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Where the standoff between the governor and Republican legislative leaders goes from here

The impasse has left plenty of questions, not only about what led to the latest meltdown but how anything is going to be resolved anytime soon.

House Speaker Kurt Daudt speaking to the press on Friday afternoon as Senate Majority Leader Paul Gazelka looks on.
MinnPost photo by Briana Bierschbach

The relationship between Gov. Mark Dayton and the Minnesota Legislature has been through plenty of tests.

In just the last year, it’s been through a long legislative process; a special session of the Legislature; and a court case brought against the governor by legislative leaders — including an appeal all the way up to the Minnesota Supreme Court. Most recently, it’s been tested via the intervention of a professional mediator, a person trained in solving even the toughest disputes between clients in high-stakes scenarios.

But after a day and a half of court-ordered private mediation over the issues raised in the Legislature’s lawsuit late last week, discussions broke down. And once again, the two sides have proven their differences are very real, and very unlikely to get solved anytime soon. In dueling press conferences Friday afternoon, legislators accused Dayton of breaking his word while Dayton accused Republican leaders of lying to him over the last four months.

“This has been a farce, and I’m deeply offended,” Dayton said Friday. “I was angry at them, I expressed my anger. The mediator himself has issued a statement saying we are at an implacable impasse and I finally said, ‘Enough of the sham.’” 

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“It’s the governor’s actions that got us here, and unfortunately the governor is the one who has cut this off,” Republican House Speaker Kurt Daudt said.

The latest impasse has left plenty of questions, not only about what led to the latest meltdown but where things go from here.

You may ask yourself, ‘Well, how did we get here?’

In May, after a long session of disagreements on everything from tax cuts to the state’s two-year, $46 billion budget, the Republican-controlled Legislature and Dayton reached a handshake agreement on a deal with an hour left until adjournment.

As part of the deal, Dayton immediately called a special session, and after four more days of nonstop negotiations, legislators passed a $650 million package of tax cuts, a bonding bill and a two-year state budget. 

Four days later, on May 30, Dayton signed all of the budget bills and the tax bill. But he also surprised everyone by line-item vetoing about $130 million in funding for the House and Senate over the next two years. Dayton did that, he said, because he wanted to avoid a government shutdown while compelling lawmakers back to the table to discuss problems he still had with the final budget and tax bills. 

In his veto letter, Dayton laid out the problems with the tax bill: including breaks on certain tobacco taxes (including one on premium cigars); changes to the state’s estate tax; and business property tax cuts that he said would be too costly in the years to come. Dayton also wanted to re-examine two provisions in the budget bills: changes to state teacher licensure laws and a proposal that bars the Department of Public Safety from issuing driver’s licenses to undocumented immigrants.

Dayton also said legislators forced his hand in signing the tax bill because of a provision in another bill that defunded the state’s Department of Revenue if he didn’t. 

Legislators, not surprisingly, didn’t bite on the offer to come back and renegotiate. Instead, the took Dayton to court, arguing that his line-item veto of the Legislature’s funding effectively abolished co-equal branch of government. Ramsey County Chief Judge John Guthmann agreed, ruling Dayton’s veto “null and void” and restoring their funding. 

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Dayton appealed that ruling to the Minnesota Supreme Court, which didn’t reverse the lower court’s ruling, but instead said they thought the veto was constitutional and ordered the two parties into mediation to try and resolve their differences. 

So what happened during mediation?

Dayton and the Legislature picked retired Hennepin County Judge Rick Solum to mediate their dispute, and they set up private talks at the Dorsey & Whitney law firm in downtown Minneapolis Thursday and Friday. Dayton and legislators sat in separate rooms throughout most of the mediation, while Solum shuttled between the two parties trying to find a resolution. 

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

For the first day, Dayton said they went back and forth on what legislators would be willing to negotiate in the tax bill. Republicans said they wanted reductions in state spending, but they were also frustrated that they were “negotiating things we’d already negotiated” during the session, said Senate Majority Leader Paul Gazelka. “We went back in our notes and found that the governor absolutely said he would support the tax bill as is on Saturday evening before the end [of session],” he said. 

But the final break came when legislators revealed that they could tap into additional funds and keep the Legislature running until the next session starts on Feb. 20. After he learned that, Dayton left, saying legislators had lied to him about how long they could operate and no longer had any incentive to work out a deal. “They owe the Minnesota Supreme Court and the people of Minnesota an honest explanation of why they have dragged all of us into their costly theatrics over the past four months,” he said.

So how much money does the Legislature actually have?

On Friday, Republicans said that hadn’t kept any funds private, and Daudt said the governor was just upset that “he hadn’t successfully eliminated us.” Due to Dayton’s veto, legislative funding technically stopped in July, the start of the next two-year budget. But the district court agreed to a temporary funding stipulation to keep the House and Senate running at their current levels until Oct. 1.

As part of information requested by the Supreme Court, lawmakers had to report last week exactly how long they could keep running after Oct. 1, using funds in little-known carryforward accounts kept by both the House and the Senate. In the filings, the House reported it had about $10 million in reserves, enough to keep paying legislators and hundreds of staffers until Feb. 1. The Senate reported less on hand, with about $6 million in its reserves, enough to keep them running until Dec. 1. 

But after advice from their counsel, legislators said this week they could also use about $3.6 million in carry forward funds from the branch’s Legislative Coordinating Commission, which wasn’t subject to Dayton’s veto. That would be enough to avoid layoffs until the 2018 session starts, but the Legislature will still need a new appropriation sometime after then to keep them going for the next two years.

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“We consider ourselves to be in survival mode,” Daudt said. “We will look at any other option to make sure people have a voice here at the Capitol in their elected representatives.”

What happens now?

For now, the case heads back to the courts. The Minnesota Supreme Court specifically left the case open and they’ve asked the governor and Legislature to report back on the status of their mediation by Friday. Since the mediation didn’t exactly go well, the Supreme Court might have to make a more definitive ruling on the case. While they stated Dayton’s veto was constitutional, they also raised concerns about the ongoing operation of the Legislative branch. 

In filings last week, Dayton’s attorney Sam Hanson argued the courts should provide the Legislature with temporary, essential funding until the political issue is resolved, but the Legislature’s attorney, Doug Kelley, argued only the Legislature has the power to order funding under the Constitution. Kelley argues the courts should affirm the lower court ruling that the veto is unconstitutional and void. The Supreme Court could also rule that legislators have time to figure out a solution during the next legislative session.

Couldn’t the Legislature just override Dayton’s veto and get their funding back?

Republicans lost their chance to attempt an up or down override of Dayton’s veto when they adjourned the special session of the Legislature sine die, or indefinitely. 

When regular session convenes on Feb. 20, Republicans said they plan to immediately introduce a bill to restore their funding and send it to the governor, hoping he’ll sign it. If Dayton vetoes their funding again, only then would legislators have the option to try and override his veto. But even that’s not a simple task: Overriding a governor takes a two-thirds vote in the House and Senate, meaning Republicans will need help from Democrats in the minority. Neither Daudt or Gazelka expressed confidence they could get enough votes to override his veto. 

So what happens when the Legislature convenes in 2018?

Much of the same. Dayton has promised to “forcefully” push the issues he outlined in his May 30 veto letter to the Legislature. And don’t expect anyone to be too friendly when things do start back up. Dayton was visibly angry after mediation on Friday, accusing Republicans of lying to him about their finances. Republicans repeatedly called into question Dayton’s word on the tax bill, which they claim he clearly approved. All this boils down to a significantly broken relationship as Dayton heads into his final year as governor.

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How is this affecting state government?

Well, the whole affair is costing the taxpayers hundreds of thousands of dollars in legal bills, although the total price tag is not yet known. The Legislature’s fees won’t be known until the lawsuit concludes, but Dayton’s office has reported about $245,000 in legal fees through August. 

This article has been edited to correctly identify how a possible veto override of the Legislature would work after a special session.