Dayton blasts Senate Democrats for slow approval of tax relief

Gov. Mark Dayton blasted fellow DFLers in the Senate on Tuesday, saying Senate leaders were holding hostage a middle-class tax-relief package until they get a new multimillion-dollar office building.

"This is inexcusable. This is unacceptable," said Dayton, who was on crutches for his first news conference at the Capitol since hip surgery a month ago. "I am very, very, very disappointed."

Dayton's sharp comments were the most public display of fighting between DFLers who control the governor's office and both chambers of the Legislature. Dayton and House DFLers are up for election this fall and have tried to portray a workmanlike harmony in St. Paul, aided by a strong economy and a budget surplus expected to top $1.2 billion.

Dayton had set a Wednesday deadline to pass more than $500 million in tax relief — a deadline that will not be met. The proposal includes about $57 million in retroactive tax relief for consumers with student loan debt, Minnesotans who adopted children and those who lost their homes to foreclosure. The tax package also wipes out new business sales taxes on telecommunications equipment and a tax on warehousing services, which was due to kick in April 1.

The House already passed the measure, but Senate leaders said they will not finish reviewing the proposal by Dayton's deadline. Meanwhile, a powerful House committee has refused to grant a crucial final passage to the new Senate office building.

Senate Majority Leader Tom Bakk said Tuesday evening that he did press House leaders to approve the building, but said he would not hold up the tax measure. "If they choose not to do that, we are still going to proceed with the tax bill," said Bakk, DFL-Cook.

Bakk had predicted that the Senate would complete its work on the tax bill by the end of the month. After Dayton's criticism, Bakk said the Senate would use a special procedure to pass the measure Thursday and send it back to the House for final consideration.

In addition to the tax bill, Senate DFL leaders have been slower to approve raising the minimum wage, also a high priority for House DFLers looking to hold on to power in what is expected to be a strong GOP year. Senators are not up for election for two more years, giving them less election-year pressure.

The governor said this intensifying public fight is giving Republicans just what they want to make their case to voters that DFLers are neither fit nor able to lead. "Republicans are just salivating at the chance to ram this down [House DFLers'] throats and my throat, too," Dayton said.

Republicans rushed to respond, calling this the DFLers' "mid-session meltdown."

"Minnesotans have a window on some interparty squabbling in St. Paul," said Assistant House Minority Leader Kelby Woodard, R-Belle Plaine. "Unfortunately, the victims are Minnesota taxpayers."

Senate Republican leaders say this is the latest example of Dayton and DFLers doing one thing and then trying to quickly and quietly clean it up.

Minnesota Department of Revenue Commissioner Myron Frans said his office is racing to get the new tax changes on the books by the beginning of April.

More than 1.1 million Minnesotans file their taxes between April 1 and April 15, so the changes would allow about 41 percent of filers to benefit from the new retroactive tax breaks. The others could file amended returns to get their share of the tax relief. We want this "to go as smoothly and quickly as possible," Frans said.

Dayton said senators do need a new office building and parking structure as the State Capitol undergoes a massive, multimillion-dollar renovation, but he thinks the $90 million price tag is high.

He called the glassy design "lavish" and out of sync with the capital campus, where buildings are generally grayish and brownish. "Does there need to be building? Yes," Dayton said. "We need a functional building."

The governor had asked Department of Administration officials to find ways to reduce the cost of the proposed office building, but possible changes didn't result in deep enough savings.

The governor said he believes Senate leaders are trying leverage House DFLers' desire to avoid confrontation in an election year as a way to get them to cave to the new building.

House Speaker Paul Thissen said that in the meeting Tuesday, the Senate leader explicitly linked passage of the tax proposal to final House approval for the Senate office building.

"It became clear that Sen. Bakk thinks that including a Senate office building in the tax bill is the only way he's going to get his Senate office building done," said Thissen, DFL-Minneapolis.

The House leaders said they understand the need for the new building, given that many senators and Senate employees will soon be displaced by the Capitol renovation. But they do not support linking a deal with the tax bill to the outcome of the building. "They're separate issues," Thissen said.

House Majority Leader Erin Murphy, DFL-St. Paul, who chairs the House committee where the building is snagged up, said DFLers and Republicans on the committee have questions about its cost and possible alternatives.

Thissen said there is still time to pass the tax proposal if the Senate acts quickly. "I'm still hopeful," he said. "In the legislative process, 24 hours is a long time."

Staff writers Patrick Condon and Rachel E. Stassen-Berger contributed to this report.

Baird Helgeson • 651-925-5044