Always a fan of theatrics, Greg Davids brought props to a Monday press conference designed to urge Gov. Mark Dayton to sign a package of tax cuts passed by legislators.
Davids, chair of the House Republican Tax Committee, authored that bill, which he affectionately dubbed the “Don’t Stop Believin’” tax bill, way back in 2015. He hadn’t stopped believing as of Monday morning, when he hauled a copy of the 277-page bill to the press conference along with enough pens for Dayton to sign each letter of his name, including his middle initial.
“We’ve got the writing instruments needed for the governor to sign this document, right here,” Davids said, pointing to the bill.
But his efforts meant very little at midnight, when Dayton chose not to sign the $260 million bill, killing the measure through a pocket veto. The bill included tax deductions for veterans, college students with debt, families and key tax cuts for a Major League Soccer stadium in St. Paul.
The media blitz was the culmination of a week of back-and-forth letters, meetings and dueling media appearances in the wake of a messy 10-week session that saw a divided Legislature negotiate how to spend a $900 million budget surplus right up until the end, passing the tax cut bill and a $182 million supplemental budget bill just a few hours before their deadline.
But a transportation deal and package of bonding projects weren’t so lucky, blowing up in the last 15 minutes of session over a disagreement about whether mass transit funding should be included in the package.
Since then, Dayton’s been mulling the possibility of calling a special session to deal with those two issues plus now the tax bill, but the odds were looking slim as of Monday.
“Who knows what happens if he doesn’t sign the bill, but I will say that it gets more difficult to get to an agreement,” Republican House Speaker Kurt Daudt said Monday. “Because the governor will have gone back on his word and that to me is something difficult to repair in St. Paul.”
One word dooms the tax bill
That promise from the governor, according to Daudt, was to deal with the tax cut bill separately from other issues being considered for a special session. One day after lawmakers adjourned, Dayton said he would review the budget and tax bill within days and decide based on their merits whether to sign or veto them.
Dayton signed the budget bill, but while he was reviewing the tax bill, his staff and commissioners discovered an error — an “or” was written in place of an “and” in one section, expanding the establishments eligible for a tax break from just bingo halls to all locations that sell paper pull-tabs. The mistake has the potential to cost the state $101 million over the next three years.
Lawmakers said they could clarify the language in the bill without a special session, but the governor’s administration said it would require a full vote from the Legislature, or else the law could wind up in court.
For his part, Dayton said he would have signed the tax bill without the error. But he also laid out a handful of conditions he’d like met if he’s to call lawmakers back for a one-day special session. That includes $182 million in additional bonding projects, more than $75 million in new spending over the next year and funding for transit projects in the metro area.
“I was not going to sign a tax bill with an error it in,” Dayton said Tuesday morning. “That would be foolish.”
Daudt and other Republicans accused Dayton of playing politics — using the tax bill to gain leverage on other issues. “There’s no way to look at this other the governor is holding the tax bill hostage to get more spending,” Daudt said. “Your word has to mean something, and if it doesn’t you are not going to have an easy time getting things done in St. Paul.”
Special session chances: slim
The one-word error in the tax bill is only the latest discord in St. Paul, but it’s not the only thing that caused the 2016 session to unravel.
The biggest points of friction all year were actually the package of public works projects rolled out every other year — known around the Capitol as the bonding bill — and a long-term funding plan for transportation.
Lawmakers couldn’t find agreement on a way to dedicate funding for transportation over the next decade, but they did agree to a $1 billion bonding bill — and to spend about $275 million in one-time cash on transportation projects. In the final minutes of session, though, Democrats in the Senate learned that proposal didn’t include funding for mass transit, so they added it to the bill and sent it back to the House. With time running short, House members decided to adjourn instead of taking up the bill and sending it to the governor.
Without a bonding, transportation or tax cut bill, 2016 could easily be labeled the do-nothing session many feared. It also means legislators will have little to show voters when they hit the campaign trail this fall, when all 201 House and Senate seats are on the ballot.
Dayton and the leaders of the Legislature’s various caucuses all say they are still open to negotiating a special session, and Daudt has said he’s not closing the door on Dayton’s list of conditions. “I don’t like a lot of them, I think that’s not a mystery, but we are going to talk about those things if they are important to him,” he said.
But the bigger the agenda gets, the harder it is to reach a compromise. Last June, a one-day special session to deal with a handful of budget bills nearly imploded after legislators started amending bills, breaking an agreement that had been negotiated among leaders. This year, Dayton again wants an agreement from all leaders on the parameters of the session before he calls legislators back to St. Paul. He’s worried re-opening the tax bill would set off a “free-for-all” for new tax cuts. Dayton would prefer if legislators simply fixed the error, added an exemption for the state’s highschool league that’s about to expire and sent the tax bill back to him.
House DFL Minority Leader Paul Thissen lamented that deals on taxes, transportation and bonding could have all passed easily if lawmakers had gotten their work done earlier. Many lawmakers have stepped up calls for transparency and changes to the legislative process after top leaders pushed deal-making off until the very end for the second year in a row.
“If there’s one thing I learned from the four generations of Minnesotans that came before me, it’s that we’re expected to get our work done, to get our work done right, and to take responsibility when that doesn’t happen,” Thissen said in a statement. “There are many good provisions in the tax bill for ordinary Minnesotans, but unfortunately, due to the rush job and chaos at the end of session, there is a $100 million error in the bill.”
