Understand that no matter what the future holds, neither the governor nor the Republican Legislature is likely to back down publicly from long-held positions for at least another week.
But we’ll see if — and how far — the Republicans move when they present their latest budget proposal at 1 p.m. today.
The basic premise still is: Why upset your basic constituency until you absolutely have to?
If you’re Gov. Mark Dayton, you want Republican legislators, particularly those who barely won their races, to feel the heat from public employees and Main Street businesses about the ramifications of a government shutdown.
If you’re House Speaker Kurt Zellers or Senate Majority Leader Amy Koch, you want Dayton to have to consider the agony a shutdown would cause.
So, they keep playing this game of chicken.
The governor says — usually in reasonable tones — that he has moved “halfway” toward compromise and that it’s the Republicans who have not moved.
The Republicans insist, though, that $34 billion has to be enough to run government.
Given the polls, it appears that the governor holds the stronger position with the public. But the smart people on both sides of this showdown — and that includes Dayton, Zellers and Koch — know that if there is a shutdown, most mainstream Minnesotans will be disgusted with all politicians.
And that leads to the fundamental question in all of this: Can a shutdown be prevented?
For all the huge differences — and those differences aren’t just financial; there also are huge policy gaps between the governor and the Republicans — it would not take long to hold a special session and end this potential crash.
A few days ago, a Republican legislative leader said everything could be wrapped up in a one-day session. In fact, she said, it would have to be wrapped up in a day, “because the public isn’t going to stand for watching us fight for three more days.”
If there is to be movement, this leader said, it will have to start late next week. That means, the posturing would have to come to a screeching halt and a handful of Republican leaders would have to be sitting down behind closed doors with the governor cobbling together a deal both sides would hate.
Fewer and fewer people, however, think that a shutdown can be avoided.
Budget basics for a compromise
But if there is to be a solution, it will be framed around a few basics:
• Republicans will have to give up their “no new revenue” stance. Their $34 billion bottom line isn’t going to get past the governor.
At a media event on Wednesday, Zellers hinted that Republicans might be willing to yield on $34 billion, by twice saying that the Republicans will not vote to raise taxes. But that does open other potential revenue doors, ranging from approving racinos to “fees.”
• Dayton almost certainly will have to give up on his idea of “taxing the rich.” A fourth-tier income tax, no matter how fair it might seem to most Minnesotans, is the line in the sand Republicans will not cross.
So where does the revenue come from to somehow get the governor, with his “compromise” $35.8 billion budget and the Republicans together?
Nothing is easy in the world of government finance.
The “heart of any deal,” according to one Republican-leaning budget expert, could revolve around the governor’s terminology surrounding fees and surcharges. Those fees amount to nearly $1 billion, according to Rep. Mary Liz Holberg, who heads the House Ways and Means Committee. (The actual amount may be closer to $600 million.)
Dayton’s ‘sleight of hand’
In his February budget proposal, the governor included those fees, the bulk of which are paid into the Human Services budget by hospitals, nursing homes, insurance companies and the like, as revenues.
But then he started calling the fees and surcharges expenditures. To Republicans, that may have been a great public relations move, for it allows Dayton to come to the table with his $35.8 billion promise. But in fact, they say, he really hasn’t moved from the $37-plus billion budget wish of February to “the 50-yard-line.”
“He’s moved closer to the 25-yard line,” says Holberg.
Republicans claim the governor performed a deft sleight of hand by moving the health fees and surcharges from the income to the expenditure side of the budget. In their mind, it actually means that Dayton’s “compromise budget” isn’t really $35.8 but closer to $36.5 — or more.
These surcharges are a shifting target. Yes, they’re paid by hospitals and other health care operations. But much of the surcharge money is matched, dollar for dollar, by the feds, although those dollars may not go directly back to the institution that paid them. One facility, for example, may pay in $5 million and receive $4 million back.
If Dayton goes back to calling those surcharges income, a source says, Republicans would likely add those funds to their current $34 billion spending limit.
That could bring the two sides closer together, but it would also force the governor to make deeper cuts than he already has vowed to make.
There seem to be other sources of revenue that might get the Republicans to say farewell to $34 billion.
In this dead period since the end of the session, it’s been instructive to notice that a handful of Republican legislators pushing gambling bills have been showing up at some sessions. A coincidence?
And one key legislator hinted that “the ponies” (meaning, presumably, racinos at Canterbury Park and Running Aces racetracks) might still be in play but then quickly backed off when pressed on the subject. Racino supporters have insisted that a plan to put slot machines into the racetracks could raise $250 million per biennium. (That number, however, seems unrealistically high to many legislators.)
Sales tax politics
Taxes — for example, an expansion of the sales tax — are a dicier proposition.
Dayton hates the sales tax because it’s regressive; Republicans hate it because it’s a tax.
But there are moderates on both sides of the aisle who long have thought that an expansion of the sales tax to more services is the most stable solution to the state’s perpetual budget issues. The problem is there’s no “moderate caucus” to push this idea forward.
In fact, a couple of DFL senators, Ann Rest and Terri Bonoff, have been talking about expanding the sales tax throughout the session. Rest went so far as to introduce a bill.
“But they [Republicans] keep saying, ‘Oh, that’s an interesting idea. We’ll need to talk about it next session,’ ” said Bonoff. “Next session! The problem is now.”
Bonoff does believe that Dayton would agree to a broader sales tax to spare as much of state government as possible.
“Over and over he’s said he’s ready to hear any ideas on new revenue,” Bonoff said. “So far, they haven’t come forth with anything.”
The rank-and-file legislators — and the moderates — seem to be paralyzed at this point.
Part of the problem is the Republican moderates have not stepped forward. Clearly, they fear the activists back home, the state party apparatus and the young-gun conservative freshmen who are strong voices in both the House and Senate.
Meantime, DFLers insist it is the Republicans who must show movement.
It all, then, comes down to who is willing to take risks.
Dayton has claimed that he’s already cut far more deeply than he wants but hasn’t closed the door on more cuts.
Republicans may be opening the $34 billion door just a bit.
But a showdown mentality still prevails.
There are some Republicans who believe that Dayton actually wants a shutdown. This is a theory espoused by the most extreme people in the party, who believe that Dayton believes that a shutdown will politically be more harmful to Republicans than DFLers.
But cooler heads in the caucus don’t believe that Dayton is that cynical.
In fact, Dayton’s great weakness is that he does believe government must work well. His strength is that he’s been able to deliver his message clearly and effectively.
The Republicans’ great strength is that they often have said that government “gets in the way” of Minnesota and its economy. Therefore, they are less fearful of the impact of a shutdown. Their weakness is that each of their members, scattered throughout the state and around the metro, will be coming face to face with people who stand to be hurt by a shutdown.
The out for both Dayton and Republicans: Use duct tape and shifts and fees and anything else possible to put together some patchwork budget and let the voters have another crack at decision-making in 2012.
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.