Done Deal: Minnesota’s Back in Session

Minnesota’s legislators are heading back to work.

Gov. Mark Dayton and state Republican legislative leaders Thursday afternoon agreed on a preliminary budget and took the first steps toward ending the government shutdown.

During a three-hour meeting in the governor’s office, the parties agreed to a June 30 Republican budget proposal that would not raise taxes, but would borrow money to balance the budget. The deal will shift state school funding to make up a $1.4 billion difference between the two parties.

Per their agreement, the deal proposes raising $1.4 billion by issuing state bonds against future tobacco revenue ($700 million) and shifting school aid from 70/30 to 60/40 ($700 million). As part of the agreement, Republicans agreed to three Dayton conditions:

• Take all policy issues off the table for the time being
• Drop a 15 percent, across-the-board reduction to employees in all agencies, regardless of their funding source
• After all the budget issues have been resolved in a special session, Republicans must support and pass a bonding bill of at least $500 million next session.

Rep. Ryan Winkler (DFL-District 44B) said in a statement that the budget agreement "compromises our state’s future.”

“Using tobacco bonds and borrowing from our schools to balance the budget would make for the most irresponsible budget in our state's history," Winkler said in a statement. "We have never borrowed money against future revenue to fund current operations in the history of the state.

"When Governor Pawlenty proposed this scheme, nearly every legislator voted against it. In addition, borrowing nearly half of the annual school funding from school districts will cause chaos for our schools and mortgage our children’s future."

In a tense meeting with reporters at the Capitol following his meeting with Republicans, Dayton said he expects to call a special session for legislators and to pass a budget “very soon. Within days.”

Dayton said he expects that he and Republican leadership would work late into the night and through the weekend.

“This is an agreement that is difficult for both sides,” said Senate Majority Leader Amy Koch, R-Buffalo. “There’s been some good discussions and some coming together on agreements for reforms.”

House Speaker Kurt Zellers (R-Maple Grove) agreed reaching a deal—as well as the shutdown—has been difficult.

“We are in an imperfect situation,” Zellers said. But in the end, “we’re focused on getting the lights back on and getting the government up and running again.”

Despite the agreement, Dayton reiterated his disappointment with the deal which he announced Thursday morning.

“I’m disappointed I wasn’t able to pursuade a legislative majority of the wisdom of my approach to raise taxes on the wealthiest Minnesotans,” Dayton said. “In the absence of that, however, this is an agreement today.”

Zellers said, “Today was about making a deal that we’re disappointed in, but that’s done. None of us got exactly what we wanted. But we have a deal that will be done, a budget that will be balanced and a state that will be back to work.”

Winkler said, "More debt and more borrowing only make this bad situation worse. We should expect bond ratings agencies to further downgrade our state’s rating, as they rightfully should if we continue to neglect the realities of the budget crisis facing our state.

"Starting with the Jesse Ventura rebate checks, Minnesota has steadily marched down a path toward a fiscal crisis, like we have seen in other dysfunctional states."

Koch said despite legislators' misgivings, she expects the budget to pass the special session.

“We’re working with our caucus. We need to hammer out final details in these bills, but we’re confident,” Koch said. “We’re focused solely on making sure these bills are processed as quickly as possible.”