Dayton, GOP at odds over school aid, taxes

Gov. Mark Dayton and Republicans who control the Legislature are at an impasse over $138 million in emergency school aid and a plan that would cut taxes for 2.2 million Minnesotans.

As the legislative session entered its final week Monday, Dayton said at a news conference that he would not support a Republican tax bill unless lawmakers consider his one-time school spending proposal. "I won't stand for it," the DFL governor said of GOP resistance to the plan. "I will not engage in any negotiations on the tax bill or sign any tax bill until we have an agreement to provide emergency school aid."

Republicans say there's no time to hold hearings on school aid and said a special session would be needed to consider it. Acting before the Legislature adjourns, said Senate Majority Leader Paul Gazelka, R-Nisswa, would be "next to impossible."

"It's too much too late" in the session, he said. The Dayton administration countered by pointing out that the Senate's tax bill, which they are now rushing to complete, was released to the public the same day as Dayton's school aid proposal.

Dayton is scheduled to meet Tuesday morning with bipartisan House and Senate leaders to embark on negotiations.

House Speaker Kurt Daudt, R-Crown, and Gazelka don't support a special session. "We want the governor to engage and that's what we're asking him to do," Gazelka said.

Dayton said he believes agreement can still be reached on pending bills dealing with opioid abuse, sexual harassment and pensions. "There's time to work all that out if legislators are willing to compromise and come to an agreement that respects my priorities as well as their own. We're not at that point yet," he said.

Republicans reached a deal Friday on a plan to reduce tax rates for people in the lowest income brackets. The cuts would cost the state about $137 million next year, $142 million in 2020 and almost $199 million in 2021.

The measure would align the state tax code with the new federal tax law. If those changes aren't made, Daudt said, the state might not be able to prepare next year's tax documents and, if it can, they could be "the size of a phone book."

A release from Dayton's office said the tax plan would prioritize corporate breaks and favor the rich. Daudt said that every income tax bracket would pay more under Dayton's alternative plan, which he called "a non-starter."

Dayton proposed school aid because at least 59 of Minnesota's 335 school districts have budget deficits that could lead to layoffs, larger class sizes and program cuts.

Dayton wants to use part of the projected $329 million budget surplus to pay for the aid. He has proposed $138 million for schools, nearly identical to the amount the state would surrender in tax revenue in the first year under the GOP tax plan.

Both sides accused the other of election-year politics. "These folks are just falling all over themselves doing whatever they can to help out the moneyed interests in Minnesota," Dayton said of Republicans' positions on taxes and other issues. "Everybody who can do them some good in November they just can't do enough for."

Daudt noted that Dayton had not advised Republican leaders about his school-aid plan before the session began or earlier in its calendar. "It looks like a political thing," he said. "I hope it's not."

The governor and lawmakers are also trying to reach an agreement over a public works borrowing package. The House passed an $825 million bonding proposal Monday, in a bipartisan 84-39 vote that met the supermajority requirement needed. The plan contains projects, including about $254 million in transportation investments, that are funded through other sources.

Capital Investment Committee Chairman Dean Urdahl, R-Grove City, told House members this may be their only chance to pass a bonding bill. He urged lawmakers to support the measure, which invests heavily in wastewater treatment, roads and bridges. Rep. Jeremy Munson, R-Lake Crystal, was one of the opponents. He said the bill included lawmakers' pet projects and is "irresponsible spending."

The full Senate has not yet voted on its bonding bill and needs to work through differences with the House before they send a bill to Dayton. One sticking point is how to fund three veterans' homes. The House bill would use $41 million from a Vikings stadium reserve account, while the Senate bonding plan would borrow $32 million for the housing.

Jessie Van Berkel • 651-925-5044