Legislature: It's over -- No deal

In an act of defiance in the final hour, DFLers passed a revised tax bill that faces a certain veto. Gov. Tim Pawlenty stayed firm in his decision to make $1.2 billion in budget cuts all by himself.

With four hours to go before the midnight adjournment, Rep. Dean Urdahl, R-Grove City, rubbed his eyes as his House colleagues discussed taking a short break to hold caucuses. There appeared to be no break in the budget impasse between the governor and the DFL.

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Working to a truly bitter end, the Minnesota Legislature adjourned at midnight Monday, following a final gesture of defiance toward Gov. Tim Pawlenty, as the DFL-led House and Senate passed a massive $2.7 billion bill that would wipe out the state's deficit through a $1 billion tax increase and a one-time shift.

Speaking at a rapid-fire clip and ignoring the shouts of Republican legislators, House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, muscled the bill through in moments on an 82-47 vote. That's well short of the 90 votes needed for a veto override, but strong enough to send the intended message to Pawlenty and the public. Minutes later, the Senate approved the bill on a 35-1 vote.

The bill, which mirrors an earlier version vetoed by Pawlenty that raised income taxes on the wealthy, liquor and credit card companies, is destined for a certain veto by Pawlenty, who now will be left to make good on his promise to balance the budget through unilateral cuts, or "unallotments."

With 30 minutes to go, House Taxes Chairwoman Ann Lenczewski, DFL-Bloomington, introduced the hastily composed bill that contained a tax increase of more than $1 billion and $1.8 billion in shifts.

House Minority Leader Marty Seifert, R-Marshall, protested "tax increases that you're trying to cram down our throats in the dark of night."

House Republicans desperately tried to prolong debate and run out the clock but failed, as did their counterparts in the Senate moments later.

"Let's not finish this way," pleaded Senate Minority Leader Dave Senjem, R-Rochester. "This is a disgrace. I cannot believe what we have just done."

The scene on the Senate floor was chaotic. At least five Republican senators tried to get formally recognized by Senate President James Metzen in what they said was an attempt to get more details of the DFL's budget bill.  When one Republican senator, Sen. Julianne Ortman, R-Chanhassen, tried to ask the budget bill's Senate DFL author, Sen. Tom Bakk, DFL-Cook, for details on the proposal, Bakk sat silently at his desk and did not respond.

Metzen, in the end, ignored the Republican pleas as the DFL senators sat quietly in their chairs and the budget bill was quickly approved. Day, at one point, carried a roll of silver duct tape to Pogemiller's desk, trying to show that the DFLers were trying to stitch together a last-second budget plan.

"Mr. Pogemiller, can't you do something about this?" said Sen. Paul Koering, R-Fort Ripley, who suddenly shot up out of seat and looked back at Pogemiller.

DFL leaders said the blame for any unallotments would lie with Pawlenty's refusal to sanction any new tax revenue even in the face of a $4.6 billion deficit and his insistence on one-time solutions.

Pawlenty spokesman Brian McClung said Minnesotans would thank Pawlenty for protecting them from tax increases. He said the governor would meet with agency heads today to review the budget challenges ahead, while Democrats fly around the state trying to explain why they failed to balance the budget.

Minnesotans are "going to remember that the Democrats couldn't pass a balanced budget ... so they left it to the governor to clean up their mess," McClung said.

While the latest tax bill would be dead on arrival, it could be an important component in the messaging wars that may soon replace the legislative battle.

DFL leaders will begin touring the state today to warn of the consequences of Pawlenty's solution, while mayors said they would mobilize their own efforts.

A lack of trust

"Minnesota is now headed toward the unallotment cliff," said Wadena Mayor Wayne Wolden, president of the Coalition of Greater Minnesota Cities. Facing unallotments to the local government aid that is the lifeblood of some smaller cities, Wolden said that "while the governor and legislative leaders are content to blame each other, Minnesota communities are about to be delivered a huge body blow in the form of huge property taxes and cuts to public safety, libraries and other critical services."

Sen. Linda Berglin, DFL-Minneapolis, a leading voice for Democrats on health care, had said earlier in the day that she intended to work till "the last minute" to mitigate health care cuts, particularly to General Assistance Medical Care, the state's program for the poor that Pawlenty vetoed, effective July 2010. But she said she had little hope.

Fear of Pawlenty's unallotment zeal ran so deep, she said, "we would need an ironclad agreement" from him that if legislators helped restore funds to GAMC by cutting elsewhere, "he wouldn't turn around and unallot GAMC."

In the House, rookie Rep. Andrew Falk, DFL-Murdock, became a near-hero in his caucus for quickly crafting a bill that would rescind the governor's unallotment powers -- a proposal that in 24 hours had gained 34 cosponsors. Falk said that if his bill did not get a hearing on Monday, he would bring it back next year.

"This is an abuse of power," Falk said. "It was intended as a surgical tool, not a blunt instrument. He [Pawlenty] put his name on all our budget bills, but vetoed the bill that helped pay for it all. Then, he turns around and says he'll unallot while we're still in session. That's not a good way to govern."

Veteran House Rep. Alice Hausman, DFL-St. Paul, agreed, saying that unallotment was authorized during the '80s recession and multiple special sessions. "It was used sparingly until this governor," she said.

How the late bill came about

House Tax Chair Lenczewski said that she, Senate Taxes Chairman Tom Bakk, DFL-Cook, Kelliher and Pogemiller had worked on the revised tax bill throughout the day. But when the time came for a vote, Bakk withheld his. Later he told reporters he was concerned about the size of the shift and acknowledged that, unbeknownst to House leaders, he had been meeting privately with Pawlenty on a plan of his own.

Bakk said he had met Management and Budget Commissioner Tom Hanson for breakfast on Friday to talk over impasse. On Saturday night, he said, while sitting in a Legislative Planning and Fiscal Policy Committee meeting with Kelliher and others, he was slipped a note asking him to meet with Pawlenty and Hanson. The night before adjournment, Bakk called Hanson at 10:30 p.m. to propose a 5 percent, across-the-board income tax surcharge, a smaller shift and a promise from Pawlenty not to unallot until April, giving the Legislature another chance to resolve the deficit.

"Pawlenty never got back to me on that," Bakk said.

Kelliher said it became clear to legislative leaders that Pawlenty was unwilling to budge from what she called his "borrow and spend" solution. The last-minute tax bill, she said, answered the charge that DFLers had not balanced the budget.

"It was important to pass a balanced budget that made it all the way through to the governor's desk," she said.

In the weeks to come, she said, "there probably will be a lot of talk about whether Gov. Pawlenty has kind of crossed a line," with his unallotment ultimatum.

"This is one of the most difficult sessions anyone can remember in modern times," she said.

House Republicans, by contrast, said they would leave St. Paul feeling that many Minnesotans would applaud Pawlenty's political and budgetary maneuvering in the past week and their own successful blocks of DFL veto overrides.

Sen. Geoff Michel, R-Edina, called Monday "a brutal night for Minnesotans and taxpayers. ... After the bad theater tonight, the good news is that when Minnesotans wake up tomorrow, this will not be law. The governor in the corner office will take this $34 billion of spending and he's going to roll it back so that we have a balanced budget."

Upending the chess table

Rep. Keith Downey, R-Edina, a freshman legislator, said that the "seeming lack of interest in progress on the part of the DFL was really quite shocking to me. They wanted to bash the governor and his budget for as long as they could." Downey said it was the DFL's "vacuum of leadership" that likely turned the House Republican minority into a tight group that showed few signs of wavering. In his district, he said, people are not necessarily pleased with the budget cuts but "most people are very pleased that we're going to exert some fiscal responsibility."

DFLers have defined progress differently, saying that Pawlenty fenced off tax revenues early in the session despite what was then a $6.4 billion deficit, willingly accepted federal money that brought it down to $4.6 billion and then proceeded to block off any new potential source of revenue.

Some Republicans said last year's veto override on a gasoline tax, in which six Republicans joined forces with DFLers, actually helped the GOP stay together politically this year. Two of the six were bounced from office in the November elections.

"The 47 of us are stronger than the 49 of us were last year," said Rep. Michael Beard, R-Shakopee, a fourth-term legislator. Beard said Pawlenty had showed in the past week that he had matured politically. "I've watched him grow" as governor, Beard said. "He's done a masterful job."

Pawlenty upended the chess table last week with his surprise decision to use unallotments at an unprecedented level. DFLers said that House Republicans who backed Pawlenty would face criticism once Minnesotans felt the depth of the budget cuts they authorized.

"I can't believe all 47 [House Republicans] are walking the plank" with the governor, said Rep. Jeremy Kalin, DFL-North Branch. "I have a hard time believing they're not hearing [criticism from Minnesotans]. It may be they're not listening."

Staff writer Kevin Duchschere  contributed to this report.

--Patricia Lopez • 651-222-1288

--Mike Kaszuba • 651-222-1673

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