Tensions over legislator pay, bonding colored last days of session
If you ask Gov. Mark Dayton, one-party rule worked out well for just about everyone this session.
“I think it worked extraordinarily well for Minnesotans,” the governor said in a celebratory Tuesday morning press conference, in which the Democrats who control state government touted their work to raise $2 billion in new revenue to balance a $627 million budget deficit and raise spending on E-12 education, colleges and universities, and property tax relief. They did it all with just moments to spare Monday evening before a midnight constitutional deadline to adjourn.
“I don’t know how they stayed awake [and] functioned over these last three days,” Dayton said. “But they pulled everything together on time with a platform that fulfills everything we said we would do.”
“When people asked me last fall what would happen if we had a DFL Legislature and a DFL governor, I said one word, ‘Progress,’” Dayton continued. “That’s what we brought about in the last five months: progress for education in Minnesota, progress for fairer property taxes, progress for a more progressive income tax to make our overall tax less regressive.”
Senate Majority Leader Tom Bakk touted the legacy they will leave behind for the next Legislature. “No gimmicks, no borrowing, and we are leaving for the next Legislature after us in the 2014 election no crisis,” Bakk said. “That has not been the case over the last decade.”
But there was little accord between the three DFL leaders, particularly between the House and Senate, in the final days of session, as a handful of legislative priorities proved to be sticking points in a final budget deal. In particular, the fine details of a tax proposal and a push by Bakk to raise legislator pay caused headaches between the two chambers in the weeks and days before adjournment. And on the last day of session, a tug of war over a bonding bill to fund the Capitol restoration project nearly kept Democrats from finishing their work on time.
Thursday, May 16
After back-and-forth negotiations that seemed to go nowhere all week and a looming deadline to adjourn, it was clear that someone needed to blink concerning tax increases, and it needed to happen soon.
The frustrations between the two lead DFLers on taxes – House Chair Ann Lenczewski and Senate Chair Rod Skoe – became abundantly clear during a Wednesday night hearing of the taxes conference committee. Dayton and Legislative leaders had finalized the broad parameters for a budget agreement in a Sunday afternoon press conference, but the $2 billion target they set for tax increases included little detail on how that target would be reached. After days of walking through the differences in the two tax bills, the House started the process of trading offers Wednesday morning, proposing an 8.84 percent fourth tier income tax increase, up from the chamber’s originally proposed 8.49 percent increase. The Senate countered that offer with an all-new 10.7 percent fourth tier income tax increase and refused to move down further than 10.5 percent throughout the course of the day.
The two chambers remained far apart on other areas, too, including taxes on cigarettes and alcohol as well as sales tax provisions. On Thursday morning, Lenczewski and Skoe acknowledged that their plan to trade toward the middle wasn’t working. After huddling with leadership in their respective chambers, lawmakers came back with a deal in the evening.
Their plan, as it was laid out at a Thursday evening Capitol news conference, would raise $2 billion in new revenue through the creation of a fourth income tax tier that levies a 9.85 percent marginal rate on household income in excess of $250,000 a year, a $1.60 per-pack cigarette tax increase, a sales tax extension that includes a handful of business services, and the closing of several corporate tax loopholes.
The agreement, notably, did not include two top priorities for House Democrats: a temporary income tax surcharge to pay back the K-12 school shift over the next two years and a 7 cent per-drink alcohol tax increase. In the final agreement, the House prevailed on only a few areas of disagreement, most notably its preferred rate for the cigarette tax, which was about 66 cents a pack higher than both Dayton and the Senate were proposing.
“It puts us in a very good place to finish our work on time,” House Speaker Paul Thissen said when asked why he gave in on the shift, his caucus’s professed top priority. “At the end of the day, Minnesotans want us to compromise to put a deal together.”
Friday, May 17
In the wake of the tax deal, a few other final pieces seemed finally to be falling in place near the end of the week. For weeks, Bakk reportedly has been complicating budget talks with his insistence that lawmakers address the issue of legislator pay. In April he had made his caucus take a tough vote on a state government finance bill that carried a roughly 33 percent increase in legislators’ own salaries. The House — which faces reelection in 2014 — was reluctant to budge on the politically unsavory pay hike in the midst of raising billions of dollars in new taxes, but on Friday there was considerable movement on what they had agreed to as a feasible alternative.
The House had on its floor agenda for the day a constitutional amendment to create a council to set salaries for lawmakers. The state already has a council for recommending legislator pay — the group recommended the 33 percent pay hike previously contained in the Senate state government bill — but it has no authority to raise or lower lawmakers’ salaries. The amendment, if passed as a November 2016 ballot initiative, would give control over the salaries of state officials to an all-new independent, citizens-only “compensation council.”
That morning, a Senate version of the constitutional amendment, authored by DFL Sen. Kent Eken, got its first hearing Senate State and Local Government Committee, where it passed. Days later that bill, too, passed off the Senate floor. The amendment is now heading for the ballot in 2016, signaling a major shift in DFL talking points since earlier in session, when multiple lawmakers were seeking a way to make it harder to pass ballot initiatives after a bruising election year that saw two controversial ballot initiatives to amend the constitution.
But while progress was made in that arena, an $800 million bonding bill failed to pass off the House floor by five votes on Friday, and with it went the only vehicle for funding the high-priority Capitol restoration project. Clearly dispirited by the vote, the bill’s sponsor, DFL Rep. Alice Hausman, said there was no time and she had no trust in Republicans to try again with a smaller bill focused on the bipartisan Capitol project.
Monday, May 20
That wasn’t good enough for Bakk, who had, earlier in session, publicly questioned the House’s ability to pass a bonding bill in 2013. He interjected himself in the bonding debate Sunday evening by reviving funding for the Capitol restoration project through a delete-all amendment to a bill on the Senate floor. After passing that bill, the Senate adjourned for the night.
That move took the House by surprise and set the stage for a Monday filled with tense, hurried shuttle negotiations over a downscaled bonding bill. By midday it became evident that each chamber was withholding one last budget bill from the other, apparently to ensure that neither could pass a bonding bill and then adjourn, thus leaving the remaining chamber with a take-it-or-leave-it proposition on bonding. The Senate had not acted on the state government finance bill and sent it to the House; the House, which gave the tax bill final passage on Sunday, refused to send it to the Senate for a vote.
That left Capitol action at a standstill that stretched deep into the evening. Senators wandered around the floor in recess, while the House opted to simply stop moving bills without actually recessing. Shortly before 9 p.m., the House Republican caucus emerged on the House floor after disappearing to caucus on a bonding proposal. When they came back, a new $156 million general obligation bonding bill was immediately taken up on the floor. It included $109 million for Capitol repairs, $22 million for two new parking facilities at the Capitol complex, $19 million for the Minneapolis veterans’ home and $20 million for flood mitigation. Hausman made it clear that she was upset by the final outcome: DFL Rep. John Ward presented the bonding package on the floor, while she was nowhere to be found. “I know what I want,” Hausman said a day before adjournment. “I want my old bill.”
“It’s a 105-year-old gem to Minnesota, but it’s at its tipping point,” Ward told members, noting flooding in the Capitol basement during major storms a day earlier. After minor debate, the House passed the bill on a 121-10 vote. Moments later, the Senate passed the bill without discussion on a 57-6 vote.
But bonding was not the only source of tension between Senate and House DFLers on the last day of session. The tax bill also proved a source of headaches in the 11th hour, particularly a provision that would apply the sales tax to farm machinery repairs, which would raise $28 million in the next biennium. The Senate came to Lenczewski to tell her the provision was a mistake, but she insisted that conference committee members were adamant about its inclusion. She was uninterested in reopening the tax bill to accommodate the Senate. “The Senate insisted on it, and now they’re saying it was an error,” Lenczewski said with about five hours before adjournment on Monday. “They’d like us to open the tax bill to fix their problems.”
Debate started on the tax bill at 10 p.m. in the Senate, giving Republicans less than two hours to debate the centerpiece of the 2014-15 budget on the floor. “It’s fitting that we are talking about this last bill on the last day in the last hour,” Senate Minority Leader David Hann said. “This is really the culminating thing we deal with this year, and it may be the thing that we are remembered for.” At 11:56 p.m., the Senate passed the bill on a 36-30 vote.
The most public testament to the battles between House and Senate Democrats in the closing days came in the waning moments of the House’s floor session: DFL Rep. Michael Paymar introduced a bill for a constitutional amendment to abolish the Senate in favor of a unicameral, House-only Legislature. That bill was given a first reading on the floor. Then, as the clock reached midnight, House Speaker Paul Thissen and Senate President Sandy Pappas gaveled out the 2013 session.