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The agreed-upon "framework" is based on an approximately $35.5 billion spending offer GOP leaders presented to Dayton on the eve of the shutdown, which the governor re-presented to them — with added conditions — on Thursday. But there remain many questions about the particulars of the agreement.

Shutdown: The end is near

Senate Majority Leader Amy Koch, Gov. Mark Dayton and House Speaker Kurt Zellers announced the “framework” for resolving the state budget impasse on Thursday. “No one is going to be happy with this,” Dayton said, “which is the essence of a real compromise.” (Staff photo: Peter Bartz-Gallagher)

Both sides agree to concessions, one-time money in surprise deal

There were no smiles when Gov. Mark Dayton and GOP leaders of the Legislature walked out of the governor’s office late Thursday afternoon after more than three hours of negotiations, but the mere fact they emerged together told the flock of reporters outside most of what they were waiting to learn.

So it was a deal.

The subject of the hastily scheduled meeting was the unexpected offer letter Dayton’s office had hand-delivered to GOP leaders that morning. The turn of events took most Capitol watchers by surprise. Dayton was in the midst of a week’s travels around the state to rally support for his budget position. The rhetoric on both sides had taken a turn for the worse as week two of the shutdown wore on. All signs seemed to point to a third week of what was apparently already the longest state government shutdown in U.S. history.

Dayton, who dabbed sweat from his forehead as he stood before the camera lights arrayed in front of his office, spoke first. The day’s exchange had produced a “framework” for resolving the roughly $1.4 billion in remaining differences over spending, he said, and the shutdown would be over “very soon, within days.” Dayton noted that it would take time to draft the budget bills and process them in the revisor’s office, but the three politicians promised to work around the clock until the deal was finished. “No one is going to be happy with this,” Dayton said, “which is the essence of a real compromise.”

Senate Majority Leader Amy Koch appeared upset at times as she fielded questions from the news media; House Speaker Kurt Zellers wore a glum-looking poker face throughout. “It’s not a perfect scenario, but we are in an imperfect situation here,” he told reporters. “[It’s] a deal we all can be disappointed in, but a deal that’s done.”

In a general sense, the deal represented a return to the point lawmakers and the governor’s office had reached two weeks earlier on the eve of the July 1 shutdown. The deal is based on an approximately $35.5 billion spending offer GOP leaders presented to Dayton on the eve of the shutdown, which the governor re-presented to them — with added conditions — on Thursday.

Dayton’s new terms

The original offer from Republicans used nontax revenues to bridge a gap of $1.4 billion or so ($1.34 billion was the figure cited Thursday) between the two parties: $700 million through an expansion of the state’s K-12 aid shift — which currently stands at $1.9 billion — and about $700 million to be reaped by issuing bonds to borrow against future proceeds of the state’s 1998 tobacco settlement.

But the governor had a few conditions of his own. He said a deal that involved no new tax revenue — a staple of his election campaign for the chief executive office — would have to include a $500 million bonding bill and remove a 15 percent state workforce cut. In addition, it would have to set aside a two-page laundry list of social and policy issues insisted upon by Republicans in pre-shutdown negotiations; they included collective bargaining limitations as well as bans on embryonic stem-cell research, state-funded abortions and abortions after 20 weeks of pregnancy. In defending the deal, Dayton stressed that the two most important provisions in his view were the social issues and the agreement to spend between $35 billion and $36 billion in order to mitigate the depth of budget cuts.

“I will rely on your public statements after the shutdown began that you have removed all of the policy issues contained on your list from our remaining negotiations and from legislative action this year,” Dayton wrote in his letter. “We must concentrate our efforts on reaching the budget agreements that will return Minnesota to work, not on continuing disagreements over issues on which we do not agree.”

Budget votes on the Republican side are by no means assured. Zellers expressed a distinctly qualified confidence in his ability to get House Republicans to vote for the deal. “We would not be uncomfortably offering up this solution if we did not have at least a good working relationship with our caucuses,” he said. But Koch hesitated as she spoke, noting that negotiators will have to “hammer out the final details” before her caucus passes judgment.

“We believe that the caucus will ultimately support this,” she said.

GOP lawmakers’ reaction to offer mixed

There remain many questions about the particulars of the agreement. At the Thursday afternoon news conference, the three principals repeated that the offer was only a “framework” for a deal and were mute on many specifics. Koch noted that the final bottom-line numbers on the school shift and the tobacco settlement will likely be adjusted, and Dayton said while he was hopeful that they could include a $500 million bonding bill in the mix, the proposal was not an “ultimate requirement” in the final compromise.

Zellers expressed doubts about the passage of a major bonding package, which requires a three-fifths majority in both chambers. “That’s basic math,” Zellers said, “and we only have 72, so it’s going to take some Democrat votes.” A smaller bonding bill failed near the end of the regular session. Dayton said he did not yet have a “pledge” from Democrats to vote for a bonding bill but added that he has communicated his desire that they support such a package.

Even as GOP leaders from both chambers were meeting with Dayton on Thursday, a number of Republican House members in their state offices across the street expressed a mixture of optimism and skepticism about the terms of Dayton’s offer.

Some, like State Government Finance Committee Chairman Morrie Lanning and Transportation Committee Chairman Michael Beard, were palpably relieved to see movement on a deal and indicated that they were willing to weigh the governor’s conditions regarding bonding, state workforce reductions and social policy issues. “I’m open to considering those things,” Lanning said, “but what’s in the fine print? I need to know more about the details.”

Beard said: “This has gone on long enough. A lot  of people are hurting from this, and at this stage of the game, I’m willing to look at any offer.” But he expressed reservations about dropping some of the GOP’s social policy issues, such as a ban on embryonic stem-cell research at state-funded institutions, and about the use of one-time moneys to solve the revenue gap between the two sides. “We’re in this boat partly because we took this approach two years ago,” Beard said. “But if this is what it’s going to take, I’m willing to go there to get a deal done.”

Other Republican members were more critical of the terms of Dayton’s offer. Rep. Keith Downey, who was the architect of the “15 by ’15” proposal that would have reduced the state workforce by 15 percent over the next four years, said that many of the workforce reforms proposed by the GOP “are fundamental to the budget we constructed. “You can’t just plug a new dollar figure into government as we’re doing it.” He cited several provisions of the state government finance bill, including employee contributions to health care premiums, wage-freeze measures and the overall workforce reduction target.

House Property and Local Sales Tax Division Chairwoman Linda Runbeck sounded a similar note on GOP policy reforms. The social issues should be taken off the table, she said, but added: “In my view, taking the [state government] reforms off the table is a deal-breaker. Why didn’t the governor tell us this before?

“These are his big issues,” Runbeck continued. “The tax issue has been the foil to get people mad at us, but what he really doesn’t want is these reforms to reduce the size of government.

“I like that he’s going back to June 30 [offers], but the conditions, in my mind, are telling us — well, I don’t want to say ‘F you’ — on all our ideas.”

Some DFLers openly critical of deal

DFL Reps. Mindy Greiling and Ryan Winkler both released statements expressing disappointment in the deal. Greiling called the proposed school shift an “egregious” example of misplaced priorities, pinning the blame on Republicans, while Winkler said the combination of K-12 accounting shifts and tobacco bonds makes the agreement “the most irresponsible budget in our state’s history.”

By most accounts, DFL legislators were upset by the terms of the proposal, but many were ultimately sympathetic to Dayton’s position. “Of all the players [in budget talks], no one has felt the responsibility more than he has,” said St. Paul DFL Rep. Alice Hausman. “He understands that he’s one of three people who have to do something to end this.”

But sources close to DFL minority leaders Rep. Paul Thissen and Sen. Tom Bakk said that Republicans should not expect help or votes from Democrats in passing the budget. On the question of a bonding bill, it remains unclear how many DFLers might ultimately cast yes votes.

The deal, if consummated, will leave a lot of bitterness in its wake on both sides of the aisle. Asked whether he believed that Dayton had gotten the best deal he could, Winkler said, “No. Just yesterday senior Republicans were talking about new revenue. The more this dragged on, the harder it would be on the [GOP] base’s business interests, and the more average people would feel it and get angry.

“That would have worked to Dayton’s advantage. I guess the question is, is the severe pain now worse than the long-term undermining of the state’s ability to govern itself? And this is the judgment he made. I’m not the governor. I’m not in his shoes.”

About Briana Bierschbach and Steve Perry

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