Gov. Mark Dayton retreated from what has become a losing political issue, agreeing Thursday to delay big pay raises for his commissioners and return oversight authority of his cabinet pay back to the Legislature. The deal with legislative leaders brings to a close — for now — the ongoing melee over pay raises that Dayton recently awarded to his commissioners.

Under the compromise, the raises will be restored July 1, according to Minnesota Management and Budget agency. By July 2, authority would return to the Legislature, repealing the 2013 measure that gave the governor discretion over cabinet pay. If Dayton allows the raises to stand, however, he could reignite a political fire even as the two parties begin recruiting candidates, raising money and plotting strategy for the 2016 election.

The GOP-led House voted 106-21 for the bill, which was carried by House Ways and Means Chairman Jim Knoblach of St. Cloud.

The controversy started when Dayton earlier this month enacted raises for his commissioners that were as high as about $35,000, with many of them getting pay bumps to about $155,000. Republicans were outraged at the increases, which left many Democrats with misgivings as well.

Senate Majority Leader Tom Bakk, DFL-Cook, led the Senate last week to vote for an amendment that would have delayed all commissioner raises until July 1, sending Dayton into a fury. The governor accused Bakk of "conniving" and backstabbing.

On Thursday, Dayton had no comment on the House bill. On Wednesday his staff released a statement saying he was "eager to get the focus of the session back to the priorities of Minnesotans."

Senate Majority Leader Tom Bakk

The squabble over salaries brought to the surface underlying tensions between Bakk and Dayton, two strong-willed DFL veterans whose feud became public last week.

On Thursday, Bakk said he did not take the disagreement personally. He blamed the discord on a miscommunication and said the two would likely be more careful in their communication going forward. "And that's probably a good thing," Bakk said. Dayton last week said he would no longer meet with Bakk unless witnesses were present.

Republican Kurt Daudt, a first-term Speaker elected to the House in 2010, played mediator between the two DFL leaders to help broker a deal. His first step, he said, was to do nothing: "I made a conscious decision last week to just sit on this for a little bit and hopefully let things cool off between them."

Then, he said, he reached out separately to Dayton and Bakk and helped forge an agreement amenable to all.

Emergency funding can proceed

The deal should release what had been a hostage of the salary kerfuffle: An emergency funding measure that would give three state agencies about $15 million to pay for last year's Ebola virus response, more staffing at the troubled Minnesota Security Hospital in St. Peter and a budget shortfall at the Minnesota Zoo, among other items.

Those agencies will, as part of the agreement, see their requests trimmed by the amount of the raises already paid out — part of the Legislature's message that it will not fund commissioner raises as part of an emergency spending package.

The House attached the salary compromise agreement to the emergency funding bill, which now heads back to the Senate.

Thursday's House floor session featured some impassioned speeches. Rep. Matt Dean, R-Dellwood, thundered that the raises showed a state government that is "out of touch" and called the episode an "embarrassment."

Minority Leader Paul Thissen, DFL-Minneapolis, said in an interview that the salary imbroglio is a discomfiting portent of what may come: "A deficiency bill, which should be about the easiest bill to get passed, took four weeks. I hope it's not indicative of how things are going to move."

Thissen said that the point of the 2013 law giving the governor discretion to set his commissioner salaries was to remove the issue from the political hothouse of the Legislature, though the law of unintended consequences seems to have crushed that rationale with Dayton's now highly politicized raises.

With the raises now on hold, Dayton's cabinet will again be making less than their counterparts in North Dakota, Wisconsin and in most states, according to an analysis by Minnesota Management and Budget from data compiled by the Council of State Governments. Fourteen of 15 commissioners are paid at or below the 50th percentile; eight are below the 25th percentile.

Staff writer Ricardo Lopez contributed to this report.

Patrick Coolican • 651-925-5042