Dayton, GOP say they have Minnesota budget deal

ST. PAUL -- Minnesota's three top budget negotiators walked from the governor's office Thursday evening to announce a state budget deal, frowning like their best friend just died.

In a way, each had lost a political friend: Democratic Gov. Mark Dayton gave up his long-held demand that the richest Minnesotans pay higher taxes; Republicans House Speaker Kurt Zellers and Senate Majority Leader Amy Koch gave up their party's strongly held stance of keeping state spending to no more than $34 billion in the next two years.

But in giving up what they fought for all year, they reached a framework of a budget deal that could end a shutdown entering its 15th day today.

"It's my understanding that we have an agreement," Dayton said Thursday evening after meeting three hours with Koch and Zellers.

Koch, R-Buffalo, called it a "framework" of a deal.

It appeared the deal was fragile, with the trio willing to speak about few details. Dayton said negotiators and others involved will work around the clock so that it can be passed within days.

A Thursday night email to Senate Democrats said they should expect a special session to start Monday or Tuesday.

Once legislators pass budget bills, and Dayton signs them, 22,000 state workers can return to work, 98 road construction projects can resume, state parks can reopen, fishing licenses can be sold and Minnesotans can receive state services.

Dayton moved a long budget impasse off center Thursday morning when he announced that ending the state government shutdown is so important that he was willing to drop his proposal to increase taxes on Minnesota's top earners.

In a speech at the University of Minnesota's Humphrey School of Public Affairs, Dayton read a letter he wrote to Zellers and Koch with his proposal to end the budget impasse and shutdown.

Dayton said he would accept a legislative Republican offer made on June 30, the day before state government shut down. But he tacked three of his own requirements onto the proposal: all policy issues would be stripped from budget bills, a GOP plan to cut the state workforce 15 percent would disappear and the Legislature must approve at least $500 million in public works construction.

The basis of the June 30 GOP offer was increasing spending $1.4 billion beyond what Republicans want to spend in the next two years. Half would come from delaying state payments to schools, a tactic legislators and governors have used before. The other half of the new revenue would be borrowing against Minnesota's future payments from a lawsuit the state won against big tobacco companies.

Koch and Zellers said they accepted Dayton's proposal, but altered it. They did not say what changed.

"The people of Minnesota won today," Dayton said, wearing a frown, adding that "no one is going to be happy with this."

Added Zellers: "No one of us got exactly all of what we wanted."

Dayton said all nine remaining budget bills would have to be completed, and his commissioners sign off on them, before he calls legislators back to work. Only a governor can call a special legislative session.

The session is needed because before the Legislature adjourned on May 23, only a bill funding agriculture programs was passed and signed. Dayton vetoed other Republican-written budget bills on May 24 and further negotiations failed, shutting down much of government on July 1.

The entire budget process was complicated because the state faced a $5 billion deficit.

The main argument has been about how much the state should spend. Dayton originally wanted to spend $37 billion in the next two years, but lowered that to $35.8 billion. Republicans said they would not spend more than $34 billion, the most in state history.

While it was unclear, it appeared Thursday's budget deal would spend $35.6 billion.

Many lawmakers said they were awaiting details of the agreement before saying whether they would support it.

Senate Minority Leader Tom Bakk, DFL-Cook, praised Dayton for finding a way to end a "painful government shutdown."

However, he added, "let's be very clear about what this budget deal means for Minnesota: Rather than asking the richest 0.3 percent of Minnesotans to pay their fair share, Republicans instead chose to solve the state's budget crisis with a borrow-and-spend proposal that does nothing to solve the long-term financial challenges."

Koch said she was happy the shutdown will end soon.

"This government shutdown had a rippling effect on individuals, families and businesses all over Minnesota," she said. "Having an agreement in place is a certain sign of relief for those most adversely affected by the shutdown."

Zellers said the deal is not perfect.

"But we are in an imperfect situation here," Zellers said. "As the governor says, there are things we don't agree with here, but it gets the budget balanced and ends the shutdown."

Zellers, Koch and Dayton said they had not discussed whether to finance a new Vikings football stadium for weeks, but did not rule out considering it during a special session.

While Dayton's proposal called for a $500 million public works construction bill, the three did not say they agreed to it. Dayton said he hoped the funding could pass, but it was not essential for the budget deal.

The governor said he would not call legislators into a special session to pass a temporary funding bill, continuing his insistence that there be an agreement on an entire budget before lawmakers return to work.

The three wore gloomy faces, a stark contrast to what Capitol observers are used to when budget deals are cut. Even leaders who do not get all they want generally are all smiles when an agreement is announced.

"We didn't believe we should spend this amount of money and the governor did," Zellers said. "We're spending more than we wanted to ... but at the end of the day, yes, we had to compromise, we had to come together."

Don Davis reports for Forum Communications Co.