The success of Gov. Mark Dayton’s last act as Minnesota’s chief executive depends on his ability to do something he’s never mastered — work productively with Republicans.

After 40 years in public service, Dayton, who turns 70 later this month, will end the final two years of his second term much like he started his first term — facing a Legislature controlled by a Republican majority. Polar opposites in ideology, the DFL governor and Republicans will square off this session over how to best spend a projected $1.4 billion budget surplus.

Shaped by the rancorous budget battle of 2011 that ultimately resulted in the longest government shutdown in Minnesota’s history, Dayton said he hopes for a different outcome this year. He is, however, pessimistic about the coming legislative session, which opens Tuesday.

“I started out the 2011 session very optimistic that we’d be able to work successfully together, and it turned out to be the opposite,” Dayton said in a recent interview. “I don’t start this next year with the same optimism. I think it’s going to be difficult and hopefully we can come to a resolution at the end that avoids a shutdown.”

State Republicans are newly emboldened after reclaiming the Senate and increasing their majority in the House in November. They’re pledging to immediately tackle skyrocketing health care costs and debate the future of MNsure, the state’s health insurance marketplace. They’re unlikely to cede much ground to Dayton’s agenda, which will include expanded early-childhood education, additional spending on services for mental health and a comprehensive transportation plan. Dayton also wants improvements to aging water infrastructure throughout the state.

Adding to the complexities of a budget-setting year is the backdrop of the 2018 governor’s race. With Dayton not seeking re-election, the contest is wide open and could include two of four legislative caucus leaders who have not ruled out running: House Speaker Kurt Daudt, R-Crown, and incoming Senate Minority Leader Tom Bakk, DFL-Cook.

With so many potential candidates, Dayton said his approach to the session will be “guarded,” explaining that “I expect to be attacked all the time.”

Dayton predicts that Daudt will paint himself as Dayton’s foil.

“Any time he can square off against me is to his political advantage and building his constituency,” Dayton said. “Democrats might be a little more subtle about it in the beginning, but it’s already an election year or an election cycle. Everything will be polarized, everything will be influenced increasingly as the two years go on by how people will position themselves for the future.”

While Dayton said he will do his best to find middle ground with Republicans on budget priorities, he is prepared to “stand up and speak out and fight.”

“I’m not going to go quietly into the night,” he said.

The 2018 race

Dayton’s decision not to seek re-election gives Republicans and DFLers plenty of time to prepare for the 2018 gubernatorial race.

U.S. Sen. Amy Klobuchar cleared the field for DFLers after recently deciding to seek a third term to the U.S. Senate. That leaves DFLers to jockey for the front-runner position: State Rep. Erin Murphy of St. Paul, and St. Paul Mayor Chris Coleman have announced they will run. Others who could pursue the job include Lt. Gov. Tina Smith, Attorney General Lori Swanson and State Auditor Rebecca Otto.

While a Republican candidate has yet to announce a run, Daudt is seen as one of the top contenders. His quick ascent to the post of House speaker, first after he helped Republicans win back the majority in 2014 and recently expanding his majority in 2016, could bode well as Republicans try to end a decade of losses in state elections. The last Republican to win a statewide office was Tim Pawlenty in 2006, who served as governor until 2011.

Daudt has slammed Dayton and other DFLers for the health care problems, which include steep premium increases and disruptions in care for some people who may find their preferred doctors outside of their insurance network next year.

Daudt called Dayton’s premium buy-down plan “uninspiring” and, in a recent radio appearance, likened him to a “spoiled rich kid,” saying the governor wants everything his way during negotiations.

In an interview, Daudt downplayed any intention to run, and said that his immediate focus will be on setting a two-year budget.

Daudt said he tires of the “perpetual campaign,” but called it a “huge honor” to be considered a likely front-runner in the gubernatorial race, adding that “at some point I’ll have to make a decision of whether I think I’m right for that job or that campaign.”

He said that even if he doesn’t run, he’s committed to seeing a Republican win the job.

“We run a pretty good — probably better than pretty good — campaign operation,” Daudt said, referring to his legislative election success, adding that, “We do it better than anybody has done in recent history in Minnesota. But I’m going to use that to help in the governor’s race whether I’m in the governor’s race or not.”

Budget priorities

Dayton in recent weeks has met with members of his administration and various agency officials as he puts together his budget proposal, set to be unveiled in late January. While details and other particulars are yet to be announced, Dayton said he will propose additional spending on mental health services and likely more staffing for the Department of Human Rights.

“The need for human services in Minnesota is growing by staggering proportions,” he said. “There are more people in distress, in emotional distress, than I’ve ever seen, both in numbers and as a percentage.”

Incoming Senate Majority Leader Paul Gazelka, R-Nisswa, said he expects that fresh leadership, which also includes incoming House Minority Leader Melissa Hortman, DFL-Brooklyn Park, will likely make for better budget negotiations.

In interviews, both Gazelka and Hortman said they plan to collaborate with fellow legislators and avoid concentrating too much power with a handful of individuals. Gazelka predicted his style of leadership will make for a smoother budget-setting year.

“The good news is the governor has reached out to me over the last six years,” Gazelka said. “I’d rather assume that we’re both going to put our best foot forward. … We intend to be much more transparent about how we are going to go about our business.”

Hortman said she supports Dayton’s priorities and added that she sees “the Minnesota House DFL [as] being a strong teammate with the governor.”

She added: “Let’s try to govern together. … Let’s not spend the next two years trying to game the system for a battle in 2018.”