabled.
Downey replied that transportation is a
core mission of government. "A lot of what we fund is not," he said.
He said we have pretty solid funding for water and wastewater
projects through different funding streams at the state. "But we
haven't spent enough on roads and bridges," he said. "I would have a
bias towards funding roads and bridges and agree with using some of
our general fund for that." Transportation needs to compete with
education and health and human services for funding. Otherwise, we
don't make a prioritization decision, he said.
We don't have the population density for
light rail, Downey said, and he's never believed that the North Star
commuter rail made sense. "We're just not the East Coast," he said.
"I don't know why all of that happened. We have to put a pause on
that and see where all that fits."
Looking at the future of transportation,
Downey noted that a recent McKinsey study showed that the use of
autonomous vehicles for business deliveries between 10 p.m. and 5
a.m. could maximize the use of our current road and bridge
He mentioned ride-sharing and autonomous
vehicles as consumer-directed and personalized opportunities and
said he is not in favor of forcing people to comply with fixed-rail
systems. "I'm not favorable to all these rail investments," he said.
"I will support the highest value, most cost-effective
congestion-relief projects. I think it's a hard sell for rail
investments, but I'll be open-minded as the governor."
An interviewer asked Downey why he's more
favorable to using general fund revenue for transportation, rather
than user fees. Downey responded that it's hard to peg the user fees
because of changes in auto technology, such as electric vehicles and
more fuel-efficient vehicles. "The gas tax then becomes a suspect
vehicle for funding transportation," he said. "How does public
policy keep pace with the changes in the market?"
He said we spend way too much money on
health care and human services and not enough on the core
infrastructure. "I would like transportation to more fairly compete
with other areas of spending," he said.
Complete school choice and reinvigorating
vocational-technical training could improve K-12 education.
Downey made that remark and explained his two specific proposals for
improving K-12 education:
He would offer complete school
choice for families whose kids are in a failing school. Complete
school choice, he said, would allow those families to pick their
children's schools, including private and parochial schools. In
answer to people asking what the definition is of a failing school,
Downey says 50 percent of the 10th graders now in Minneapolis
district public schools will not graduate. Among students of color,
75 percent of the 10th graders won't graduate.
"I think that's a pretty fair definition
of a failing school," he said. "For the kids who are going to have
their opportunity in life deprived them because the school isn't
functioning, how can you defend not allowing them to go to the
parochial school down the street where they can have that
He said he hears the counter argument that
we already have lots of school choice. "Yes," he said, "but it
forces you to send your kid from Minneapolis out to Minnetonka and
you have to get them to the district border so they can get
transportation. Everything is within the context of the
public-school monopoly. If we offered vouchers, my sense is you'd
see parochial schools expand in those neighborhoods."
He said that, given the success of charter
public schools with families in North Minneapolis, someday there
might be no Minneapolis School District schools in that part of the
2. Downey also proposes reinvigorating
vocational-technical education and building that back into the
high school curriculum in both district and charter public schools.
We need to empower people to go into their
local communities and train people for real jobs. Downey made
that remark and said when he was chair of the Minnesota Republican
Party, he met with leaders of five minority-based workforce-training
programs. They represented the Native American, Hispanic, Southeast
Asian and African American communities. Their programs were focused
on training people for real jobs, paying $25,000, $35,000 or $45,000
a year, with benefits.
Downey said the leaders complained that
they couldn't get any money from the state, because the state plows
all its workforce-training funds into its own state workforce
centers. The leaders complained that the state centers focus on
teaching people how to write a resume and apply for a job. They also
get people signed up for health and human service programs. "It's
almost like a recruitment program for welfare and other social
service programs," Downey said. He believes the community-based
workforce programs would do a better job.
Downey does not support universal
preschool for four-year-olds. "I don't support pushing the
public school system down to four-year-olds," Downey said. Instead,
he supports scholarships at the early-education level, so parents
can choose preschool programs for their children. "It pushes parents
to ask why they don't have that same choice and option and parent
control when the kids go to kindergarten," he said.
He said, though, that he's skeptical about
the returns claimed for early education. A Head Start review from
five years ago, he said, showed that any kind of advantage shown in
kindergarten for kids who'd been in Head Start had been smoothed out
by third grade. He said early education is not a panacea. And in
Minneapolis, he said, universal preschool for four-year-olds would
be "just a way to get kids in failing schools one or two years
Some people believe the way to make change
in K-12 education is to make the role of teachers central and to
diminish the role of superintendents and principals. An
interviewer made that statement and asked for Downey's reaction.
"Amen," Downey said. "The independent school district system that
produced such awesome results for Minnesota has been lost. The
Minnesota Miracle is showing serious cracks. The profession of
teaching has been lost."
5. The Policymaking Process in
The Civic Caucus is looking at the issue
of the policymaking process and its impact on Minnesota's ability to
be competitive. Civic Caucus Chair Paul Ostrow introduced the
topic of the policymaking process with that remark.
Another interviewer said she's concerned
with the current lack of enforcement of the single-subject bill
requirement in the Legislature. (That requirement, part of the
Minnesota Constitution, mandates that legislative bills be
restricted to a single subject and that the title of the bill
reflect that subject. Many critics of the Legislature maintain that
the use of multi-subject Omnibus bills violates this Constitutional
requirement. In September 2017, the Civic Caucus joined a Minnesota
American Civil Liberties Union amicus brief on a lawsuit now
before the Minnesota Supreme Court seeking enforcement of the
single-subject requirement. See
The interviewer asked Downey what the role
of the governor should be in enforcing that requirement and
improving the legislative process. Downey responded that the
governor's role is "huge." He said that, unfortunately, up to this
point, the Supreme Court has ruled that Omnibus bills meet the
single-subject requirement. But, he said, the governor has the
ability to veto such bills. "If you have a commitment to a good
legislative process, you have a commitment to veto big packaged-up
bills with all kinds of junk in them intended to buy votes," he
said. "You have a real opportunity to change what's going on in that
When Tim Pawlenty was governor during
Downey's first term in the Legislature, Downey said Pawlenty's
state-agency commissioners and gubernatorial staff were down in the
committees with legislators offering first drafts of bills, staking
out their positions and writing letters to legislators about various
"He was engaged," Downey said, even though
the House was under DFL leadership during Downey's first term. "Pawlenty
worked very effectively with DFL committee chairs. During the
legislative session, we passed bill after bill after bill two or
three weeks before the end of the session." When human services,
taxes, and education legislation was left towards the end of the
session, Downey said Pawlenty and the DFL Senate and House
leadership "hammered it out."
Republicans have never brought their case
to the people of Minnesota very effectively. Downey made that
remark and said that Republican legislators merely reacting to and
criticizing Gov. Mark Dayton's budget is not leadership. "Leadership
is taking your ideas out to the public and selling them," Downey
said. "If you have the people behind you, you have a really strong
What's the role of the governor in tamping
down the state's growing rural/urban divide? An interviewer
asked that question. Downey replied that when the DFL had
single-party control of state government six years ago, they kind of
"jammed" Greater Minnesota. Republicans then exploited that
rural/metro divide, and won a majority in the Minnesota House and
Senate. "It's now who can pit people against each other enough and
get enough seats," he said. "Both sides are guilty in having played
Downey said the progressive, left version
of the DFL is really starting to lose people, especially in Greater
Minnesota. "I fear what I see happening in the urban core, with
proposals to get rid of the police and establish a $15 minimum wage,
which just guts the lower end of the economic ladder," Downey said.
The immigrant businesses can't afford it.
"On principle, I will fight very hard
against things that are anathema to who we are as people--ideas
coming out of the progressive, far-left of the DFL party," he said.
"I would stand against those things where I thought they were really
wrong. There's some stuff that I think we have to stand up to."
6. Closing remarks.
People realize that this is an awesome
state, but there are bunch of things we need to fix. Downey made
that remark and said he has started asking people at various events
Are you concerned that your kids
might not stay in Minnesota?
Are you concerned that your
parents might not stay in Minnesota?
Do you ever think you might not
stay in Minnesota?
Downey said people think about those
questions and realize there are many things that need to be fixed.
He said we must fix the private-sector economy and failing schools,
and find a way to rein in state government. He senses among people
in Minnesota and the whole country that things are out of control
and need to be restored. "It's public policy, it's cultural and it's
spiritual," he said.
"As a candidate, there's an opportunity
and an obligation to speak to the public that way," Downey said.
"And, if I am governor, I will have run on a strong, bold agenda,
focused on the people and on making Minnesota work for everyone. And
I can actually look at the people of Minnesota when I'm giving my
State of the State address in 2019 and say that I will deliver on
everything I've talked about."
Downey said if he is elected governor, he
will come back for another Civic Caucus interview.
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Interview Group
includes persons of varying political persuasions,
reflecting years of leadership in politics and business.
to see a short personal background
John S. Adams, David Broden, Audrey Clay, Janis
Clay (executive director), Pat Davies, Paul Gilje,
Dwight Johnson, Randy Johnson, Sallie Kemper, Ted
Dan Loritz, Tim McDonald, Bruce Mooty, Jim Olson,
Paul Ostrow (chair), Wayne Popham, Dana Schroeder,
Clarence Shallbetter, and Fred Zimmerman