Deadline nears with no agreement at Capitol

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The Minnesota Legislature is careening toward the end of its session without having figured out a path to a new state budget. Four days remain before time runs out, and a deal over tax cuts, school spending, transportation and other items is proving elusive.

“You can expect to be here all weekend. I would expect to be here all of Monday just to make sure we do it right,” Senate Majority Leader Paul Gazelka, R-Nisswa, told his colleagues Thursday night. But what lawmakers will be doing during that time is not at all clear.

Negotiations among the Republican-led House and Senate and DFL Gov. Mark Dayton have ground to a halt.

Gazelka and his House counterpart, Speaker Kurt Daudt, R-Zimmerman, confirm they’re working on a contingency plan to pass a set of budget bills in the absence of an agreement. They did that once already, only to have Dayton veto them.

“If we don’t have a deal then we’re going to send him bills that I think are appropriate, that Minnesota would say we did our part, we met in the middle. But I’m still holding out to the fact that the governor will come back to the table and we’ll hammer out a deal,” Gazelka said.

Daudt wandered the halls of an emptying Capitol Thursday night, clearly agitated.

“I think there’s an agreement to be had to put in place a state budget,” he said. “But, unfortunately, the governor has walked away from the table and doesn’t want to return. I don’t know what we can do to compel him to do that.”

With $1.5 billion in surplus tax dollars, you’d think there would be room to satisfy competing interests while crafting a roughly $46 billion two-year budget.

It hasn’t been so simple.

Republicans are angling for a big tax cut and a big bump in road construction spending. Add to that a boost in school aid, and the surplus is more than gone. They would hold down spending in other areas, mainly health programs for the poor, to free up more cash.

Dayton’s budget chief Myron Frans says he fears the GOP plan would overextend the state, at a time when some experts see a weakening economy.

“It’s really critical that in addition to the values we bring to this budget and how we decide this budget based on our values, we really bring to this budget fiscal responsibility to make sure it’s not only funded in this particular biennium but the future biennium as well.”

Dayton would use up the surplus, too, only on different things — a courts funding increase, cybersecurity measures and higher allowances for schools, colleges, health programs and other government operations. His tax-cut appetite is more limited.

The governor also wants to tap a separate surplus in the Health Care Access Fund, which is fed by health-care related taxes and can be used only for health-care related programs.

Republicans are resisting that. But Senate Minority Leader Tom Bakk, DFL-Cook, says he’s struggling to figure out why, pointing to a GOP re-insurance plan passed in April.

“Now all of the sudden there’s this sanctity of the health care access fund that certainly wasn’t there six weeks ago when we gave the insurance companies $400 million.”

Sen. Jim Abeler, R-Anoka, specializes in health care issues. He said he’s willing to dip into the fund, but thinks it would be reckless to bleed it dry.

“Part of that is a way to insulate us from the challenges that may happen from changes in Washington, which no one knows what’s going to happen there. So that’s our own private rainy day fund for human services, generated by people who are sick contributing money out of their health costs.”

In addition to difference in philosophy, as the standoff moves toward the weekend, the logistics of writing and passing giant budget bills is a clear concern.

“Time is going by. It’s slipping away,” said Rep. Lyndon Carlson, DFL-Crystal, whose 45 sessions in the Legislature are more than anyone in history.

“I’m not going to say it’s past the point of no return yet, but we’re close. If we don’t have a breakthrough in the next day or two as we move into the weekend, then the probability of going into overtime is pretty high.”

Daudt, the House speaker, looks back to 2015 when the Legislature found itself in a similar predicament.

“Two years ago we made the agreement on Friday night and we spent the weekend building bills and passing bills. And that was enough time.”

It did take a one-day special session in June to wrap it all up — an outcome everybody around the Capitol is desperate to avoid this year.

Abeler, who has 19 years in the Legislature under his belt, said while leading lawmakers and the governor might be in a sour mood lately, they have little choice but to get back to the bargaining table. He drew a dating analogy.

“It’s like you date, you get engaged, you have a big fight and don’t talk to each other, then realize it’s all good. You get married and have kids and live happily ever after,” he said.