Legislators tried to give Minnesotans a little candy with their medicine Monday as they passed a sweeping package of tax breaks after dealing with the ugly business of shaving $312 million from the state budget.
The state House and Senate wiped out one-third of the $1 billion deficit by carving up 10 areas of the budget, including higher education, the courts and aid to cities and counties. In higher education, legislators cut from operations and maintenance and work-study. In natural resources, they nicked forest management and parks and trails. They raised fees for barbers and cosmetologists, but scrapped a DFL plan that would have raised millions of dollars by raising fees for large securities brokerages.
After blowing a self-imposed deadline, legislators adjourned for a week-long Easter and Passover break, having completed what are widely seen as the easiest budget reductions. Still left are politically unpopular cuts to health and human services and K-12 education.
The House passed the budget cuts, 76 to 55. The Senate approved them 44 to 23.
Despite Republican legislators' recommendation to reject the cuts, Gov. Tim Pawlenty's chief spokesman said that was unlikely. "As long as there are no unforeseen problems, the governor plans to sign the bill," said Brian McClung.
"It's a good compromise," said Sen. Richard Cohen, DFL-St. Paul, chairman of the Senate Finance Committee.
At a time when legislators are looking to slice nearly every segment of the budget, some seemed relieved that the cuts weren't deeper.
While there is a $9.6 million cut to the courts' budget, that's considerably less than nearly $15 million Pawlenty had proposed earlier. Minnesota Supreme Court Chief Justice Eric Magnuson said the earlier cut could have put justice at serious risk.
He was more measured in his reaction to the trim that looks likely to become law. "We appreciate their recognition of the critical importance of the justice system to all Minnesotans," Magnuson said in a statement.
Republican leaders such as Sen. Geoff Michel, R-Edina, blasted DFLers for breaking up the budget work into chunks, which they see as a political gimmick that will create a "train wreck at the end of the session."
Legislative leaders and Pawlenty are waiting to see whether Congress approves a jobs bill that could send $408 million to the state, enough to wipe out a huge share of the remaining deficit.
DFL-GOP debate
On the House floor, two candidates for governor got to the essence of the budget debate between DFLers and Republicans.
Rep. Tom Rukavina, DFL-Virginia, said the budget doesn't do enough to help "the little guy."
He recommended "some kind of fair tax increase" rather than what he called "terrible" cuts.
Rep. Tom Emmer, R-Delano, said the measure doesn't do enough to redefine and reduce the "over-bloated size of government." "You haven't been willing to deal with the actual size of the bureaucracy that you created," he said.
Rukavina and Emmer both voted against the bill, as did GOP gubernatorial candidate Marty Seifert and DFLer Paul Thissen. DFL candidates Margaret Anderson Kelliher, the House speaker, and Sen. John Marty voted for it.
The jobs bill
Legislators passed the budget cuts with little fuss, only to get bogged down in final details on a grab bag of tax breaks and job-creation initiatives.
Along with so-called "angel" credits for small-business investors and tax credits for renovating historic buildings, the legislation retooled tax breaks for the proposed expansion of the Mall of America, which legislators said should quickly result in two new developments at the mall worth more than $200 million. The bill also creates tax breaks to spur development in urban areas and a JOBZ tax break zone at the St. Paul Ford plant.
In the end, legislators agreed to siphon $30 million a year set aside as gasoline tax credits for low-income residents to pay for the new tax breaks.
Some legislators said the bill would create up to 20,000 jobs, but even its staunchest backers weren't so sure.
"I don't pretend to think that this is going to put thousands of Minnesotans to work next month," said Senate Taxes Committee Chairman Tom Bakk, a chief architect of the plan. "But you have thousands of Minnesotans hurting out there, and this is the best idea I've been able to come up with."
During the debate, legislators talked about the potential political perils of taking money from low-income residents to give tax breaks to the rich.
Legislators created the gas credit program as a way to win enough votes to override Pawlenty's veto of a gas tax increase in 2008 for transportation needs.
The money comes from taxes on lease vehicles and is returned to low-income residents as a tax credit capped at $25 per family.
Rep. Bobby Joe Champion, DFL-Minneapolis, said canceling the credit sends a message that the Legislature doesn't care about poor people.
"If we want to do something for the wealthy, we are just going to take it from the people who really don't matter that much to us. That's the message this morning," Champion said.
As legislators grappled with the details, Pawlenty sent a midday letter to leaders saying he would support the current plan. "Barring any other changes, if the bill comes to my desk in its current form ... I will sign it into law," Pawlenty wrote.
Legislators did insert one last-minute amendment before approving the jobs bill by votes of 112-20 in the House and 58-3 in the Senate: They banned any money from the bill from "financing or constructing a stadium or ballpark."
And should the Vikings come before the Legislature questing for a new stadium?
"My guess is after that vote, it is looking a little more challenging," Kelliher said.
baird.helgeson@startribune.com • 651-222-1288 rachel.stassen-berger@startribune.com • 651-292-0164