After a stand-still week, negotiations over a new state budget saw the first real progress Tuesday as Gov. Mark Dayton and the Republican-led Legislature shifted closer on tax cuts and education spending.
Inside a week before the mandatory session adjournment, the sides all presented compromises to their prior positions over a two-year budget likely to top $45 billion and maybe reach $46 billion.
Dayton, a DFLer, said offers traded marked “significant movement on both of our sides.”
“We’re still a significant ways apart,” he added.
Dayton came up on the amount he’s willing to put into tax cuts while Republicans brought their desired amount down below $1 billion for the next two years. Republicans are now suggesting $875 million in break, which is still more than double what Dayton is willing to give.
“We’re moving closer together and I think that’s what it’s going to take to get this wrapped up. There is going to be compromise on both sides. I think that’s happening,” said House Speaker Kurt Daudt, R-Zimmerman. “And ultimately I feel good about the direction we are headed.”
On education, Dayton reduced his request for new preschool program spending from $175 million to $100 million while Republicans came up in their overall education target by $100 million. That leaves them $200 million apart. What taxes ultimately get cut will be decided later by lawmakers on a tax conference committee.
Dayton said concluding the budget work by Monday’s adjournment deadline will depend on state leaders focusing squarely on the numbers and less on shifts to state policy.
“It’s really going to be their decision. If they want to finish on time next Monday, then let’s focus on the budget, Real ID, a couple of the things, a bonding bill and get it resolved. If they don’t, if they are going to insist on bringing in all the policy into these discussions, there’s just no way,” he said.
The sides reached a tentative agreement on the agriculture area of the budget. On Wednesday, they intend to engage in serious discussions about health care spending, one of the biggest spending drivers.
Meanwhile, transportation is a still a sticking point. Dayton put a vehicle license registration increase into the mix as part of negotiations on a long-term road-and-bridge construction finance plan.
But Republicans said it’s a non-starter.
Senate Majority Leader Paul Gazelka, R-Nisswa, said he thinks a transportation deal is within reach.
“I still think we’ll get it done,” he said. “But we have to work out some of those differences, but it definitely won’t have a gas tax or a tab fee increase.”
House Republicans briefly proposed increasing vehicle tab fees last year. Daudt said that approach isn’t necessary given a projected state budget surplus that has reached $1.65 billion.
“Ultimately I think Minnesotans expect us to use the money they have already given us to pay for roads and bridges,” he said.
Dayton said he’s trying to avoid shifting money from the general treasury — $372 million in the next two years and more into the future — into a new road account because it would compete with other priorities and be ripe for cuts during an economic downturn.