In budget battle, Dayton moves to ‘midfield,’ but Republicans say they won’t budge on raising taxes

House Speaker Kurt Zellers responds to the governor's budget proposal.

MinnPost photo by Jay Weiner
House Speaker Kurt Zellers responds to the governor’s budget proposal.

When the Minnesota legislative session began 132 days ago, Gov. Mark Dayton was still settling into the corner office at the Capitol. Even then, everyone knew that one big, honking thing separated the Republican-controlled House and Senate and the governor.

The state budget — and how to fix its $5 billion deficit.

With seven days now to go until the constitutional deadline for a balanced budget to be in place, the same big honking things divide the Legislature and the governor.

Dayton makes day’s first move
Monday, it felt as if the lines in the sand grew deeper and wider. In the theater that is the Capitol, in the world in which messaging is disseminated via quickly called news conferences, tweets, instant stories and emailed news releases, Gov. Dayton made the first move.

At 11 a.m., he announced an increase in the amount of spending cuts he’s willing to eat ($1.8 billion) and he reduced the amount of income taxes he was prepared to assess (from $3.4 billion to $1.8 billion).

He also dropped a property tax hike on homes valued at more than $1 million.

“I won’t go beyond this,” he said.

“If somebody else wants to offer an alternative, they’re welcome to do so.”

Dayton’s most emotional comments came when he said, “We’re talking here about an unwillingness to raise one dollar on income tax on people making a half-million, a million, 5 million, 10 million a year, and they would sacrifice 125,000 Minnesotans and throw them off health care.”

Talking later about other cuts to those with disabilities and higher education, he added: “I just don’t think Minnesotans want to do that to their fellow citizens. And good for Minnesotans. We’re better than that.”

He called the GOP budget plans “all cuts” and “unreasonable” and “extreme.”

“I’ve offered to meet them halfway, and I’m not going to do anymore than that,” the governor said.  “I’ve gone to the 50-yard line,” Dayton said. “They’re staying on the 20.”

Then, a virtual mosh pit of GOP legislators
About two hours later, more than 50 House and Senate Republicans assembled in the Capitol’s Room 125, site of many news conferences and a virtual mosh pit of GOP legislators.

And there, the wingtips in the sand drew a bolder, wider line.

House Speaker Kurt Zellers: “There are no votes in the majority in the House Republican caucus or the Senate Republican caucus for a job-killing tax increase. Whether it’s a half a tax increase, a whole tax increase or a quarter tax increase, if it forces one job provider to leave our state because of over-taxation, it’s a bad idea.”

Gov. Mark Dayton explains his budget plans.

MinnPost photo by Jay Weiner
Gov. Mark Dayton explains his budget plans.

He and Senate Majority Leader Amy Koch said they believe they are close to the governor’s positions on some prospective bills. But Dayton desires a more global solution on key numbers and then he would be prepared negotiate within the framework of those $1.8 billion additional cuts and the tax increases.

But, by saying he would go no farther, Zellers said of Dayton: “To throw the baby with the bath water out the window and say, ‘I’m done right now,’ and throw your sucker in the dirt and quit is a bad idea and not leadership.”

Koch: “We stand united against any tax increase proposals. We believe that government should live within its means, spend the money that’s in the checkbook and no more. We were elected in November — a historic majority in both the House and Senate — on holding the line on taxes and spending in state of Minnesota. That’s what we came here to do, and that’s we intend to do … When it comes to holding the line on taxes and spending, we cannot compromise.”

Senate Deputy Majority Leader Geoff Michel said: “Half of a bad idea is still a bad idea. Gas prices are going up. Housing values are going down. We are not going to raise taxes.”

Zellers said he felt that by pinpointing a state budget at $34 billion — $3 billion more than last biennium, by the GOP’s accounting — “that’s the 50 [yard line]” what with Dayton seeking a $37 billion budget.

Earlier during his news conference, on a number of occasions, the governor cited a poll published in Sunday’s Star Tribune. In it, 63 percent of those surveyed supported a balanced approach of increased taxes and spending cuts. Only 27 percent backed an all-cuts budget.

DFL caucus weighs in
In a press release and a news conference that followed the GOP’s, DFL House Minority Leader Paul Thissen, of course, supported Dayton while blasting the Republicans: “The GOP is choosing to keep their feet in cement while laying waste to Minnesota seniors, small businesses, children and homeowners with their all-cuts budget … We need to make difficult choices and cuts.  We also need a fair deal that keeps taxes down on 98% of Minnesotans by asking the richest 2% to take a share of the budget-balancing responsibility.”

In another media release and in joining Thissen later, DFL Senate Minority Leader Tom Bakk declared that he was confident that his DFL caucus would support Dayton’s proposal with near unanimity. Thissen agreed.

Bakk also noted that Dayton received 44 percent of the votes in November and Independence Party candidate Tom Horner earned 12 percent. Horner, too, campaigned on spreading out the sales tax statewide and including clothing and other services.

Voters for Dayton and Horner — 56 percent of the voters “knew they were going to be taxed,” Bakk said, adding that Dayton’s tax increase on the richest would affect 45,400 taxpayers out of 2.4 million returns.

Amid all that debate, leaders of eight Chambers of Commerce from across the state held a briefing and called for a balanced approach to a balanced budget, in essence supporting Dayton’s parameters. It was a message from Greater Minnesota that deep reductions in Local Government Aid, as proposed in the GOP bills, would do one thing: increase local property taxes.

Zellers, at his news conference, said the Legislature shouldn’t be blamed for local units of government boosting property taxes. But the Chamber leaders disagreed.

“Property taxes are hammering businesses, especially small businesses,” said Randy Kehr, executive director of the Albert Lea-Freeborn County Chamber of Commerce. “Maintaining LGA is critical to business growth and job creation in Minnesota.”

Fate of gambling bills up in air
Meanwhile, Dayton did allow that he is open to other forms of revenue. That slightly pushed ajar the door for gambling initiatives. Gaming has long been whispered in the hallways by lobbyists as part of a final budget solution.

Zellers, though, said later: “I don’t feel comfortable basing our state’s budget on gambling revenues.”

So far, a charitable gaming bill — that would add electronic pull tabs and other handheld games to bars and restaurants statewide — has moved nicely through committees.

Racino efforts have stalled, but there’s a Senate hearing scheduled for Tuesday night, the first test in that chamber. Today, standing outside the Senate chamber, racino lobbyist Dick Day, a former Senate Republican leader, said he wasn’t sure if he has the votes to pass a racino bill out of the Senate State Government Innovation and Veterans Committee.

But, as always, Day had an opinion.

“Here’s my feeling,” he said. “There’s going to be 10 people in a room and they’re going to put together an overall budget to get these people out of here. We [racino proponents] know that we’re one of the few people that actually have a couple hundred million that they can use for whatever they want.”

Still, Day said, any gaming component to a state budget solution is “probably 50-50.”

“Nobody’s telling us, ‘Hey, your gaming bill will be there in the end,’ ” Day said. “We don’t have probably anybody smart enough to say that because, if they did, they’d have 80 percent of Minnesotans cheering from the top of their lungs.”

He went on:  “We’ve got Bakk and Thissen opposed because they plan on getting $2 million for the next election,” Day said, meaning political contributions of Indian tribes and their gaming support groups.

Day added: “The Republicans have the wacko right-wingers that say, ‘Don’t feed the [government] beast’ and whatever. What do you have? You kind of have a stalemate.”

You betcha.

Special session? Government shutdown? Both sides say it need not come to that or that any preparations are under way. But it’s in the air. Zellers said there were “no weak knees” in the crowded Room 125. Dayton insisted he’s got no more rope.

Still, Tuesday morning, Zellers and Koch were scheduled to have breakfast with the governor.  Wonder how many yards apart they’ll sit.

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Comments (5)

  1. Submitted by Greg Kapphahn on 05/16/2011 - 05:48 pm.

    Once again, our Republican friends prove that they have their own psychologically dysfunctional worldview wrapped so tightly around themselves (and the “money goggles” with which that worldview inflicts them – i.e. only those who appear to have large amounts of money matter),…

    that they are simply unable to even begin to comprehend how aware the public is becoming that they have not only failed to carry through on, but actually rendered to be lies every one of their campaign promises from last fall,…

    while now proving that “building wealth” for their wealthy friends (which means fewer jobs for everyone else) is all that matters to them.

    They seem to believe that they can put up a smokescreen of “feel free to shoot anyone who sets foot on your property,” new and ever-more-creative ways to try to restrict abortion legislation, and “bash the fags” constitutional amendments, and the general public will be SO impressed with their Christofascist moral rectitude that they’ll completely ignore that their taxing and economic ideas violate everything Jesus Christ ever said or did.

    I only hope that Gov. Dayton will veto the entire mess and tell them to go back and start over until they come up with something he will sign (you now, the Pawlenty approach)…

    and that the public will notice the rich men behind the curtains and not fall for their smokescreen and fearmongering, no matter how brilliantly green the smoke might appear to be nor how scary the flames the Republicans claim to be able to see might sound.

    You know,… like all the most selfish, self-serving rich people leaving the state in a huff if we raise their taxes.

  2. Submitted by Ray Schoch on 05/16/2011 - 10:29 pm.

    Taxes do not “kill jobs.”

    It is morally indefensible to provide the wealthy with tax breaks.

    Wealth does not “provide jobs.” More often it is the result of jobs provided.

    Few, if any, wealthy Minnesotans will leave the state if their taxes go up 2%.

    Republican legislators who subscribe to this latest party line have sold their souls and their brains to right wing ideology that is the antithesis of “conservative,” but which they serve faithfully instead of the people. They should be ashamed and embarrassed.

  3. Submitted by Neal Rovick on 05/17/2011 - 07:52 am.

    The stated position is that if “a thousand, one hundred or even one” business doesn’t want to come to Minnesota because of taxes or regulations, it’s time to reduce taxes and regulations.

    It’s too bad that that same sort of absolutism is not in the service of an idea that even one student who cannot afford college is one too many, or one person who cannot afford medical care is one too many, or one person who cannot afford a PCA so they can stay in their home is one too many, etc., etc.

  4. Submitted by will lynott on 05/17/2011 - 09:15 am.

    This “job killing” crap is getting pretty old and crusty. Study after study has shown that, when companies are deciding where to build or expand, they look for an educated workforce, good infrastructure, social amenities and quality of life-and the list goes on. Taxes are way down on their list of priorities. Unfortunately, these are the things they’re endangering with their draconian budget fantasies.

    I hearken again to the Tonka Toys company that sent its manufacturing operations to Texas but kept the corporate HQ in Minnesota–so the executives could continue to take advantage of the Minnesota quality of life. That was back in the 80s, and the executives didn’t seem to mind the unreduced Quie/Perpich tax rates back then.

    Zellers and his crowd are running on ideology, not sound public policy. They’re also running on empty when even the business community is against them. Of course tp did the same thing, bucking the chamber on the need for a gas tax increase. Sheer ideology.

    Thank God for 2012.

  5. Submitted by Greg Kapphahn on 05/17/2011 - 03:49 pm.

    By the way, the Republican leaders did NOT say they “won’t raise taxes.”

    They said they “can’t.”

    I’d like to know who it is that has sufficient power and influence over our Republican representatives to tell them such a thing and make it stick (and why that voice or those voices drown out the desires of the voters who elected them).

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