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Two months into the session, Republicans and DFLers are moving further apart on legislative priorities

MinnPost photo by Briana Bierschbach
For even the most seasoned Capitol watchers, it’s hard to imagine what an overarching deal might look like in 2015, and there are only two months left before lawmakers are required to adjourn.

In a news conference Tuesday meant to outline how he wants to spend the state’s $1.9 billion budget surplus, Gov. Mark Dayton opted to kick things off by dismissing an idea that’s been gaining steam with Republicans around the Capitol: giving the cash back to Minnesotans in the form of tax cuts.

He did so by offering a bit of a history lesson, decrying a decision by lawmakers in the early 2000s to give budget surpluses back, a move that was followed by a decade of near-constant deficits. “As the saying goes, those who fail to learn the lessons of history are doomed to repeat its mistakes,” Dayton told reporters.

Then he pivoted to his plan, which entails spending nearly every penny of a surplus that grew by nearly $900 million in the February forecast. His priorities: pre-kindergarten education for all 4-year-olds in the state; freezing tuition at college campuses; and child-care tax credits for families.

“If we give it all back, there’s nothing left to invest in Minnesota,” he said. “Some want to give $1 billion or more back to ourselves. I prefer to give $1.2 billion more to our future.”

Dayton admitted that there was a strategic component to the breadth of his proposal, standard operating procedure in politics. Both sides start out articulating their ideal plan — and then negotiate their way to somewhere in the middle.

But Dayton’s new budget bill and strong statements against tax cuts were the starkest example of a dynamic that’s been developing at the Capitol since the legislative session started: Instead of moving toward common ground, the two parties seem to be moving further apart.

Differences go beyond taxes

For even the most seasoned Capitol watchers, it’s hard to imagine what an overarching deal might look like in 2015, and there are only two months left before lawmakers are required to adjourn. 

As the surplus figures have grown, so have Dayton’s ideas on how to spend the money. At the same time, Republican legislators seem to be moving in the opposite direction: GOP leaders in the House have grown more brazen in calling for $1 billion or more in tax cuts — a big departure from January, when Republican House Speaker Kurt Daudt said only that they would consider the idea.

Gov. Mark Dayton
MinnPost file photo by James NordGov. Mark Dayton

But the differences aren’t only over tax cuts. On transportation, for example, Dayton and Lt. Gov. Tina Smith are traveling around the state in an effort to pressure legislators to pass his plan to raise gas taxes at the wholesale level; the tax would pay for $11 billion in new road, bridge and transit projects over the next decade. 

As the surplus figures have grown, however — in part due to lower gas prices — Republicans have gone from keeping the door open to a gas tax to calling for the governor to drop the idea altogether.

Then there’s MNsure, the state’s oft-maligned health insurance exchange. Earlier this week, Dayton circulated a plan to spend $500,000 out of the surplus to create a task force to study the future of the program, which would even include looking at the possibility of moving the state onto the federal exchange.

Legislative Republicans were having none of it, though, despite the fact that they have long campaigned against MNsure, greeting the plan with skepticism and a fear that the task force would only delay action that should be happening now. 

‘Waiting around’ to compromise

Dayton said the biggest hindrance to finding common ground is that he hasn’t seen a GOP budget yet. That will change next week when the House releases its budget targets, as well as a new version of their transportation plan. 

“I have very few proposals from the Legislature, particularly the House majority, so I don’t know what’s up for negotiation and what to negotiate with,” Dayton said. “I’m still waiting around.”

Dayton wouldn’t list specific proposals in his amended budget bill that he will put on the top of his list when negotiating with Republicans, but says he’s willing to compromise. “Compromise means you agree to things you don’t agree with,” he said.

And yet, before closing out an hourlong press conference, Dayton made one last effort to quash the idea of a tax cut.

“Tax cuts are very popular,” he said. “It’s like M&M’s: You give them out, everybody’s happy and they taste good. You get a little sugar energy and you’ll feel better for a little while. [But] it’s not a wise investment in the future of Minnesota and it’s not sound fiscal policy.”

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Comments (21)

  1. Submitted by Paul Udstrand on 03/18/2015 - 11:24 am.

    Huh?

    “starkest example yet of a unique dynamic that’s been developing at the Capitol since the legislative session started: Instead of moving toward common ground, the two parties seem to be moving further apart.”

    Unique dynamic? Ms. Biearschbach must be new to this state. There’s nothing unique about this, it’s been the status quo for more than 20 years. In fact the last time the two parties really came together in a major way was back in the 70’s wasn’t it?

  2. Submitted by John Appelen on 03/18/2015 - 12:55 pm.

    Similar

    “His priorities: pre-kindergarten education for all 4-year-olds in the state; freezing tuition at college campuses; and child-care tax credits for families.”

    ““Tax cuts are very popular,” he said. “It’s like M&M’s: You give them out, everybody’s happy and they taste good.”

    So the GOP wants to give out M&Ms to everyone, and Dayton wants to give out Skittles to specific groups of people. What exactly is the difference?

    Now if he was fixing roads, buildings or other infrastructure, I would call that investing in the State. However what he has identified is just increased government spending which is not sustainable in down years…

    • Submitted by Ralf Wyman on 03/18/2015 - 04:48 pm.

      “Now if he was fixing roads, buildings or other infrastructure…”
      That’s exactly what the $11 billion over 10 years is! I guess he can’t get credit from you for including the specific thing you demand.

      • Submitted by John Appelen on 03/18/2015 - 10:25 pm.

        Taxes For Roads

        From what I have been reading, Dayton wants to spend this extra revenue on everything but roads. While he works to raise taxes even higher to pay for “transportation”.

        Imagine if they earmarked the 1.9 Billion for Transportation… We would have 20% of the transportation bill covered.

        • Submitted by Logan Foreman on 03/19/2015 - 09:36 am.

          Education will result in longer benefits

          Than more unnecessary road building, which encourages sprawl and is usually outdated before the project is finished. (See 35W project from 62 to downtown Mpls. We need a constant flow of funding for repairing the roads and bridges we have now. Not one shot deals which the republicans will not repeat.

  3. Submitted by Bjorn Awel on 03/18/2015 - 01:44 pm.

    The House republicans are wavering all over the place.

  4. Submitted by Jesse Langanki on 03/18/2015 - 02:42 pm.

    Pay down debt.

    Why doesn’t the government just pay down debt with the surplus? That seems like the most obvious thing to do. They can do this by buying back state-issued bonds, and deleting them (so the annual fees that currently go to servicing those bonds would no longer be required).

    It would improve the state’s overall balance sheet and provide flexibility for the future since a lower debt burden provides room to take on new debt in a crisis.

    • Submitted by John Appelen on 03/18/2015 - 04:08 pm.

      Interesting thought, however no politician will vote for that. Dayton/DFL wants to buy votes and prop up MN’s GDP by giving it to some people. The GOP wants to buy votes and prop up MN’s GDP by giving it to all people. Paying down debt likely buys few votes and does little to help MN spending in the short term.

      http://mn.gov/mmb/images/State-Debt-Management-Practices-February2013-SenateforWeb-1.pdf

      • Submitted by Logan Foreman on 03/18/2015 - 05:23 pm.

        Why pay down the debt

        At these interest rates which are only likely to go up. Do you honestly think that transportation needs will be solved with $1 billion? You should have asked Pawlenty at St Olaf today. He of course spent nothing which is why we are in this position.

        • Submitted by John Appelen on 03/18/2015 - 10:47 pm.

          Debt is Debt

          At some point, $1.9 Billion in principle needs to be paid down… We have the cash, might as well pay it now rather than pass those bills on to our children.

          And as I mentioned elsewhere, $1.9 Billion is 20% or 2 years of Dayton’s aggressive transportation spending plan. Now that really is investing the future of MN

        • Submitted by John Appelen on 03/18/2015 - 11:06 pm.

          More Than Nothing

          See Page 18
          http://www.dot.state.mn.us/funding/documents/financial-mgmt-legislative-briefing.pdf

          And from what I can tell, pretty much all the light rail came in while Ventura and Pawlenty were in office. So I think “nothing” is a severe understatement.

          • Submitted by Logan Foreman on 03/19/2015 - 09:38 am.

            Nothing for

            Roads or bridges, esp the 35W bridge

          • Submitted by RB Holbrook on 03/19/2015 - 05:12 pm.

            Light Rail

            Pawlenty did nothing to advance light rail, and Lt. Governor/Commissioner of Transportation Molnau was openly opposed to it (she once said that she wasn’t in favor of any mode of transportation that couldn’t be used for “hauling potatoes”). Pawlenty couldn’t stop it, because construction had already started and the state would have had to pay the same to stop building it.

            So “nothing” is, once again, appropriate to describe the Pawlenty Interlude.

  5. Submitted by Ben Ashley-Wurtmann on 03/18/2015 - 05:41 pm.

    not so much

    We have outstanding bonds for infrastructure, as in the presentation in the comment above, mostly issued at quite low rates due to our AAA rating for many years (and heading back up now). I don’t know off hand if they can be prepaid/bought out.

    There’s 11.5B in debt shown there. For comparison, House/Senate/Gov are arguing about a 38-42B spending target for the next two years.

    And it is very important to be clear that general operating expenses *cannot* be borrowed for. There is no such thing as “Minnesota Debt” in manner that the federal government holds. If we prepay these, and then run into trouble, we’re out of luck. We can’t borrow out of a budget deficit for year to year expenses, our constitution doesn’t allow it.

  6. Submitted by Bill Willy on 03/19/2015 - 12:43 am.

    Conservative Fiscal Amnesia Disorder (CFAD)

    “As the saying goes, those who fail to learn the lessons of history are doomed to repeat its mistakes,”

    “Some want to give $1 billion or more back to ourselves. I prefer to give $1.2 billion more to our future.”

    Think back to those $300 or so Jesse Checks from the late 90s, and think about that last sentence for a few seconds.

    Which sounds better to you: A check for $350 or continued state fiscal stability and reserves and a $1.2 billion dollar investment in ALL Minnesotan’s future?

    And then think about this:

    January 2002

    “From 1997 through 2001, thanks to strong economic growth, Minnesota’s state leaders had the opportunity to allocate budget surpluses of over $13 billion. Decisions about how the surpluses were used reflect those leaders’ priorities and set the stage for how prepared we are to deal with the current economic downturn. The state now faces a nearly $2 billion deficit.

    “How the $13 billion in surpluses were used:

    – The majority, 53 percent or $7 billion, was allocated toward tax cuts, which were divided nearly evenly between rebates and ongoing tax cuts.

    – An additional 15 percent of the surplus, or $2 billion, was set aside either in endowments or budget reserves.

    – Only 27 percent of the surplus total, or $3.5 billion, was spent on improving or expanding services, with the remainder going to bonding and debt service.”

    http://www.mnbudgetproject.org/research-analysis/minnesota-budget/trends/1997-2001-used-our-surpluses

    Now lets fast-forward to 2010 where we find those rounds of “give and give and give it back” (’til it hurts) Republican Fiscal Brilliance transformed the substantial enough $2 billion deficit of 2001 into this projection (that turned out to be right on the missing money):

    “Projected budget deficit in Minnesota rises to $6.2 billion in 2012-2013”

    http://www.mprnews.org/story/2010/12/02/state-budget-forecast

    And, at that point, Mark Dayton (who campaigned on raising taxes to get the Republican-made financial mess straightened out) became governor, and Republicans took over the legislature wearing their cute little “Not A Penny More!” pledge buttons and promptly drove the same old sad Fiscal Brilliance Bus they always drive straight into the Government Shutdown of 2011 and, a year later, were rewarded with a classic “Throw the bums out!” Minnesota voter renunciation.

    Which made it possible for Mark Dayton to (finally) fulfill his campaign promise and, lo and behold, and despite Republican fiscal Armageddon warnings galore, next thing everybody in Minnesota knew:

    No more deficits;

    Money in the rainy day fund;

    School “shifts” (not cuts, but “shifts”) all paid back and no more K-12 short-changing;

    Frozen tuitions in higher education;

    All-day kindergarten for all;

    LGA restored;

    Property tax increases just about frozen in their tracks;

    Renters credits restored;

    Lower than average unemployment;

    Higher than average median incomes (see Wisconsin, et all around us); AND, as a well deserved bonus (if you ask me)

    A decent, but relatively small $1.9 billion surplus (relative to the size of the overall budget).

    And what is the Republican Fiscal Braintrust’s idea of The Best Way Forward?

    Give either 100% back (Republican Party/Keith Downey wing); or

    Give 52% percent back (Kurt Daubt/Republican Leadership wing’s $1 billion counteroffer).

    We can only hope the Republicans will settle their Refund Negotiations (with themselves) before they show us THEIR budget vision, but that aside, the most interesting thing about their low-ball proposal is that it’s about EXACTLY the same percentage of Give Backs Jesse Ventura and they implemented and stuck with for OVER TEN YEARS while the state’s deficit kept growing and growing and growing to SIX-POINT-TWO BILLION DOLLARS just three short years ago.

    But let’s do it anyway…

    “As the saying goes, those who fail to learn the lessons of history are doomed to repeat its mistakes.”

    Here’s another similar saying: “The definition of insanity is doing the same thing over and over again and expecting different results.”

    That said, I would appreciate it if some of the Republican leaners that post here regularly would explain why, in light of the above, they believe giving 52% of the surplus back is a good idea.

    I’m probably just ignorant, but I don’t get it.

    If I AM being ignorant, please help me understand.

    Thanks in advance.

    • Submitted by Bob Petersen on 03/19/2015 - 08:32 am.

      What Else Should Be Paid For?

      From the list given, why not have the government pay for everything? Let’s just go socialist? The problem with socialism is that at some point, you can get more money because you get to point where taking more from everyone actually comes out less. State ‘investment’ does not grow the economy, only the private sector can grow the economy. Thus you get less.
      The problem with what’s happened previously is that spending budgets get increased at an even greater amount on a permanent basis. State revenues need to increase at an even higher rate to cover these spending splurges. Surpluses are temporary, permanent spending is not. Surpluses mean that the state has taken in more money than it needs. Since when does the need to put us on a higher spending and taxing plans take precedent over giving the money back Minnesota taxpaying families?

      • Submitted by Bill Willy on 03/19/2015 - 01:42 pm.

        Which list?

        I’m not sure if there’s some other list you’re referring to, but because you replied to my note, I’m assuming that’s the one you meant.

        Frozen college tuitions; all-day kindergarten; LGA restored; property tax increases just about frozen; renters credits restored; lower than average unemployment; higher than average median incomes.

        Which of those items do you consider “socialism”?

        “The problem with socialism is that at some point, you can get more money because you get to point where taking more from everyone actually comes out less. State ‘investment’ does not grow the economy, only the private sector can grow the economy. Thus you get less.”

        Besides the idea, the flat-out certainty, that state (or federal government) investment does not grow the economy being completely untrue, yeah… I keep hearing that. I’ve been hearing it for 30 years or more. Especially the part about how “only the private sector can grow the economy.” Problem is, the myriad laws, policies and plans that have been put in place to help that happen over the past 30 years haven’t done much for the “economic growth” of most Americans.

        “A new Pew Research Center analysis of wealth finds the gap between America’s upper-income and middle-income families has reached its highest level on record. In 2013, the median wealth of the nation’s upper-income families ($639,400) was nearly seven times the median wealth of middle-income families ($96,500), the widest wealth gap seen in 30 years when the Federal Reserve began collecting these data.”

        http://www.pewresearch.org/fact-tank/2014/12/17/wealth-gap-upper-middle-income/

        And that’s just the “wealth gap.”

        “Between the end of World War II and the late 1970s, incomes in the United States were becoming more equal. In other words, incomes at the bottom were rising faster than those at the top. Since the late 1970s, this trend has reversed.

        “Data from tax returns show that the top 1 percent of households received 8.9 percent of all pre-tax income in 1976. In 2012, the top 1 percent share had more than doubled to 22.46 percent…

        “Between 1979 and 2012, the top 5 percent of American families saw their real incomes increase 74.9 percent, according to Census data. Over the same period, the lowest-income fifth saw a DECREASE IN REAL INCOME of 12.1 percent.

        “This sharply contrasts with the 1947-79 period, when all income groups saw similar income gains, with the lowest income group actually seeing the largest gains…

        “After rising steadily during the three decades following World War II, wages have stagnated since the early 1970s. Between 1947 and 1972, the average hourly wage, adjusted for inflation, rose 76 percent. Since 1972, by contrast, the average hourly wage has risen only 9 percent.”

        http://inequality.org/income-inequality/

        So there’s that pesky “real income” aspect of “private sector economic growth” too.

        “The problem with socialism is that at some point, you can[‘t] get more money because you get to [the] point where taking more from everyone actually comes out less.”

        That may be, but I’d say we’re in much greater danger of the experiencing what happens when you apply the same principle to what you’re referring to as “the private sector.”

        “The problem with private sector growth is that at some point, you can’t get more money because you get to the point where taking more from everyone actually comes out less.”

        Especially for the people the money was taken from which, over the past 30+ years, has NOT been “the private sector.”

        Like I say, I’ve been hearing what you’re saying, Bob, for more than 30 years. My question to you (and everyone else who’s been saying that, along with everything else that goes with the “Conservative Republican Economic Theory”) is, WHEN IS IT GOING TO START WORKING for more people than it’s NOT working for?

        Or, asked another way, if the “Conservative Republican Economic Theory” is such a great thing, how come it hasn’t worked at all for most Americans when compared to how the Other Thing (socialism?) worked for most Americans from 1950 until 1980 when R. Reagan was elected and the “Conservative Republican Economic Theory” started getting its 30-year chance to prove itself in the real world.

        The objective facts prove it HASN’T worked. Millions and millions of Americans (and their net worth and incomes) are saying, “It doesn’t work! Stop DOING it!”

        Yet you keep saying it’s the ONLY thing that works.

        How come? Where are the facts that support that idea? Can you provide ANY?

        Unless you’re in the top 10% of income earners and “net worth possessors” I’d strongly recommend you take a closer look and MAYBE start adjusting your perspective a little because, believe it or not, if you’re NOT in that top percentile, the Strongest Proponents (and beneficiaries) of the things you’re advocating are taking an increasing share of YOUR income and assets too. WAY more than the “socialists.”

        As to your question, “Since when does the need to put us on a higher spending and taxing plans take precedent over giving the money back Minnesota taxpaying families?” please read about what happened the last time the exact same thing was done. (You must have missed it.)

    • Submitted by Dan Landherr on 03/19/2015 - 10:32 am.

      The cyclical way to shrink government

      Whenever there is a surplus due to a booming economy the Republicans claim we were overtaxed and need tax cuts. Whenever there is a deficit due to a poor economy they claim government is too big and needs to be cut. If you follow that pattern forever eventually government spending will be cut to nothing.

      The surplus absolutely should be put into savings. These are the boom times.

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