Minnesota borrowing proposal fails on mostly party-line vote

In a stunning last-minute setback, House DFLers failed Friday to pass a proposal for $800 million in state-backed construction projects.

The surprise defeat throws dozens of new projects in doubt, everything from buildings at state colleges and universities, light rail in the Twin Cities and several regional civic centers. The measure is a signature job-creation initiative from Democratic leaders, who are counting on the projects to improve state amenities and create thousands of construction jobs around the state.

Visibly frustrated after months of painstaking work, Rep. Alice Hausman, DFL-St. Paul, said there is no time to salvage the proposal by Monday's adjournment.

"One word: Tragic," Hausman said. "I regret we saw the worst in politics today — and the entire state will pay the price."

State borrowing requires a larger majority than most measures, and Democrats, who control the House, could not muster enough Republican support to pass the measure. The proposal died on a largely party-line 76-56 vote, with defiant Republicans lifting newspapers during the voting to show their lack of interest in more borrowing.

"It's disappointing that with less than 100 hours remaining in session that Democrats chose to divert precious time away from our work of passing a budget to attempt to pass a massive bonding bill," said Rep. Matt Dean, R-Dellwood.

The defeat was a rare show of force from Republicans, who have been powerless to stop most DFL initiatives and who have been frozen out of negotiations with Democratic Gov. Mark Dayton. The brief triumph gave Republicans added traction to address their broader dissatisfaction with Democratic control.

The measure's failure comes as lawmakers race to piece together a two-year budget and brace themselves for what could be the biggest showdown of the session: A final weekend floor debate over a measure that would allow home health- and child-care workers to unionize.

It was only Thursday night that Dayton and DFL legislative leaders emerged from another closed-door meeting to announce that they had worked through the final sticking points on $2 billion in new taxes. To reach agreement, the House ditched its call for an income tax surcharge on high earners while the Senate abandoned a proposal to expand the sales tax to include clothing. Instead, legislators reverted to Dayton's plan, which includes an income tax hike on the state's wealthiest wage-earners and a dramatic boost to the tobacco tax, adding $1.60 per pack.

But even that overall global outline left House and Senate tax committee members with a mountain of details to resolve.

Bleary-eyed, they convened Friday morning and immediately began plowing through the finer points of the tax bill. A crush of lobbyists jammed into the room, leaning forward on chairs or against stately pillars, straining to hear as members plowed through the millions of dollars that flowed through the tax bill. At one point, it took committee members just 15 minutes to agree on millions of dollars in new corporate tax revenue.

House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington, showed little patience for delay.

Amid murmuring from lobbyists, Lenczewski said that "I don't want lobbyists thinking that if they lobby us really hard, they can change the deal," she said. "The deal is done."

Legislators also waded gingerly into a proposal that eventually could result in pay hikes for elected officials. While the Senate is seeking a 35 percent pay hike starting in 2015 — one which drew scorching criticism from every corner of the state — the Minnesota House on Friday approved a constitutional amendment that hands over pay issues to an outside panel.

The House measure, which passed 69-62, would ask Minnesotans to change the constitution on the 2016 ballot.

Paid $31,000 a year, lawmakers have gone 14 years without a salary increase, although they receive stipends and mileage reimbursements that can nearly double that amount. The Senate proposal would raise legislative pay to $42,000.

Democrats who support the measure say taking the issue out of the hands of legislators would quell some of the outrage. They say the current salary basically ensures that candidates are either retired or wealthy, which is not a fair cross-section of Minnesotans.

The House also gave final passage to a $2.8 billion higher education bill that will boost funding by $250 million and freeze tuition for two years at Minnesota State Colleges and Universities and the University of Minnesota.

DFLers also set aside $100,000 to help pay for the "DREAM act," designed to help undocumented students who are on a path to becoming permanent residents.

"I feel great," said Sen. Terri Bonoff, a Minnetonka DFLer who chairs the Senate Higher Education Committee. The bill also contains measures to ensure the U will bring down what it spends on administration, which has been the subject of national scrutiny lately.

The higher education measure now goes to Dayton for his signature.

Legislative Democrats continue to keep a close eye on the clock.

There is still a chance that Democratic leaders could work with a small coalition of Republican lawmakers to pass a state-backed construction proposal this year. If House Democrats can resurrect a plan, it still would need to pass the Senate, where the same partisan tangles remain. Democrats insist there is still time, even with the heavy lift on the budget ahead.

Republicans, who have prepared 100 amendments to Saturday's unionization bill, say DFLers' decision to leave crucial budget bills to the last may force a special session.

Said Murphy: "We are on track. We are going to get it done."

Staff writers Jennifer Brooks and Rachel E. Stassen-Berger contributed to this report.

Baird Helgeson • 651-925-5044