Dayton, Republicans say they're closer to budget deal to avoid government shutdown
Updated: 06/28/2011 10:52:57 PM CDT
Minnesotans should know by tonight if their state government will shut down Friday.
After two closed-door meetings with legislative leaders Tuesday, Gov. Mark Dayton said today is "the day when we have to get it done if it's going to get done.''
Technically, Dayton and leaders of the Republican-controlled Legislature have until midnight Thursday to prevent more than a brief shutdown.
The Democratic-Farmer-Labor governor said he and legislative leaders could cut a deal if they're willing to do so.
Senate Majority Leader Amy Koch, R-Buffalo, said they are close to agreement on most of the nine remaining budget bills, but a few still need work.
The state's 201 legislators have been told to be ready to get back to the Capitol on short notice for a special session, Koch said.
Budget negotiations will resume at 9 a.m. today in the governor's reception room.
Meanwhile, a judge has ordered the Minnesota state court system to remain open if state government shuts down.
Retired Judge Bruce Christopherson, who was appointed to hear the case, ruled Tuesday that the judicial branch will continue to perform the functions necessary to fulfill its obligations and ensure citizens' rights under the state and federal constitutions.
His order directs the state to continue issuing checks and processing the necessary funds for the courts to keep operating.
A ruling is pending from another judge on which other essential government functions should keep running if Dayton and the Legislature fail to agree on a budget before Friday.
Even if the governor and legislative leaders reach an agreement today and he calls a special session Thursday, they won't have enough time to process all the complicated bills.
If the negotiators reach a broad agreement, Senate Minority Leader Tom Bakk, DFL-Cook, said the Legislature could pass a "lights on" bill to fund state government temporarily. Then legislative staff would have a few days to meticulously draft the long and complicated budget measures before lawmakers return to cast the final votes on them.
Abiding by the "cone of silence" agreed to Friday, neither Dayton nor the top lawmakers would say anything more about what they discussed. But they spent their afternoon session focusing on the health and human services bill, where they sharply disagree over costs and policies.
The core of their disagreement is how much to spend. Republicans insist on a $34 billion budget, which is what the state expects to collect over the next two years. Dayton says he needs a $35.8 billion budget to avoid what he calls "catastrophic cuts" in vital services and has proposed a new tax on high earners to pay for it.
Can they resolve their differences?
"Absolutely, there's a path to getting it done, and there will be a resolution," predicted former DFL House Speaker Margaret Anderson Kelliher.
How?
The key could be "nontax revenue," according to a pair of former state budget insiders.
If Dayton drops his demand for an income tax increase, Republicans could offer him some additional revenue from sources other than taxes, said Tom Hanson, state finance commissioner under former GOP Gov. Tim Pawlenty, and Charlie Weaver, executive director of the Minnesota Business Partnership and Pawlenty's former chief of staff.
Nontax revenue could include fees, surcharges, delayed payments, transfers from funds with surpluses and possibly cash from an expansion of gambling.
In budget disputes between DFLers and Republicans during the economic downturns of the past decade, "the compromise ground has been nontax revenue," Hanson said. Two years ago, that was more than $2 billion in federal stimulus money.
State officials frequently have delayed state payments to school districts to plug budget gaps in the past, and they could do it again, Hanson and Weaver agreed. The state used nearly $2 billion in "shifts" to balance the current budget, and they could "borrow" an additional $200 million or more from school districts if they agreed to repay them when the state books are back in the black.
Both said the state could raise another $200 million or more with a Medical Assistance or MA surcharge on hospitals, nursing homes and health plans. The federal government reimburses the state one dollar for every additional dollar it spends on MA, and state officials could find ways to return some of that additional revenue to the health care providers to offset their costs.
Dayton has proposed an MA surcharge, but Republican lawmakers have resisted it.
Weaver, who has talked to GOP legislative leaders and Dayton's staff about those options, said state revenue collections are coming in higher than projected, and lawmakers could offer to let the governor spend that additional revenue for the programs he wants to protect.
Gambling is another option. Every year, some legislators propose a "racino" bill to allow slot machines at horse tracks, and this year developers rolled out a plan for a casino on Block E in downtown Minneapolis. Supporters say either could generate up to $100 million a year for the state, but so far, most legislators have steadfastly opposed expanding gambling.
It may be on the table, however, as one of several options to raise revenue without increasing taxes.
"I think the path (to a budget agreement) is pretty obvious, but sometimes it takes a while to get there," Weaver said.
The Associated Press
contributed to this report.
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