State Capitol leaders try to resolve bitter pay-raise dispute

Gov. Mark Dayton and the Legislature's two top leaders worked Wednesday to resolve a festering dispute over agency commissioner salaries, a conflict that led to the recent blowup between the governor and Senate majority leader.

Aides to Dayton, Republican House Speaker Kurt Daudt and Senate Majority Leader Tom Bakk said all three were involved in talks to settle the pay flap, which has become tangled in an unrelated temporary budget bill expected to hit the House floor on Thursday. Daudt was acting as an intermediary of sorts between DFLers Dayton and Bakk, who still had not spoken directly to each other since their falling-out last week.

Dayton and Daudt met Wednesday morning at the governor's residence. Daudt and Bakk also were in contact, and the speaker told reporters on Wednesday that the goal was a deal on the $16 million budget deficiency bill that's also meant to calm the furor over the salary hikes, which both GOP and some DFL lawmakers have criticized. The main purpose of the budget deficiency bill is to provide emergency stopgap funding for the Minnesota Security Hospital in St. Peter, the Minnesota Zoo and several other state agencies.

"The governor is eager to get the focus of the session back to the priorities of Minnesotans," said Dayton's spokesman, Linden Zakula. "To that end, he is working with House and Senate leadership to pass the deficiency bill and bring the salary dispute to an end."

Dayton recently boosted pay for 30 state agency commissioners, members of the Public Utilities Commission and executive directors for several smaller state offices. The raises total about $900,000 in additional state spending per year, with some commissioners getting pay bumps up to $35,000 per year. Six agency commissioners now earn just under $155,000 a year: the leaders of the departments of Management and Budget, Natural Resources, Public Safety, Revenue, Transportation and Human Services.

Five more commissioners now earn $150,000 a year, with the rest now earning between $116,000 and $145,000 a year.

In 2013, the Legislature voted to give Dayton authority to make the raises without further legislative oversight. But his decision to do so ignited a political brushfire at the Capitol, with House Republicans in particular criticizing the raises as excessive. Dayton has defended them as needed to attract and hold onto top-quality state officials. He also has noted that a number of top House and Senate employees have salaries approaching those same levels.

Dayton, who reportedly thought he had a deal with Bakk to resolve the issue, publicly called out the majority leader in unusually condemnatory terms. He called Bakk conniving, said he felt stabbed in the back and said he had lost trust in him. The dispute has riveted the Capitol and cast DFL unity into doubt at a time when major party initiatives are starting to move through the process.

No deal on the budget bill and pay raises had been finalized by early Wednesday evening, and details on what it might include were not available. It could resemble an earlier House Republican effort to reduce the raises, which involved using the budget deficiency bill to subtract money from state agencies at a rate roughly equal to the raises that the commissioners received.

Two amendments filed by Rep. Jim Knoblach, the House Ways and Means chairman, would subtract two different total sums: either $836,000, or half that. But it wasn't clear whether that reflected the talks between Dayton and the legislative leaders. It's also not clear if those reductions would actually come out of commissioners' paychecks.

Even if the House passes a deficiency bill backed by Dayton, Bakk and Daudt, the likeliest next stop for the legislation would be a House-Senate conference committee. That would provide the opportunity for continued political hijinks around the volatile issue.

Daudt has also made clear that, once the deficiency bill is settled, House Republicans will still be interested in pulling back some of the governor's unilateral authority to grant the raises. A bill making that change won approval from a House committee on Tuesday, and that provision could also factor into the deal-making.