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Three-way fight over state’s budget

As he concluded the presentation of his 2015 budget proposal, Gov. Mark Dayton received a smattering of applause from about two dozen Cabinet members and senior administration staff positioned near the governor’s podium.

They were, in effect, cheering for their own daunting workload. Now, it’s their turn to pick up the $42 billion budget proposal, Dayton’s third since taking office in 2011, and convince Minnesota’s lawmakers that the governor’s priorities should be their own.

Dayton’s package would spend nearly all of the $1 billion surplus, leaving just $35 million on the bottom line. The vast majority of that total would go to new or expanded state programs, which Dayton favors over the tax cuts supported by his political opponents.

Suffice to say, there was less in the way of applause when Republican leaders got a chance to respond to Dayton’s plan. Slightly more approving, and no less important, was the response from the DFL leadership in the Senate, though the agenda already staked out by that caucus shares only a few common themes with Dayton’s plan.

As telegraphed by the administration before the full announcement, Dayton wants to allocate more than half of the surplus to education-related purposes. In total, $518 million of the budget would go toward free pre-kindergarten (which would cost $109 million over two years), an increase in per-pupil spending in public schools ($373 million) and an expansion of the child care tax credit for working families ($100 million), which Dayton had previously announced.

Education Commissioner Brenda Cassellius said Dayton’s spending in that sector is directed at the state’s “most vulnerable” students and would go some distance toward alleviating the achievement gap between white and minority students.

Dayton’s pre-K funding accounts for half of the estimated cost to fund that program. School districts would be on the hook for the other half and could choose to opt-in or not, as could individual schools within those districts that pursued the state funds.

Dayton said that initiative and others were inspired by data showing the lasting results of early childhood programs, as well as anecdotal accounts he had gleaned in meetings with teachers.

“There are more and more kids having more and more difficulties,” Dayton said.

Senate Democrats have introduced a universal pre-K package for 4-year-old children, with a plan to make scholarships available on a volunteer basis. Dayton said the agreement in principle is a good sign and expressed confidence that the two sides could sort out the details during the coming months.

“It’s going to take a legislative session to go through that,” Dayton said. “I’m not wedded to the formula.”

The second-largest categorical increase in spending would come in health and human services, where Dayton’s budget hikes a number of programs to the tune of $140 million total. Some $35 million of that is designated to mental health care, a growing need, according to Department of Human Services Commissioner Lucinda Jesson, who said one in four people would suffer from mental illness during their lifetime.

Gone, though not forgotten, was the notion of more money for long-term care. Dayton pointed out that nursing homes had received significant funding increases over the last two legislative sessions, and that the raise was now built into the base budget.

Even still, Dayton commented: “I’m open to that discussion. In fact, I would invite that discussion over the next couple months.”

He’ll get it, no doubt, from House Republicans, who said they would have liked to have seen the state’s aging population addressed in the budget.

“We know there are problems with the funding for nursing homes,” House Speaker Kurt Daudt said. “The governor does not put any new money into that, and that is a disappointment.”

Though he said there was “common ground” on money for education programs, Daudt said he found the Dayton budget “uninspiring,” and lacking in “major reforms” to modernize state government.

“This budget … grows Minnesota state spending by almost $1,250 per man, woman and child in the state of Minnesota,” Daudt said. He added: “Obviously, we think this is a bit excessive.”

Senate Minority Leader David Hann echoed Daudt’s criticism, saying the governor wanted to spend new money without new ideas.

“There is no reform in this budget at all,” said Hann, singling out the MNsure health insurance exchange as an area where the state needs a new approach.

Rep. Jim Knoblach, R-St. Cloud, chair of the House Ways and Means Committee, said the spending increase is “staggering.” Knoblach recalled that during his first stint in the House, which ended in 2006, state agencies had regularly come to the Legislature to lay out their plans to save money, rather than just spending more of it.

“You’d see some ideas out there that you hadn’t thought of,” Knoblach recalled. “Well, there isn’t any of that here. There are no new ideas on how to save money.”

Interviewed later Tuesday afternoon, Senate Majority Leader Tom Bakk said he found it “interesting” that Republicans had ideas of how to divvy up the surplus, which Bakk argued only came into existence because Democrats had voted to raise taxes in 2013.

Bakk also pushed back on Republicans’ criticism that the budget lacked new thinking. Research on the benefits of early childhood education was only just becoming available in the mid- to late-1990s, Bakk said, and any desire to devote funds toward it had been stymied by budget deficits or hard-line Republicans.

“The fact is,” Bakk said, “there have been a lot of good ideas out there, in the early childhood area, that we just — we’ve known it was a good investment, but we never had the money.”

Bakk continued that he thought Dayton’s budget was “a little short” on higher education, which has become a signature funding target for the Senate DFL caucus: Three of its first six bills introduced this session cover higher education, including a bill that would make two years of community or vocational education free for the state’s high school graduates. In his press conference, Dayton said the Senate plan is a “very good idea,” but worried about advantaging one type of college over another.

Dayton’s budget has $93 million in new funding for the University of Minnesota, which would be tied to a continuation of the existing tuition freeze; the University would be responsible for producing the other half of the necessary funding through cuts to administrative spending.

Notably absent was any new spending for the Minnesota State Colleges and Universities (MNSCU) system. Dayton explained that he was withholding new spending on MNSCU as he awaits resolution on a tense dispute between faculty and system chancellor Steven Rosenstone.

“I don’t view it as punitive,” Dayton said, reminding the press that he had similarly excluded money for the University of Minnesota following reports of administrative bloat in 2013, only to add the money back in as part of his supplemental budget.

Knoblach, whose district includes St. Cloud State University — the largest MNSCU school by enrollment — said Dayton’s withholding was a transparent ploy, with the $35 million left on the bottom line to be used as a bargaining chip to negotiate a truce.

For his part, Bakk thinks the MNSCU rancor was to blame for Dayton’s apparent distaste for a larger boost to higher education, adding that he was hopeful the governor would come around on the topic after the quarrel has ended.

“I don’t think it reflects the fact that [higher education] is not a priority to [Dayton],” Bakk said. He added: “I hope we’re not that far apart on higher education, although, initially, we’re going to look like it.”

Dayton said he expected to release his supplemental budget, reworked to incorporate new findings from the February forecast, sometime in mid-February. But his administration wasted no time in taking the current iteration to the Legislature: Senate committees began reviewing Dayton’s budget at 8:30 a.m. Wednesday, with Jesson and Casselius on hand to testify in support of their respective subjects.

That afternoon, those same commissioners were due to encounter a less receptive audience in front of the corresponding House panels, where Republican committee members would get their first chance to pick apart the Dayton budget.

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