Posted at 8:31 AM on July 15, 2011
by Jon Gordon
Posted at 9:45 AM on July 15, 2011
by Paul Tosto
State Senate DFL Leader Tom Bakk savaged the proposed budget deal between Republican leaders and Gov. Mark Dayton, calling it a "totally irresponsible solution" to the state's finances.
"I don't plan on voting for a borrowing proposal," Bakk said on MPR's Midmorning program.
The deal is essentially the Republican plan for no new income taxes that closes the budget gap by withholding money from schools, about $2.1 billion, and borrowing against future revenues from the state tobacco settlement fund. It also contains several Dayton conditions, including a bonding bill of at least $500 million and no across-the-board cuts of state workers.
Bakk gave credit to Dayton for his work to end the state government shutdown. But he was incredulous at the idea of holding back K12 education funds "and saying, 'well the next legislature that gets elected after 2012 will pay you back.'"
Interestingly, Bakk also said that he was not in the room during the final negotiations. He'd been a key player for weeks with Dayton pressing DFL positions. But he told MPR's Kerri Miller that he pulled out "when it looked like it was going to be a borrowing deal."
Bakk, Dayton and other DFLers had pushed for an additional tax on Minnesotans earning more than $1 million a year. Republicans rejected the idea as a potential jobs killer, hurting high income people who create jobs in the state.
Bakk, though, said his research showed that would not have been the case. He said of the 7,700 Minnesota tax filers earning more than $1 million, only about half lived in Minnesota with the rest simply having taxable investments here.
Among the millionaires living in the state, "next to none our business owners," he said. "Business owners reinvest in their business, so they don't have high tax liability. To say that they're 'job killing tax increases,' there is no study, no data to back that up."
While it's likely that few if any legislative Democrats vote for the compromise, Republican leaders say their majorities hold enough votes to pass it.
Click on the play button below to listen to the program:
Posted at 9:26 AM on July 15, 2011
by Paul Tosto
MPR News reporter Alex Friedrich put together this easy-to-read package of FAQs on the budget deal. Check it out. Any questions you still want answered? Post below or shoot me an email at firstname.lastname@example.org.
Q: How did Dayton and the GOP come up with the deal Thursday?
A: It was based on a June 30 set of counter-proposals that the GOP had given Dayton, but which he had rejected at the time.
Q: What were the financial details of the deal?
A: The main items that effectively closed the $1.4 billion gap between the DFL and Republican budgets were the tobacco bonds and delayed school payments.
Q: What did Republicans get?
A: Those tobacco bonds and delayed school payments were gains for the GOP. Dayton had opposed borrowing about $700 million against future payments from the tobacco industry by issuing tobacco bonds. He was also originally against delaying another $700 million or so in payments to school districts.
But even before Thursday, he'd come to accept that move grudgingly. He saw both as temporary fixes to the deficit -- not a permanent solution. Republican leaders aren't wild about the measures, either, but say they're preferable to raising taxes.
Q: What did Dayton get in the deal?
A: The three big things he made conditions for his acceptance of a deal: 1) Republicans are supposed to include a bonding bill of at least $500 million for various construction projects around the state; 2) They are to drop plans to cut the state workforce by 15 percent; and 3) They'll have to drop policy changes they'd been pushing, such as a requirement that voters show photo identification at the polls, a ban on cloning, and an end to taxpayer funding of abortions.
Q: What else did he get?
A: According to the June 30 agreement, Republicans offered: 1) an increase in the per-student funding formula by $50 per student per year to cover borrowing costs; 2) an additional $10 million to the University of Minnesota to put reductions on par with those suffered by the Minnesota State Colleges and Universities system; and 3) restored funding for the Department of Human Rights and Minnesota Trade Office.
Q: How is the deal being received by the two sides?
A: Neither side is particularly happy. Dayton said he won't be able to raise revenue through taxes on the wealthiest Minnesotans, and Republicans say the agreement will cost more than the $34 billion they wanted to spend.
Q: Is all this set in stone?
A: No. Although the general framework has been worked out, leaders on both sides say there will be some tweaks, so it's too soon to say exactly how it will look.
MAIN ITEMS IN THE DEAL
Q: How do tobacco bonds work?
A: The state receives annual payments in perpetuity under a 1998 settlement of its lawsuit against big tobacco companies. Investors buy the tobacco bonds, a deal that gives the state a $700 million advance on that money, which it will use to plug the current deficit. Those future tobacco payments will then go to pay off the bond investors. Read more here.
Q: What are the long-term implications?
A: The state would lose some of the money earned from the sales because of interest and transaction fees. It would eventually have to pay for various programs currently funded through the tobacco money, or cut them.
Q: How do school payment delays work?
A: Although it's not clear the exact percentage, the state would delay up to 40 percent of the payments it normally makes to schools, leaving schools with only 60 percent of the funding they normally would have received. The payment is supposed to be made up next fiscal year. It's an accounting shift that temporarily balances this year's books.
Q: How will they affect schools?
A: The disruption in cash flow will prompt a number of them to take out short-term loans, which will cost them in interest and various loan fees. As part of the deal, however, Republicans did include an increase in the per-student funding formula by $50 per student per year (totaling $128 million) to cover such costs.
Q: How drastic a move is that?
A: For years, the state has done it regularly -- usually involving 10-15 percent of the payments -- as a generally accepted bookkeeping practice designed to deal with the fluid funding formula numbers. Forty percent would be the largest amount ever, though the state has steadily increased the size of the delays over the past decade or so as a temporary budget deficit fix.
DAYTON'S CONDITIONS: A BONDING BILL, THE ELIMINATION OF SOCIAL POLICY CHANGES AND CUTS TO THE STATE WORKFORCE
Q: How large will the bonding bill?
A: Dayton has insisted it be at least $500 million for projects around the state.
Q: What would be in it?
A: It's too early to say. But early this year, Dayton proposed a list that included:
• $51 million for a new 150,000 square-foot physics and nanotechnology building at the University of Minnesota
• $35 million for roof replacements, wall repairs and other improvements to buildings at the University of Minnesota
• $30 million for building improvements at the Minnesota State Colleges and University system campuses
• $28 million in Department of Natural Resources flood hazard mitigation grants for cities and towns
• Center in Rochester, $12 million for Mankato Civic Center and $10 million for St. Cloud Civic Center expansion
• $22 million for improvements to state prisons
• $20 million for a new regional baseball stadium in downtown St. Paul that would be home to the Saints minor league baseball team
• $19 million for building improvements at state parks and other facilities maintained by the DNR
• $16 million to the Three Rivers Park District for dam repair and reconstruction in Coon Rapids
Q: What are the main policy changes that would be eliminated?
A: The most controversial changes would:
• Require voters to show photo identification at the polls, which have drawn protests from groups such as students and the elderly, who say such a measure would disenfranchise them by making it hard for them to vote
• Ban cloning, which has drawn criticism from the University and Minnesota and biomedical community
• End taxpayer funding of abortions
Q: Why does Dayton want a wholesale elimination of policy changes?
A: The governor considers policy issues "extraneous" provisions that don't belong in what's essentially a budget bill. Many of the measures are also ones Democrats generally oppose.
Q: Why did Republicans want a cut of 15 percent to the state workforce?
A: Republicans said it would make state government more efficient, and put the state more on par with the private sector. Dayton and other opponents said that was speculative, and that it wouldn't help the economy or do enough to fill the deficit.
OTHER ITEMS IN THE AGREEMENT
Q: Why does the University of Minnesota get $10 million in additional funding?
A: The university suffered greater cuts than the Minnesota State Colleges and Universities system did -- 14.5 percent from today's funding levels, compared to 11.4 percent for MnSCU -- so the Republicans offered an additional $10 million to help bridge the gap.
Q: Why did Republicans want to cut funding to the Department of Human Rights and Minnesota Trade Office
A: The work of the Human rights Department, which investigates discrimination complaints, educates about discrimination and certifies compliance with equal opportunity hiring laws, is something Republicans say can be streamlined or carried out by other agencies, many of which do their own investigations. But department supporters say the breadth of its jurisdiction allows it to investigate areas -- such as housing discrimination and discrimination based on sexual orientation -- that others don't look into so readily.
It's less clear why Dayton has decided to keep the trade office. While on the campaign trail, the governor called on multiple occasions for its elimination, because he said it has not performed well over the past decade. But in February he appointed his campaign finance director, Katie Clark, to run it. He has tied improved trade to a more vibrant Minnesota economy, and said Clark had a good shot at improving the department. Closing it, he said, was not his biggest priority.
Q: What happened to Dayton's attempts to raise revenue from other sources?
A: It's a little unclear, but those appear to have died. Political leaders discussing the agreement Thursday did not mention Dayton's proposals to increase surcharges on hospitals and nursing homes, expand gambling or install new sales taxes, close corporate tax loopholes, or beef up non-resident estate taxes. He also appears to have lost his bid to increase taxation of Minnesotans making more than $1 million annually.
Posted at 11:45 AM on July 15, 2011
by Paul Tosto
Minnesota would have risked damaging its business climate compared to other states if it had raised income taxes, Republican House Speaker Kurt Zellers said today.
Calling in to MPR's Midday program, Zellers, R-Maple Grove, said Republicans went into the legislative session philosophically believing there was no need to use a tax increase to balance the budget. "For a lot of our folks, that's what it came down to."
He also said members worried that any tax hike would put Minnesota at a disadvantage versus other Midwest states that had kept taxes in check, that Minnesota would be seen as an "outlier."
While there's always a chance of a breakdown, Zellers indicated he believes the Republican votes will be there to pass the budget deal despite unhappiness among some lawmakers.
He also reiterated there's been no discussion about a new Vikings stadium as part of the upcoming special session to deal with the budget.
He said he hadn't talked about the Vikings for weeks. "It's all about us getting the bills passed that get the state running again."
He also appeared to channel the feedback he's received from constituents about the possibility a prolonged shutdown with no alcohol regulation would have stopped the flow of beer in Minnesota. "For the love of God," he said, "get the Miller beer and Blue Moon back on the shelves!"
Posted at 12:14 PM on July 15, 2011
by Paul Tosto
Gov. Mark Dayton says he feels good about the budget deal he and Republican legislative leaders have agreed on and that if staffers finish the detail work by tonight, a special session could happen Monday to pass budget bills and end the state government shutdown.
Facing callers on MPR's Midday program, he said he decided to agree to the Republican no-taxes position with conditions after traveling to parts of Minnesota and hearing stories of people suffering because of the shutdown.
Even people who supported his position to tax millionaires told him, "we want this (shutdown) to end," he said.
"I didn't give in" to Republicans, he said, adding he got the higher level of spending he sought, got GOP leaders to agree to a $500 million bonding bill and to take social policy issues out of the budget debate. "My position came out very well."
The deal is essentially the Republican plan from two weeks ago with no new income taxes that closes the budget gap by withholding money from schools, about $2.1 billion, and borrowing against future revenues from the state tobacco settlement fund. It also contains several Dayton conditions, including a bonding bill of at least $500 million and no across-the-board cuts of state workers.
Earlier in the day, Senate DFL leader Tom Bakk blasted the deal for borrowing money and deferring billions to education to close the budget gap and said he would not be voting for it.
Dayton said he didn't like it either but it was preferable to an "all-cuts budget."
Borrowing, he said, isn't a responsible way to fund government. And while he agreed to the deal in negotiation, Dayton said he wouldn't vote for it either.
"Property taxes will go up in most of the state and that's the Republicans responsibility as well," he said.
Dayton said he would continue to raise the issue of raising taxes on Minnesota's top earners.
He said he also expects the issue of increasing gambling in the state to help fund government would also continue to come up in the future. Slot machines at the state's two horse racing tracks were considered but it was unclear if the votes were there and it faced a potential court challenge, Dayton added.
Dayton said he'd continue to seek higher taxes on the highest income earners "as long as I'm drawing breath...It's an essential part of making this society fairer."
He also said that the education spending bill will contain some kind of evaluation effort for teachers and principals but didn't elaborate.
Click on the play button below to hear Dayton's entire interview
Posted at 2:25 PM on July 15, 2011
by Paul Tosto
From MPR News reporter Tom Scheck:
Governor Dayton says he's inclined to call lawmakers back into a special session on Monday, but he says he wants to make sure every budget bill is wrapped up first.
Dayton said his commissioners are working with committee chairs to finish up their budget work by tonight. He says he intends to read the budget bills this weekend and hopes to bring lawmakers back into special session on Monday.
"The law doesn't require any lead time so I could do it Monday morning at 9 o'clock. And I won't do it until I reviewed all of the bills and believe they all fit the parameters of our agreement and also until we've agreed in writing to what's going to be involved and not in a special session. Because as you know if I call them back they leave at their discretion not mine."
Dayton and GOP legislative leaders reached a budget deal yesterday that spends an additional 35.4 billion over the two year cycle. The plan relies on an expanded payment delay to schools and borrowing against future tobacco payments.
Posted at 2:52 PM on July 15, 2011
by Paul Tosto
Some Department of Natural Resources workers are starting to lay out plans to reopen Minnesota's 66 state parks once the all the budget bills are passed (hopefully on Monday) and the shutdown officially ends.
If it works out, the parks may be back in business by Saturday July 23.
MPR News reporter Tom Robertson writes:
Matt Snyder, manager at Itasca State Park, says once he gets the green light to reopen the park, it may take a day or two to prepare for visitors.
Park staff will need to check over roads and trails for downed trees or other health and safety concerns, he says.
"From there we would start unlocking buildings, turning the water back on, turning the electrical back on in the campground, getting the restaurant opened back up," Snyder adds. "We'd have to order food again, all those kind of things would need to go on."
Snyder says state park campers with reservations for next weekend may be able to follow through with their plans.
The DNR is expected to have details on its web site regarding every state park and when they're back in shape and ready for visitors.
Striking a no-new-taxes budget deal with Gov. Mark Dayton required Republican legislators to withdraw all non-budget "social issue" proposals, including a ban on cloning and an end to taxpayer funding of abortion.
But while it's led to an agreement to end the state government shutdown, the leader of Minnesota Citizens Concerned for Life calls the budget compromise devastating.
MPR's Lorna Benson writes:
Executive Director Scott Fischbach says his group lost everything that it worked for this session. MCCL backed several pieces of legislation that would have banned human cloning, along with taxpayer funding of abortion and family planning groups that provide abortion. Another bill would have banned abortions at 20 weeks gestation and later.
Fishbach says Republican leaders didn't follow their mandate.
"We had operated under the assumption that we had pro-life leadership in both the House and the Senate. I think that there are many pro-lifers that are devastated now to the point of questioning some of that leadership. And we're going to have to address that down the road."
Republican leaders agreed to drop their social policy demands as part of a global budget agreement with Gov. Dayton
Benson adds that University of Minnesota stem cell researchers were relieved the compromise preserves their ability to clone human embryonic stem cells.
The university has no interest in cloning a human being but researchers do want to pursue some therapeutic cloning techniques that may lead to treatments for diabetes, heart disease and other conditions, a spokeswoman said.
Posted at 5:25 PM on July 15, 2011
by Paul Tosto
GOP House Speaker Kurt Zellers, Senate DFL leader Tom Bakk and Gov. Mark Dayton all said at some point in the past couple days that the subject of a Vikings football stadium bill hadn't surfaced for weeks and made it clear that it was unlikely to come up during a special session to finalize a budget and end the state shutdown.
The Vikings, however, still see an opportunity.
The Star Tribune this afternoon reports:
Minnesota Vikings owner Zygi Wilf told Gov. Mark Dayton in a Friday telephone call that "the time is now" for a new football stadium in Arden Hills, according to team Vice President Lester Bagley.
Dayton was noncommittal about his intentions regarding a stadium in the special session, although the governor also met Friday with Metropolitan Sports Facilities Commission Chairman Ted Mondale. Mondale declined to comment on the conversation.
Bagley said the team is "still working on this special session, we're trying to see what's possible." Although a deal is not complete, Bagley said an agreement could be reached in two hours and meetings are possible over the weekend.
The most recent public plan called for a $1 billion stadium on a former munitions site in Arden Hills at the connection of 35W and Highway 10. The Vikings would pay $407 million. Another $350 million would come from a half-cent sales-tax increase in Ramsey County and $300 million from the state. Bagley, however, has said recent discussions have involved reducing the size and cost of the stadium.
So next week should be entertaining.