Posted: 1/25/05
Kierlin predicts million dollar payroll for Caledonia Fastenal office
Senator also gives legislative update
By David Heiller
Argus News Editor
The new Fastenal business that is coming to Caledonia could provide a payroll of about $1 million in two years.
Fastenalís board chairman and founder, Bob Kierlin, passed that and more information on to about 40 Caledonia citizens at the Caledonia Rotary Clubís weekly meeting on January 21.
Kierlin, the Minnesota State District 8 Senator from Winona, also gave a legislative update and heard questions and concerns from some of those attending in the basement of Goodtimes Restaurant.
Kierlin started with Fastenal, a company he founded. Based in Winona, Fastenal operates more than 1,440 stores in the US, Canada, Mexico, and Singapore.
Its stores stock about 356,000 products, including threaded fasteners such as screws, nuts, and bolts, and more. Its customers are typically construction, manufacturing, and other industrial professionals.
Caledoniaís Fastenal office will be located in the upper southwest end of the former Caledonia Elementary School building. Fastenal signed a lease with owner Mike Nanof for two former kindergarten classrooms there in December, and is remodeling them. Officials told Nanof that up to 30 jobs could be created there within six months.
Kierlin described the Caledonia office as a call center, with employees trying to collect past due accounts and working with Fastenal sales people. Fastenal had losses from unpaid bills of 6/10 of one percent of their annual sales in 2004, he said. Industry standards are 3/10 of one percent, so lowering the losses by 3/10 of one percent could save the company $3.5 million a year, based on its 2004 sales of $1.2 billion.
Starting pay for the call center jobs will be $1,800 a month, with workers eligible for bonus plan after a year that could increase their pay by 25 percent.
The call center will be good for the community, Kierlin said, because all the money will come from other locations, and will stay in Caledonia. Michelle Reinhart, a Fastenal employee in La Crosse, will head it.
ěIím sure itís going to be a good thing for you and also for Fastenal,î Kierlin said.
The Caledonia site was chosen because it is close and convenient to company headquarters, and because of the good work force in the area, Kierlin added.
Legislative update
Kierlin spent the next 25 minutes talking about the 2005 legislature, and listening to concerns from local citizens. Several people questioned him about funding problems on things like schools and roads.
Charlie Wray, a Caledonia school board member, said that with Governor Tim Pawlentyís education funding increase proposal of two percent, school districts will have difficulty just keeping what they have in place.
Wray noted that Pawlenty was suggesting proposals for giving school district the option to increase levy amounts, and to levy without the need for referendums. Thatís good politics for the governor with his no-new-taxes pledge, Wray said. ěThe reality is I think taxes are going to be raised.î
Kierlin responded to Wrayís long question by saying that the governorís proposals are a starting point, but predicted that funding would ultimately be higher than two percent. He also said that school districts who took part in changing their compensation programs could receive up to eight percent funding increase.
ěThe mood is such that education is the area we have to fix first,î Kierlin said.
A good educational system is one of the keys to economic development, Kierlin said, along with providing the type of tax climate that keeps businesses and venture capitalists here.
ěYou want to have the students coming out of high school be ready for college,î he said. ěThatís really the secret to good, quality life.î
School superintendent Michael Moriarty asked if the state would be restoring ECFE funding, and if there would be money for all-day, every-day kindergarten.
Kierlin said he didnít think the kindergarten funding would come through, but he was more optimistic about ECFE because communities are becoming more aware of its positive impact. But Kierlin jokingly warned the audience about ěRule Fiveî with the state legislature: It takes government five times as long to do something as it does the private sector.
Audience member John Benton said that he doesnít hear education as a priority coming from the capital.
ěI think it is,î Kierlin responded.
Tax changes?
Randy Mell asked if there would be changes in what he called regressive taxes (such as sales tax) on the middle class that began five years ago. He pointed out to Kierlin that most of the questions of the day centered on not enough money coming in to the state.
Kierlin responded that sales and property tax tend to be regressive, but there are some exceptions for low-income families. He said it is hard tell how accurate the state revenue forecast is, mainly because taxes from corporations are hard to predict. He felt the last forecast from December 2004 of a $700 million deficit was probably on the pessimistic side. He also said that people should remember how it compared to the forecast two years ago that showed a deficit of $4.2 billion.
Kermit McRae made a plea for improving roads in the area. Highways 16, 76, and 44 are lifelines in the county, and Highway 44 hasnít been fixed for 15 years, McRae said.
Kierlin said a gas tax of five cents per gallon would probably pass this year. ěIt wouldnít fix all the problems though,î he said. ěThe problems are bigger than that.î
Kierlin feels that Minnesota needs to repeal its estate tax, because the federal estate tax credit is being discontinued in 2005. Many elderly people are being advised to change their permanent residency to states like Texas, where people pay 15 percent less in estate tax than in Minnesota. Itís a small thing, Kierlin said, but it could get swept under the rug and not be changed, Kierlin said.
The top priorities at the capital will be passing a bonding bill and passing a new budget for the next biennium, Kierlin said. Lawmakers will end up with a balanced budget with money for education and a few other areas, he predicted.
Extra income will have to come from gambling or a ěracino,î which is a combination of race track and casino, Kierlin said. ěThe other alternatives out there start getting really slim.î
A 2-1/2 percent sales tax on alcohol that is scheduled to be removed likely will stay in place, he said, as will a tax on car rentals.
Local governments will also be given the option of levying a 1/2 percent sales tax, he predicted, provided the levy passes by a referendum and is used for improving infrastructure.
As for state funding for new sports stadiums, Kierlin said that the University of Minnesota has the best chance, but only if the University can come up with a big part of the funding. The state could pick up responsibility for the remaining part of the bond, then recover the money through ticket sales.
Baseball and football stadium bills wonít pass unless the teams pony up more money, Kierlin said.
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