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Halfway or no way? Budget talks stall over what it means to meet in the middle

MinnPost photo by Briana Bierschbach
Gov. Mark Dayton: “If they want to have an agreement and a budget and they want to be reasonable about it, then we’ll meet them halfway.”

In Minnesota, when something is described as “different,” that’s usually a bad omen.

That’s what happened this week, after DFL Gov. Mark Dayton presented an offer to the Republicans who control the Minnesota Legislature in an attempt to wrap up the state’s $46 billion two-year budget.

The offer, as presented by the governor, was a “meet halfway” solution that proposed to split the state’s $1.5 billion remaining budget surplus between the two sides’ competing priorities. Republicans would get roughly $700 million to spend on their top goals — new transportation funding and tax cuts — while the governor would get the rest to spend on things like state programs, health and human services and new education funding.

Republican House Speaker Kurt Daudt and Senate Majority Leader Paul Gazelka called it a “departure” from what they’d been talking about all along, which involved taking each budget area piece-by-piece and trying to work out a global deal. “We’re not sure yet,” Daudt said after receiving the offer. “It’s different.” 

By later that evening, it became clear that “different” meant “bad.” Talks between the governor and Republicans quickly went sour, creating an impasse between the two parties that’s shown only little movement since then.

And though the two sides met again Friday morning, with just four days left until the Legislature is required to adjourn and plenty of logistical hurdles left, they will have to work overtime in order to preserve any hope of getting a deal done in time. 

“Our budgets and our ideas represent where Minnesotans are at,” Daudt said. “They want to see tax relief, they want to see money spent on roads and bridges, and we are going to continue to advocate for those things very strongly.”

“If they want to have an agreement and a budget and they want to be reasonable about it, then we’ll meet them halfway,” Dayton countered. “If not, then they won’t finish on time and it will be their responsibility.” 

Halfway or no way?

At the heart of the current disagreement is a seemingly straightforward issue: What constitutes a halfway point when it comes to the state’s budget surplus?

When legislators started drafting their budget plans, the state’s budget surplus sat at about $1.65 billion. But when lawmakers passed a reinsurance bill earlier this session, which aims to shield health insurance companies from some of the risk involved in paying for medical care, it took a $142 million bite out of the surplus.

That left about $1.5 billion in the surplus when lawmakers began to craft the state’s two-year state budget.

Under Dayton’s plan, $83 million of that money would go to the state’s courts and public safety budget, $45 million for state government cybersecurity measures on state systems and $10 million should be left unspent. The remaining $1.36 billion, according to Dayton, is what he and Republican legislators should split for their respective priorities.

“The governor believed these two responsibilities, the courts and cyber security, are really shared responsibilities by both the Legislature and the governor to fully fund,” said Myron Frans, Dayton’s top budget commissioner, who briefed reporters Thursday about the governor’s latest offer.

Republican leadership
MinnPost photo by Briana Bierschbach
State Rep. Jim Knoblach, House Speaker Kurt Daudt, Senate Majority Leader Paul Gazelka, House Majority Leader Joyce Peppin and Deputy Senate Majority Leader Jeremy Miller shown at a press conference earlier this week.

That plan would give $682 million for the Legislature to spend on taxes and transportation, Frans said, with the expectation that they might want to put more toward one area than the other. “We made an offer to meet halfway and we haven’t been met halfway,” he added. “That’s why we’re at an impasse right now.”

But that’s not the way Republicans look at the numbers. Following Frans’ presentation, Republican Rep. Jim Knoblach, who’s chair of the House’s top finance committee, called the governor’s offer “fake mid-point math.” By counting the courts and cyber security funding priorities separately, Dayton wasn’t actually meeting Republicans halfway, he said. Also problematic to Republicans is the fact that Dayton wants to move $350 million from the Health Care Access Fund, which he doesn’t count in his budget totals.

“It’s not half. It’s nowhere close to half. This isn’t a halfway budget. If we’re going to consider a halfway budget we’ve got to consider all the spending,” Knoblach said. “We’ve got to consider all the funds that are being talked about. All I can say to my friend Commissioner Frans is, ‘Nice try.’”

A messy ending ahead 

The impasse is reminiscent of what happened in 2011, the last time Dayton and a Republican-controlled Legislature faced off to pass a two-year state budget. Back then, Dayton also offered in early May to meet legislators halfway on taxes and spending cuts. His proposal included postponing the repayment of $1.8 billion that Minnesota owes local school districts, covering the rest with $1.7 billion in spending cuts and $1.7 billion in additional tax revenues.

That offer went nowhere with Republicans because it included tax increases on the state’s wealthiest residents, and the rest is history: The gridlock stretched past the deadline to adjourn and into a 20-day government shutdown, the longest in state history.

Back then, legislators had a $5 billion budget deficit to close. Dealing with a budget surplus this year, some at the Capitol thought legislators might be able to cut a deal in time for an orderly finish to the session. Now some are expecting a budget outcome closer to what happened in 2015, when Dayton and a divided Legislature deadlocked until the final weekend of the session, and the House and Senate went ahead with a budget deal they agreed on without Dayton.

That plan still led to a messy, one-day special session that nearly derailed over disagreements on environmental spending. If legislators don’t find an agreement by midnight on Monday, Dayton can call them back for a special session to finish budget work. But an agreement must be passed by the start of the next fiscal year on July 1, or state government goes into shutdown mode.

By Friday, lawmakers were in and out of meetings again, but with little to report. House Speaker Kurt Daudt said they were reviewing the situation and could meet with the governor again later on Friday. “We’ve entered the cone of silence,” he said. 

Comments (2)

  1. Submitted by Ray Schoch on 05/19/2017 - 04:24 pm.

    We’ve been here before

    A $50 tax cut isn’t going to change my standard of living in any meaningful way. A lack of public transit funding will. Courts are an essential part of any civilized society, and cybersecurity an increasingly important protection for both government and the citizens it serves, whether Mr. Knoblach likes it or not. Those are things, like funding of education, that shouldn’t even be on the table when the state is showing a more-than-billion-dollar surplus.

    Republicans are, once again, proving themselves incapable of governing outside of a very small set of narrow interests, at the expense of the general public and the state’s economic and social welfare.

  2. Submitted by Paul Udstrand on 05/21/2017 - 02:18 pm.

    This is the second time this week…

    That I’ve seen a Minnpost article that pretends rhetoric is substance by reporting what people say rather than what’s actually going on, and it’s disappointing.

    The failure of the budget negotiations has nothing to do different interpretations of “middle”, that was merely a rhetorical spat.

    The budget negotiations have broke down because because there’s a chasm between Dayton’s notion of responsible governance and that of the Republicans and their leadership. It’s not about meeting in the middle, it about doing it right.

    Dayton has specific substantive reasons for vetoing these Republican bills and they have nothing to do their location on some kind of yardstick. The Republicans have taken a bunch of unrelated laws and tucked them into these budget bills. Bills that would not stand on their own have been tacked on as amendments. That’s a constitutional violation, not a failure to find the middle of something.

    Beyond the issue of non-germane amendments, there is the math behind Republican budgets. Everyone one of these Republican budgets has cuts, and spending, and revenue shifts that Dayton rejects. These budgets contain the same accounting gimmicks and fuzzy math that produced the deficits and crises of the Pawlenty era. Dayton doesn’t reject this budget because it’s not in the middle of something, he rejects it because he thinks it’s irresponsible legislation.

    The budget negotiations were already stalled, so why pretend that Dayton’s shift something “different” stalled them?

    Dayton will veto these budget bills and the Republicans know it. Those vetoes and the bills themselves have nothing to do with centrism or middle ground. If you want to report on this you find out why Dayton is vetoing the bills, and why the Republican are sending up bills they know Dayton will veto. Let’s explore the reasons behind the vetoes and legislation rather than obscure the nature of the impasse with references to a mythical “middle”.

    And by the way, we all understand that meeting in the “middle” doesn’t actually solve anything right? Being half way across a bridge when it collapses isn’t better than being on either side.

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