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Does the 2019 legislative session have the makings of a state government shutdown?

With less than two months left in the session, it’s hard to see how any deal will come together, not only when it comes to the one must-do — passing a state budget — but also on front-page issues like health care, transportation and guns.

Gov. Tim Walz
Gov. Tim Walz wants to keep the provider tax and replace reinsurance, which DFL lawmakers argue gives money to health insurers with no assurance they will use it to continue to keep premiums down.
MinnPost photo by Peter Callaghan

Are the governor and the Minnesota Legislature heading for a special session or, worse yet, a government shutdown?

No one on the inside of state government likes those terms, recognizing that voters don’t look favorably on dysfunction, especially perhaps in a state that fancies itself better than most.

Yet with the 2019 session entering its critical final six working weeks, it’s hard to see how it will all end, not only when it comes to the one must-do of the session — passing a two-year state budget — but on other front-page issues such as health care funding, transportation improvements and gun safety.

Deals almost always come together. That is what the governor and legislative leaders are relying on. Yet the way they talk about their disagreements goes well beyond the acerbic rhetoric that has become the political norm.

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With the governor’s office and the state House in the hands of DFLers and the state Senate controlled by the GOP, Minnesota’s two major parties are firmly on either side of a whole mess of chasms. Each is certain they have a mandate from voters, and both are convinced they will be rewarded at the next election more for fealty to firm policy positions than for compromise.

The endless campaign comes to the Capitol

Compromise? Where is the compromise between a 20-cent-per-gallon gas tax increase the governor wants and the zero cents the Senate GOP leadership wants, since they say no new funding is needed?

How about the sunset on a 27-year-old provider tax that raises $700 million a year for health programs and insurance subsidies? Gov. Tim Walz says it not only must be lifted but will be lifted, while Senate GOP continues to maintain that the tax must end, as agreed to eight years ago, come January.

Gun safety bills? Advocates consider it a victory that Senate Majority Leader Paul Gazelka, R-Nisswa, said a Senate committee will hold hearings if two key bills pass the House as stand-alone bills, and Gazelka said they could even come up for votes in committee. But there is little chance the Republicans on the committee will vote in favor of the bills. And any hearings will include pro-gun-rights bills such as stand-your-ground protections for gun owners.

Walz and House DFLers also want significant tax increases to pay for budgets that spend more on education, colleges, health care and transportation. GOP budget writers are bent on no new taxes and argue that a state with a projected $1 billion surplus ought to be able to get by without higher taxes, especially when they are convinced that the state already taxes too much and needs to reduce the burden on taxpayers.

“The tax bill will be zero,” Gazelka said while showing the rough budget numbers the Senate will be starting with as they craft their two-year state spending plan.

The never-ending campaign colors the 2019 session. DFLers, led by Walz himself, have told themselves and anyone who will listen that they talked about health care, gun control, transportation improvements and public school funding throughout the last election and won. They are equally convinced that the only reason they share political power this session with the GOP is because nearly all of the senators at the Minnesota Capitol weren’t on the ballot. Just wait until 2020, they think and say and threaten.

First lady Gwen Walz now famously warned GOP senators in districts carried by her husband that their position on gun safety bills could cost them politically: “I have a message,” she said at a March rally organized by the gun-control group Moms Demand Action. “If they do not put it up for a vote, there are seven senators sitting in seats where Tim Walz won and we are coming.”

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There actually were 10. But Donald Trump won eight of those districts in 2016. So will those voters necessarily support a DFL candidate who supports a 20-cent-per-gallon gas tax hike or gun safety bills or tax hikes for a larger state budget? Gazelka points to a special election in February in which his candidate prevailed in a district held by the DFL for two generations.

Political dynamics come into focus

But they always figure it out and come to a compromise at the end, right?

They have since 2011, the last time there was a government shutdown (with a resolution that included the provider tax sunset that is at the center of this year’s collision). But this year, the act of compromise could upset each party’s political base and cost them a chance to retain control or — as both sides dream — win complete control of the Legislature.

This dynamic of hoped-for compromise in the midst of intransigence came into focus last week with the subject of health care. From Day One of the 2019 session, Walz and Senate majority Republicans were far apart on two key aspects of the conversation: first, whether to lift a sunset on a tax on medical providers that raises $700 million a year for health programs and subsidized insurance; and second, whether to keep using what is called reinsurance to stabilize premiums on the individual market.

Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
“The tax bill will be zero,” Senate Majority Leader Paul Gazelka said while showing the rough budget numbers the Senate will be starting with as they craft their two-year state spending plan.
Walz, with support from the DFL majority in the House, wants to keep the provider tax and replace reinsurance, which they argue gives money to health insurers with no assurance they will use it to continue to keep premiums down. Senate GOP leaders have already passed an extension of the reinsurance program that reimburses insurers for high-cost policyholders. At the same time, the GOP insists on letting the provider tax sunset.

Irresolvable differences — or normal posturing?

Well past the midway point of the session, the spaces between those positions haven’t closed, by an inch or a syllable. The pessimists see it as proof of irresolvable differences. The optimists see it as end-of-session maneuvering.

Walz can often see it both ways, depending on the day. Last Thursday he did so in the same day.

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The first-term governor said he believes the provider tax will remain in place after this session and that GOP senators know that. Their words are just tactics, he said. “We all know it’s going to be there,” Walz said. “If they want to see this in a package dealing with health care, we’re certainly open to that. But we know this is so important to Minnesota that there’s not a senator who will allow this to expire.

“This is that old adage around here, ‘This is really important to the governor so we extract a lot out of him,’” he said. “No, that’s not going to happen.”

But later, when asked for a preview of his State of the State speech set for Wednesday evening, Walz said: “This budget and this Legislature needs to be about Minnesotans and Minnesota’s future and I think we need to tell those stories about what it means. It’s not too late to figure out how this bipartisanship works.”

He cited small successes on funding for the troubled MNLARS computer system, opioid crisis response, a cellphone hands-free bill and even relieving public schools from making up snow days. “This is going to be about what we aspire to, what we can do together, a little bit about process things we can change and expectations of all of us,” Walz said. “We have an opportunity to make this a lot better, a lot more functional.”

Gazelka didn’t agree that his caucus is using the provider tax issue as leverage for, as Walz suggested, unrelated issues like corporate tax cuts. There are not votes in his caucus for a sunset of the sunset, he said. And he doesn’t think there are votes for a different tax on insurance claims processing, which some of his own members have proposed to replace the tax on doctors, hospitals and other healthcare providers.

For Gazelka, the reality of divided government is that both get some of what they want but no one gets it all. And some issues just fall by the wayside of disagreement.

“There are certainly issues that Republicans are passionate about that they think are important, and there are others that the Democrats think are important and are passionate about,” he said. “Those collide and then how do we navigate to the finish?”

Passing a balanced budget is the only thing they must do this year, Gazelka said. But even that will involve disagreements over gas taxes and the provider tax, which he says won’t be included in a GOP budget. “The governor is in a much different place than that. That will make negotiations difficult but not impossible,” he said.

Can interpersonal relations save the day?

Just last week, examples of an improved relationship between DFL and GOP — at least at the leadership level — came to light. Gazelka said he spoke to Walz about his unhappiness regarding Gwen Walz threatening his caucus members. And while he didn’t reveal Walz’s response, Gazelka seemed satisfied with it. For his part, Walz said he complained to Gazelka that his bills aren’t being heard in Senate committees and said Gazelka pledged to remedy that.

And after being critical of Senate Republican caucus positions on a whole batch of issues, House Speaker Melissa Hortman of Brooklyn Park had kind things to say about the caucus leader.

“We have seen parties close very large gaps in the six or eight weeks we have left,” she said specifically to the budget differences. “We’ll do it the same way this year. Although I think there’s a little bit of a difference, a difference in the personalities. Sen. Gazelka is a person who is able to separate the issues from the personalities. If we continue to be able to do that I think we might be able to come up with some creative solutions that nobody has thought of and let the other person have a win.”