Gambling expansion as part of Minnesota budget fix? Don’t bet against it, some legislators say

Electronic pull tab machines might be part of the elusive end game that helps bring the legislative session to a close.

The possibility that the slot machine-like games might be part of a compromise between struggling DFLers and a governor committed to no new taxes was raised by two Republican representatives Monday afternoon. Those machines, which could be installed in bars across the state, could raise as much as $800 million to $1 billion a biennium, according to Rep. Tom Emmer, R-Delano, and Rep. Kurt Zellers, R-Maple Grove, assistant minority leader.

Emmer and Zellers appropriately sit in the back row of the House chamber.

“Back benchers,” said Zellers.

“It’s good to be in a spot where nobody can sneak in behind us,” said Emmer.

GOP is content at moment to sit and watch disarray
Though occasionally Emmer still tries to attach amendments to DFL bills, more and more the Republicans are becoming mildly amused spectators of the state political process, which currently features DFLers fighting among themselves.

To entertain themselves, the back benchers frequently have offered up amendments to DFL bills.

Typically, the amendments are voted down. 

“Throw a little sand in the machine once in a while,” said Rep. Paul Kohls, R-Victoria, who sits close to the back benchers philosophically and physically.

“Amendments are the one way that your side gets to be heard,” said Emmer of the frustration of being in the minority.

But more and more, silence is starting to be the Republican strategy. On Saturday, for example, Emmer had “about 20 amendments” ready to attach to the DFL House tax bill, but Rep. Laura Brod, R-New Prague, asked him to remain silent.

Brod, one of the rising stars among the Republicans, said the House tax bill “is so bad that no amount of amendments could fix it.”

She knew Emmer was disappointed by her request, but …

“Even the Black Stallion himself needed someone to hold a rope sometimes so he did not hurt himself,” said Brod of stifling Emmer.

But who will hold back the DFLers from hurting each other?

For the time being, at least, DFLers are far from united in their approach to tax bills. The House and Senate tax conference committee will have a huge job trying to reconcile the differences in the House and Senate proposals that have only a fourth tier — a new tax bracket on the state’s wealthiest people — in common.  Pawlenty, of course, has vowed he’ll veto any budget bill that comes to him with a tax increase.

House, Senate DFLers split over revenue fix
How bad are the splits in the DFL over how to create new revenue?

Rep. Tom Rukavina, DFL-Virginia, held his nose as he voted for the House tax bill Saturday. He voted for the bill only because his vote was needed to get the bill to the conference committee. He was still angry about the bill Monday because it includes tax increases for smokers and drinkers. It’s hard to find two more regressive taxes, Rukavina said.

In conference committee, “cigarette and liquor taxes go away or the bill dies,” Rukavina said.

But Rep. Ann Lenczewski, DFL-Bloomington, chairwoman of the tax committee, says those taxes “will stay because the governor has shown he’ll support them in the past.” (Recall Pawlenty’s support of a “health fee” increase on tobacco in the past.)

But Brian McClung, the governor’s spokesman, said that by any name, the governor will veto an increase on the cost of smokes or drinks.

“The DFL increases on cigarettes and alcohol are tax increases and nothing else, and the governor doesn’t support them,” McClung said.

Lenczewski said that the House tax bill, which calls for $1.5 billion in tax increases, is the only bill that has a chance of survival because it’s smaller than the $2.2 billion tax bill being promoted by the Senate.

But McClung says the governor is not impressed.

“Rep. Lenczewski’s bill raises taxes on so many Minnesotans in so many ways that she should probably get some bonus points for creativity,” McClung said.

Sen. Tom Bakk, DFL-Cook, chairman of the Senate tax committee, is nearly as contemptuous of such things as a tax increase on cigarettes and booze as Rukavina.

Back and forth the DFLers go, amazing Republicans with their inability to get together.

“Whatever their plan is to get together is so secret they don’t even know it themselves,” said Sen. Warren Limmer, R-Maple Grove, regarding the difficulties DFLers seem to be having.

Off the record, many DFLers fear that Limmer is right. DFL leadership seemingly has no unified plan for attacking the budget hole with a piece of revenue legislation that will put the smooth-stepping Pawlenty on the spot.

Large DFL majorities may be disadvantage
It’s almost become a disadvantage for the DFL to hold such large majorities in both chambers. They have too many voices. Republicans have so few voices they have no choice but to speak as one, if they speak at all.

“If there wasn’t such a gap,” said Zellers, “everybody would have to move toward the middle. Now, there’s no middle.”

DFLers and Republicans do share one common sentiment: They all want this session to end on schedule. No matter who’s right or who’s wrong on how to attack the budget problem, all legislators know that the public will be contemptuous of all pols if a solution to the multibillion-dollar budget shortfall is not forthcoming by May 18.

And that brings us back to an expansion of gambling as a possible compromise play.

Both Zellers and Emmer predict that when the DFL conference committee does finally come up with a tax bill, it will pass both legislative bodies, with no Republican votes and not even united DFL support. Pawlenty then will do what he’s promised to do all along: He’ll veto it.

That’s when gaming will come into play. Both DFLers and Republicans have shown support for expansion of gambling as a possible way to raise revenue in a more “voluntary” way than traditional tax increases.

Zellers, who as a college student in North Dakota, was a blackjack dealer, said nobody likes the idea of falling back on gambling revenue to fill the budget gap, but it’s at least an area of potential compromise. Members of both caucuses have a variety of gambling bills ready in the form of amendments.

DFL leadership will have a difficult time accepting increased gambling because of the close ties the party has to American Indian tribes. The tribes, big financial supporters of the DFL caucus, have long opposed any form of expansion of state gaming.

But rank-and-file members of the DFL caucus have shown themselves to be much more open to the idea of getting the state more deeply involved in gaming, and Republican members have long been boosters of a racino plan, which would add more gambling to the state’s two metro-area racetracks.

Electronic pull tabs might be one piece of puzzle
The electronic pull tabs, which were being touted by Rukavina even before the session began, would replace the paper pull tabs currently sold in many bars and clubs in the state. Proceeds from those sales have gone to charities, but sales have been falling over the years. Electronic pull tabs, Rukavina said, are much more like slot machines and, therefore, would be far more popular than the paper pull tabs.

At least some of the revenues from the electronic version of pull tabs probably would be earmarked for charities.  But the rest could go to the state’s depleted general fund and would constitute at least a portion of the new revenue that DFLers say is so desperately needed.

“It’s the one thing that could get us to a compromise,” said Zellers.

Of course, electronic pull tabs could be only part of a solution. Passage of a bill putting electronic pull tabs in bars, might make at least a small increase on cigarette and alcohol taxes palatable to people such as Rukavina. 

There are other areas of possible compromise that would allow the Legislature and the governor to scrape together some sort balanced budget bill.

Though the DFLers have ridiculed Pawlenty’s plan to “borrow” money by selling a so-called tobacco bond, they may have to accept at least a portion of the nearly $1 billion Pawlenty wants to raise with this approach. In return, Pawlenty may have to accept a DFL plan to remove property tax caps and also empower counties to more easily raise locally controlled sales taxes, though McClung is saying that the property tax caps must stay.

“Property tax caps are projected to save Minnesotans hundreds of millions of dollars,” McClung said. “The only effective way to hold down property taxes to to cap them — we did that. We need the caps to stay.”

OK, so the governor doesn’t seem excited by these possibilities. But the governor’s spokesman did not rule out gaming, making it seem more and more likely that it could be one step toward a compromise.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.