When Minnesota got the news of an expected $2 billion budget surplus back in February, the bounty brought relief.
Even in divided government, there was no way lawmakers and the executive could fail to come to quick and easy agreement on how to handle the next two-year budget, Capitol powers thought.
But with a May 18 legislative adjournment deadline pressing down on politicians, the relief has turned to anxiety.
“We’re so far away from one another. … It’s a lot of work to do,” a disappointed Gov. Mark Dayton said last week. It was the second time in two weeks that he expressed dismay at the direction lawmakers are veering in their budget plans.
The governor, who said earlier this year that it would be “political malpractice” to shut down government, is now pessimistic.
The deep fissures between Capitol Republicans and DFLers extend beyond well-known differences on transportation funding. Indeed, on transportation, both sides of the aisle, despite sharp words, are expressing some optimism.
But on spending nearly $40 billion in state cash, lawmakers are widening the chasm. In plans for funding state government operations, health care, education, energy programs and tax plans, the two parties are so far apart that talk of a special session — even of a shutdown — has begun.
Senate Finance Committee Chairman Dick Cohen said he did not expect such distance between DFL and Republican plans, given the surplus.
“I don’t think I’ve seen a gap this wide,” said Cohen, DFL-St. Paul. “There’s a certain irony in that, with the surplus we have. Even in years in deficit, I don’t think we saw a difference as great as we have this year. It’s difficult to know what’s going to happen.”
State Sen. Dave Senjem, R-Rochester, a former Senate minority and majority leader, said the coming fight could be as brutal as those he negotiated in deficit years.
“I think this year is every bit as much of a loggerheads kind of a session as those years. Maybe worse,” Senjem said. “I think it is going to be really, really hard to put a budget together. It wouldn’t surprise me at all if we went to special session.”
While the expressions of pessimism might be part of the endgame negotiations to build pressure toward compromise, here are some of the key dividing lines:
STATE GOVERNMENT
House Republicans and Senate Democrats agree that professional soccer owners should not get any state money to advance a stadium.
But the agreement on funding of state government ends there. The Senate would increase spending on state departments and the Legislature and fund lease payments for the still-rising Senate office building behind the Capitol. The House would spend far less, outlining budget plans that could result in state, legislative and executive layoffs and cutbacks.
The House, to Dayton’s ire, took aim at the governor’s appointees building the Minnesota Vikings stadium and leading the Metropolitan Council. It also plans to freeze the number of state employees just below current levels.
TAXES
Minnesota House Republicans have followed the state Republican Party’s lead and crunched their budget numbers so they can “give back” $2 billion to taxpayers. This month, they unveiled a tax plan that would reduce taxes on Social Security recipients, businesses, education expenses and farmers. The measure would also cut aid to the Democratic bastions of Minneapolis, St. Paul and Duluth.
DFLers in the House, Senate and governor’s office have said that the budget sacrifices needed to make the tax cuts are untenable and that the cuts to state aid to major cities are nonstarters.
“They’re not even in the same ballfield that we’re on,” Dayton said.
But the veteran chairs of the Senate and House taxes committees — Republican Rep. Greg Davids and Democratic-Farmer-Labor Sen. Rod Skoe — say they can still play ball.
“I want to get to the negotiating table,” Davids said.
“Compromise is always available,” Skoe said.
And if not, Senate Majority Leader Tom Bakk says, the session can end without any tax bill: Taxes would keep being collected and cash would continue to flow.
“We may not get a tax bill,” Bakk said. “We just may not be able to come to an agreement.”
EDUCATION
When it comes to funding public education, from preschool to college, the Republican-led House, the DFL-controlled Senate and Dayton’s plans are hundreds of millions of dollars apart.
Spending for public schools is already roughly half of Minnesota’s two-year budget. Both legislative caucuses and the governor have proposed increases. The focus of the new spending includes more access to preschool, school facilities maintenance and some money to address rising operational costs.
But those proposed spending hikes differ dramatically in size. The House Republicans’ bill puts $154 million of new money into pre-kindergarten to 12th grade; the DFL Senate adds $361 million to existing spending; and Dayton wants to spend an additional $695 million over the biennium.
For higher education, Dayton has proposed $283 million in new spending; the DFL-led Senate wants $205 million in additional money; and the GOP-controlled House proposes $57 million in new spending. A lot of the new money is directed at holding down the cost of tuition at various institutions.
The governor also has insisted on significant new spending to fund pre-kindergarten but has indicated some flexibility on how the money is spent. He said last week that hefty, flexible scholarships might be a fine compromise.
TRANSPORTATION
Surprisingly, transportation is a bright spot in the negotiations. Both the DFL and the GOP would raise billions of dollars over the next decade for transportation spending. Such agreement on the need for that money seemed out of reach a few months ago.
But the transportation plans of the GOP-led House and DFL-led Senate, which is closely allied with Dayton on the issue, remain separated by two huge barriers: taxes and transit.
The DFL plan relies on increased taxes on gasoline and motor vehicles, while the Republican plan has no tax increases but instead rededicates existing taxes to transportation.
And while the DFL wants to raise billions for Twin Cities mass transit — through new taxes — the Republicans propose no significant new revenues and want to wean Metro Transit off state support.
The two plans also differ in size, with the Republicans proposing about $300 million per year in ongoing funding, versus closer to $600 million from the DFL.
Transportation is arguably the highest-profile issue at the Capitol this year, but it’s also possible lawmakers could adjourn in May without reaching a deal.
“Transportation probably doesn’t have to happen,” Bakk said Wednesday. “We can kick the can down the road for the next Legislature to deal with. That’s what’s been happening. It’ll only get more expensive. The congestion will only get worse.”
Christopher Magan contributed to this report. Follow Rachel E. Stassen-Berger at twitter.com/rachelsb. Follow David Montgomery at twitter.com/dhmontgomery.
