Budget negotiations at the Capitol were in suspended animation Thursday after talks broke down late Wednesday.
“It did not go well,” said Senate Majority Leader Paul Gazelka after emerging from the governor’s Cabinet room Wednesday night.
Gov. Mark Dayton offered Republicans $682 million for their two top priorities—$372 million each for tax cuts and transportation. However, the governor had offered the GOP a $400 million tax cut on Tuesday.
“So we felt that was backward from where we were,” Gazelka said.
Dayton’s latest global budget offer was issued at 6:40 p.m. on Wednesday. His staff characterized it as a “meet half way global offer.”
By his lights, it was: After calculating the amount of surplus money that Dayton felt was available to spend—$1.364 billion—he split the difference on the balance evenly between his priorities and those of the Republicans.
However, there is no doubt that Dayton weighted the scales a bit in his favor—and the court system’s.
The actual surplus stands at $1.5 billion when factoring in money already spent because of bills already passed into law this year, including the reinsurance bill from earlier in the session.
Dayton arrived at $1.364 billion only after deducting $83.2 million in priority spending for the judiciary—a figure that includes Supreme Court Chief Justice Lorie Gildea’s entire $51.4 million requested budget increase, as well as added money for public defenders and other justice system costs.
“The governor put the courts on top of his chart,” Minnesota Management and Budget Commissioner Myron Frans said in Thursday a press conference explaining Dayton’s offer.
Frans said the governor thinks the Legislature and executive branch are duty-bound to fund the courts properly. “The court system,” Frans said, “is really overworked in many areas of our state.”
Dayton also deducted another $45.1 million in cyber-security spending to fortify critical state financial and information systems, which contain Minnesotans’ sensitive private data.
“If the legislature decides not to fully fund these, they can make their counteroffer,” Frans said. “But we felt it was important to put those on top of the line.”
Finally the governor set aside $10 million from the surplus to keep a positive balance on the general fund’s bottom line, Frans said.
It was only with that $138.2 million effectively off limits that the governor then began splitting the spending difference. Minus the $682 million he offered Republicans for tax cuts and transportation, he said he had $682 million left to fund the other eight spending divisions.
Down in the numbers
According to his latest offer, Dayton wants $113.9 million for public safety and corrections for the next biennium. That is actually a smaller offer than the $130 million that GOP leaders put into their Wednesday night counter-offer.
Dayton also proposed a cut to Health and Human Services general fund spending by $283.6 million—but that does not mean he intends to slash its budget. His plans calls for diverting $350 million from the Health Care Access Fund to help pay HHS costs. Without that money in play, Frans said, Dayton’s Wednesday offer would include an increase of $73 million to HHS general fund spending.
For their part, the GOP offer cuts $490 million out of HHS spending, partially offset by their own $100 million transfer from the Healthcare Access Fund—a net HHS budget cut of $390 million.
In other high-spending areas
- E-12 education: Dayton offered $507.1 million Wednesday, a reduction from his $606.2 million Tuesday offer. GOP leaders responded Wednesday night with $440 million, upping the ante from their $408 million Tuesday offer.
- Higher education: Dayton on Wednesday pitched $221.6 million for the biennium, a reduction from his $268.2 million Tuesday offer. The GOP responded Wednesday with a $185 million offer, a bump up from $175 million a day earlier.
Altogether, Republicans moved $150 million in Dayton’s direction Wednesday night, said House Ways and Means Chair Jim Knoblach, R-St. Cloud.
“The governor did not feel that was a reasonable offer,” Gazelka said. “And we felt it was.”
House Speaker Kurt Daudt, R-Crown, chided the governor’s staff for characterizing his latest offer as a down-the-middle split.
“I think that everybody is intelligent enough to figure out that two-thirds your way and one third our way isn’t half way,” he said.
GOP staffers later offered to back up Daudt’s math. By granting GOP $682 million for tax cuts and transportation, they indicated, Dayton offered Republicans just 37 percent of the available money pie. By funding his own priorities to the tune of $1.16 billion, they say, he keeps 63 percent of available money for himself.
To get to $1.16 billion, Republicans include the $350 million in Healthcare Access Fund money Dayton wants to fund health services. Dayton does not count that money against his own offer.
Emerging from the abandoned negotiations late Wednesday, Gazelka described the governor as “very upset” during the meeting. Daudt admitted that the talks’ failure was a setback.
“But that’s OK, right?” Daudt said. “You always have to have that setback before you make the breakthrough.” Daudt said he hopes both sides would soon get back to rolling up their sleeves and finding a breakthrough.
Dayton sounded less than optimistic about that when he emerged a few minutes later to speak with reporters.
Far from the two-thirds/one-third split in Dayton’s favor that Daudt described, Dayton said the Republicans’ offer tilted 80 percent to 20 percent in their own favor.
He said that Republican negotiators insisted on spending almost $1.2 billion of $1.5 billion surplus on just two priorities—$825 million for tax cuts; $372 million for transportation. That left just 20 percent of the surplus to spend on everything else, while ignoring Dayton’s set-asides for courts, cybersecurity and the bottom line.
In addition, Dayton said, Republican leaders insisted—for the first time during negotiations, he said—that their offer was contingent on committee chairs and agency commissioners coming to terms on hundreds of policy provisions in the various vetoed omnibus bills. “There was nowhere to go,” Dayton said.
“If they want to have an agreement and a budget and they want to be reasonable about it, then we will meet them halfway,” he added. “If not, then we won’t finish on time and it will be their responsibility that we didn’t.”
Dayton said whenever negotiations restart, he is willing to quibble over the numbers in various budget areas. But he will not budge from his insistence the two sides’ priorities be treated equally.
Asked if he felt that the two sides had moved farther apart, Dayton responded: “Well, we’re not any closer.”