GOP leaders said budget negotiations went poorly Wednesday after rejecting Gov. Mark Dayton’s two proposals to forge a deal over the state’s $5 billion shortfall.
Six days into Minnesota’s government shutdown, the governor offered two approaches to solving the deadlock:
• One would put a 2 percent income tax surcharge that would “sunset” in 2013 on Minnesotans earning more than $1 million annually, increase health care surcharges and further shift school payments into future years.
•The other would increase cigarette taxes a $1 a pack to generate $283 million in new revenue. It also would keep his first proposal’s health care surcharges and implement a larger K-12 aid shift.
The goal is to bridge a roughly $1.4 billion gap between the GOP budget and the governor’s proposal.
Republican leaders left the roughly 30-minute meeting looking unhappy.
“Things went backwards today,” House Speaker Kurt Zellers told reporters. “We’ve made it clear that we don’t believe in a tax increase.”
Both sides have clung resolutely to their positions – the GOP says, “No new taxes” and Dayton says, “Tax the rich.”
So why did Dayton offer another round of tax increases if he knew they were a no-go? The governor says he didn’t realize the Republicans would reject his offer so handily.
In fact, when they left his office, Dayton said, he was under the impression Zellers and Senate Majority Leader Amy Koch were returning to their members to discuss the proposal.
Although Koch and Zellers said they’d bring it back to the Senate and House GOP caucuses, they made it clear the deal is going nowhere.
“A tax increase in general is a nonstarter in our caucus,” Zellers told the press. He also added that cigarette taxes are regressive, something that the governor campaigned against.
“So, where do we go from here?” a reporter asked the House speaker, who paused for a moment and looked to Koch. She took a second and reiterated they’d bring the offer back to their members.
Koch and Zellers said they made the “real effort” last week when they brought Dayton a proposal that would raise alternative revenues by bonding for payments Minnesota receives from a tobacco lawsuit settlement.
Dayton, who rejected the deal, said Wednesday it would only “increase the indebtedness of the state.”
The governor’s proposal is similar to the one that ended Minnesota’s eight-day shutdown in 2005.
It appears budget negotiations have deteriorated further since Thursday’s shutdown. Back are accusations that the other side mischaracterized what occurred in the meeting, and that’s after a weeklong “cone of silence” did little to help a deal but did cloud the public’s view.
Dayton said the “cone of silence” is over, claiming that Zellers mischaracterized their discussions concerning increased gambling revenue from racinod, a Block E casino or slot machines in bars.
The governor also said he is disappointed that the Republican leaders openly rejected his proposal to the press after they left the meeting without communicating the same sentiment to him.
He said they came to that conclusion extremely quickly after the meeting, “or at least somebody made up their mind for them.”
“If this was a step backwards, it’s because they took the step backwards,” Dayton said. “Not me.”
Now Dayton is waiting for the GOP to make a counter-proposal. He and lawmakers will work on the K-12 reform bill and Health and Human Services talks are expected to continue.
Koch said HHS was the one bright spot of the day, and the governor agreed.
“That’s the progress today,” Koch said.