Signs of progress in budget cliff-hanger

  • Article by: BAIRD HELGESON and ERIC , roper and MIKE KASZUBA
  • Updated: June 25, 2011 - 11:24 PM

A growing number of GOP lawmakers say they could support some form of increased revenue to break deadlock.

Legislators and Gov. Mark Dayton spent another day Saturday quietly trying to patch together a last-minute budget deal as the countdown toward a historic government shutdown moved into its final days.

Meanwhile, a growing number of Republican lawmakers say they are willing to support some form of increased revenue to help secure an agreement between DFLer Dayton and the GOP legislative leaders, who have huddled in closed-door negotiations much of the past two days.

Before the rapidly evolving and secretive political poker match is over, many elements could come into play -- a new Minnesota Vikings stadium, education reform and even an expansion of casino-style gambling.

"It's like a dock on a lake; on the surface you don't see things being done," said Charlie Weaver, executive director of the Minnesota Business Partnership, who has spent months trying to broker a deal. "Under the surface, there are good discussions happening."

Saturday's daylong budget talks -- the second straight day of private negotiations between Dayton and GOP leaders -- ended with Republicans and DFLers saying that progress was being made. However, there were signs that significant roadblocks remain.

"We have a considerable road trip ahead of us," said Rep. Jim Abeler, R-Anoka, the lead House Republican on health and human services issues, as he left Saturday's meetings. He said he expects the health and human services budget talks to continue Monday.

Dayton tried to fend off talk that the state's top public officials were withholding vital information from a public waiting for word on whether a shutdown is coming.

"It's not that we [want] to withhold information," Dayton said. "It's because we find it very conducive to our goal, which is to reach an agreement together that will benefit the state of Minnesota."

Dayton and Republican leaders have been deadlocked since January over how to eliminate a projected $5 billion shortfall. Other cash-strapped states have seen similar political gridlock, but managed to strike 11th-hour budget deals. That leaves Minnesota as one of the last states facing a shutdown on July 1, when the current budget expires.

Saturday's negotiations, outwardly at least, displayed a collegial atmosphere. After lunch, Republican House Speaker Kurt Zellers tossed a football on the State Capitol lawn with House Majority Leader Matt Dean. A smiling Dayton nodded to GOP leaders as he headed back into the meetings.

Republicans have unanimously opposed Dayton's proposal to raise income taxes on Minnesota's top 2 percent of earners, which Dayton says would raise nearly $2 billion to spare what he calls "draconian" cuts to state services.

Over the past several days, though, a small but growing number of Republicans -- including at least two committee chairs -- have expressed a willingness to consider increases to non-income tax revenue. Prospects include a hike on so-called sin taxes -- alcohol and cigarettes -- possible health care surcharges and the long-pitched racino, which would install video slot machines at horse racing tracks.

Publicly, Zellers and Senate Majority Leader Amy Koch are sticking to their no-new-revenue message. But if rank-and-file Republicans can piece together enough proposals, they could get closer to Dayton's number and still honor their campaign pledge to hold the line on "job-killing" taxes.

A hard look at gambling

Senate Finance Committee Chairwoman Claire Robling, whose district includes the Canterbury Park horse track, says she favors the racino idea, which could raise $250 million over the next two years.

Republican Sen. Mike Parry, chairman of the State Government Innovation and Veterans Committee, also is open to expanded gambling, which he says could serve the dual purpose of breaking the budget stalemate and eliminating the monopoly on casino-style gambling now held by Indian tribes.

"Here's the deal," Parry said. "People want racino, not so much that they want the gambling, but they want to know the dollars are going to help the state of Minnesota."

Minnesota isn't the only state eyeing greater gambling revenues. A report released last week by the Nelson A. Rockefeller Institute of Government at the State University of New York says at least 10 states expanded gambling in the 2010 fiscal year.

While gambling appears to be a solution for some legislators, it wouldn't be a silver bullet for the budget.

Robling said there may be other forms of politically palatable new revenue out there, too.

To end the shutdown in 2005, Robling voted for what Republican Gov. Tim Pawlenty called a "health impact fee," which had the effect of raising cigarette taxes.

"It's the only tax increase I ever voted for in 15 years," she said. "It was a solution. There are things out there like this that are less widespread and less objectionable."

Unprecedented closure

With so few days before a shutdown, state and local government leaders are bracing for what could be a far-reaching and unprecedented closure. Swarms of legal teams have shifted the budget fight to the courts, pleading for their clients' funding to continue if the state's financial spigot is shut off. Ramsey County Chief Judge Kathleen Gearin must wade into the murky business of deciding the scope of a government shutdown. That ruling is expected this week.

Once Gearin rules, state budget staffers will move quickly to notify the few workers who will be needed to keep critical services operating.

With so much at stake, many Republicans are advocating for "lights-on" legislation that would keep government running and allow more time to cut a deal.

Dayton rejected that idea last week. "It just means we'd face the same situation a month from now," he said.

"Negotiations get real when there are real consequences," said former Rep. Matt Entenza, who was House DFL minority leader during the 2005 shutdown. "And all the lights-on does is prevent the consequences that are going to force both parties to compromise."

Democratic legislators, who have been largely silent during budget negotiations, are banking on a shutdown doing Republicans the worst damage. The GOP took control of both chambers this year, but a recent poll showed a very low approval rating for the Legislature -- far lower than Dayton's approval numbers.

"It seems like a pretty high-risk strategy for them," said Senate Minority Leader Tom Bakk, DFL-Cook. "They have the swing seats now. If the Legislature is seen as doing poorly, it will fall to them."

Tom Hanson, Pawlenty's deputy chief of staff in 2005, said a shutdown has the power to step up negotiations. "There was a palpable difference between one minute to midnight and one minute after," he said.

Entenza said it took five days of a shutdown in 2005 for both sides to "panic."

"Both Democratic and Republican legislators are going to see the pressure go rapidly through the roof," he said.

Baird Helgeson • 651-222-1288

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