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Minnesota Lawmakers Prepare For A Budget Showdown

Minnesota Lawmakers Prepare For A Budget Showdown

Gov. Mark Dayton and Republican leaders have found agreement on a handful of major issues so far. But things are about to get a lot tougher.

At this time six years ago, things weren't going so well in St. Paul.
 
DFL Gov. Mark Dayton was entering his fourth month as governor of Minnesota and facing off against a Republican-controlled Legislature to shape the state’s more than $40 billion budget. “We were $3 billion apart, myself and the Republican majorities,” Dayton said. “I came down a billion and a half and sat there and they wouldn’t budge, so we ended up with a [government] shutdown.”
 
Now halfway through Dayton's second term — and with the GOP once again in control of the Legislature — Dayton and Republican leaders say this year is a different story.
 
So far this session, the governor and Republicans have already found agreement on a handful of major issues, from a bill providing short-term relief for people who’ve seen their health insurance premiums skyrocket to the most recent agreement over a so-called “reinsurance” bill to subsidize insurance companies operating in the individual market. Meanwhile, the Republican House and Senate have spent the last two weeks churning through committee work and votes on major budget packages, from tax cuts, health care and roads to funding colleges and classrooms. 
 
After they take a break for Easter and Passover next week, legislators and the governor will negotiate their differences on budget bills in conference committees as soon as they return, starting in mid-April.
 
That’s a dramatic departure from the standard operating procedure of the last several sessions, when the details of major bills only became clear in the final two or three days of session in May. That resulted in plenty of all-nighters, confusion and — ultimately — special sessions to fix mistakes. 
 
That’s not how Paul Gazelka, the new Senate Republican majority leader, sees things going down this year. “Look at the bills we’ve already passed,” he said. “We’ve tried to include the governor as much as possible. That’s the trend that I want to continue to foster. I think we will get better bills if we work that way.” 
 

Phony numbers vs. fuzzy math

That’s not to say there aren’t tough negotiations ahead. The budget bills put forward by the governor and Republican legislators paint dramatically different visions for the state. 
 
To name a few areas:  
 
  • Dayton wants to spend more on government services, but Republicans are proposing to rein in state spending across all agencies.
  • Republicans in the House and Senate want around $1 billion or more in tax cuts, but Dayton, concerned about the impact of big tax cuts on future budgets, has only offered up several hundred million in mostly tax credits.
  • Dayton wants a gas tax increase for roads and bridges and more funding for transit, while Republicans have proposed using existing state money for roads and blocking both state and federal funds for transit altogether.
  • Dayton wants to pump $175 million more into his signature all-day prekindergarten proposal, while Republicans have left its funding stagnant or eliminated the program altogether.
 
And those are just the political differences. The two sides also can't agree on the basic math of the budget. In a briefing with reporters Wednesday, Dayton’s budget commissioner, Myron Frans, used words like “phony” and “alternative” to describe the House and Senate Republican budget figures.
 
At the heart of the disagreement is Republicans’ decision to shape their budgets off of spending numbers for the last two-year budget. Frans, however, has said the cost of government has gone up since then, particularly the spending for medical assistance and other health care programs. The governor’s budget automatically includes inflationary increases to run those programs.
 
“The legislative leaders put together a budget full of alternative math that helps support their campaign talking points but they do not add up,” Frans said. “The bills are designed ... to start negotiations with the governor over an imaginary position, a made up balanced budget starting point.”
 
Republican House Speaker Kurt Daudt fired back at that contention, saying Dayton’s administration has let automatic increases in state government spending run out of control. The Republican’s budget, he said, doesn’t assume automatic spending increases. 
 
“This is the governor’s fuzzy math. We are spending $2 billion more on health and human services and the governor would call that cuts?” Daudt said. “The reality is almost every year the budget is increased and much of it is increasing because of the governor’s inability to make the departments operate more effectively and more efficiently.” 
 

An early start for negotiations

So how can all sides come to agreement by the deadline if they can’t agree on the math? 
 
A clue to that question will come after lawmakers return from break, when they go into conference committee, where the House and the Senate meet to work out the difference between their bills. GOP leaders in both chambers said they want the governor’s office to sit in on those meetings and start negotiations. In theory, the end result would be bills Dayton can accept and sign. For now, at least, all sides say they want to work together to make that happen.
 
“If we send a bill that he vetoes then you know that things are breaking down,” Gazelka said.
 
“The governor has come to the table with us on all the other bills we’ve passed. By setting this up early, we have time to work on all of these complex issues and find somewhere to land early,” Gazelka added. 
 
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That means everyone will agree to things they don’t want. For Dayton, that might mean agreeing to some kind of tax cut bill — which isn’t included in the budget and doesn’t have to get done this year. But with a $1.65 billion budget surplus, Daudt said Republicans will insist that some kind of tax cut is passed. “If the governor thinks we are going to leave here without putting some money back in the pockets of Minnesotans, he’s sorely mistaken,” Daudt said. 
 
For Republicans, that could mean agreeing to spend more on certain state programs and eliminating controversial policy provisions from budget bills that Dayton has said he won't accept. That includes a delay of deadlines for water protection buffers that’s included in an environmental budget. “If they keep insisting on lumping those into budget bills they are going to really confound the process,” Dayton said.
 
Leaders acknowledge the similar dynamics between this year and the 2011 budget battle and shutdown. But they also say there’s one major difference in 2017: The state has a budget surplus, not a $6 billion budget deficit. 
 
“We’re more than willing to work with the governor to get to completion,” Daudt said. “And with a surplus like this, I don’t see any reason why anybody should be talking about a shutdown at this point.”