Dayton plan sets up budget negotiations

By the rules of the game, Gov. Mark Dayton plays first in the three-way poker match between the administration and the two houses of the Legislature. On his turn, Dayton’s bold but predictable move was to push his chips to the table and go “all in.”

Well, almost. The supplemental budget released on Tuesday has line-item spending for just about every bit of the $1.9 billion surplus: There’s $13 million left on the bottom line, in case there’s anything Dayton left out. That’s a thin slice relative to the $42 billion budget, but the governor’s statements portray the supplemental budget as a starting point, with nearly every viable option still on the table.

Entering the third budgeting negotiation of his tenure, the second with Republicans holding a majority in the Legislature, the governor understands how the game is played. Dayton said he was willing to negotiate spending amounts on a number of proposals — his own, or theirs — to reach a compromise budget that could pass into law.

Almost inevitably, that compromise will include more in the way of tax cuts, which feature in only one place on Dayton’s initial position: An expansion of the working family credit, first announced in January, would help parents pay for day care at a cost of $175 million over two years.

But Dayton is not in favor of the larger GOP push to lower taxes across the board. He compared tax cuts to being “like M & M’s,” for their sweet, tempting and temporary effect, and parts of his Tuesday announcement were framed as a response to the Republican Party of Minnesota’s call to “give [the surplus] back” to taxpayers. The House Republican majority has stopped short of that, but House Speaker Kurt Daudt has said his caucus might devote half of the surplus to slashing taxes.

“Some want to give $1 billion or more back to ourselves, I prefer to give $1.2 billion to our future,” Dayton said, referring to his combined spending for education and families.

Dayton’s own priorities were clear based on the Cabinet members who got time at the lectern on Tuesday. Education Commissioner Brenda Cassellius spoke about the prospective impact of all-day pre-kindergarten ($343 million in Dayton’s budget), and additional funds for special education ($41 million), while Higher Education Commissioner Larry Pogemiller touted the $252 million to ensure a tuition freeze for University of Minnesota and Minnesota State Colleges and Universities (MnSCU) students.

Increased dollar amounts for those proposals amounted to much of the change seen since January, when Dayton’s budget pitch reflected the roughly $1 billion surplus projected at that time. Previously, only half of the pre-K plan had been paid for by the state, leaving districts on the hook for the other half.

Dayton said that he is “open to” a means-tested system for pre-kindergarten but that lawmakers should look at the “phenomenal success” of the universal all-day kindergarten program approved in 2013.

“Parents are working, they know where their kids are, and they know they’re getting quality learning experiences,” Dayton said. “Why wouldn’t we want to extend that to 4-year-olds?”

Dayton said he was “flexible” on how local districts chose to implement pre-K but hoped for an “integration” with existing child care options.

Principal elements of the supplemental budget are due to spike in cost between the next budget and the “tails” budget for fiscal years 2018-19. All-day pre-K, pegged at $234 million over the next two years, would rise to $587 million the following biennium; the special education increase would go from $37 million to $97 million; funding a tuition freeze at MnSCU rises from $142 million to $190 million.

Dayton acknowledged the challenge of long-term budgeting, especially in the likely event that the state’s economic fortunes change someday soon.

“All spending increases are temporary,” he said.

The press conference also saw the introduction of several new spending priorities. Among them:

• More than $24 million for recruitment and retention of teachers in “hard-to-fill” positions, which would add an estimated 400 teachers, largely in rural districts.
• A $25 million pay hike for staff at the state’s nursing home facilities, allowing for what Dayton called a “significant” raise on top of increases in the last budget.
• A one-time, $10 million appropriation for 650 units of workforce housing in Greater Minnesota.
• An $11 million dedication to refill the state disaster contingency fund, the newly established account intended to prevent the need for a special legislative sessions to pass disaster relief bills.

Dayton said his salary increase for nursing home workers is an alternative to “considerably more expensive” proposals introduced this session.

“I anticipate the Legislature may very well want to go beyond that, and I’m certainly agreeable to doing so,” he said.

Disability advocates were first out of the gate with a reaction to the budget, as the “5% Campaign” coalition announced that it was “stunned” Dayton was devoting money to nursing homes but not disability care facilities.

“It’s really a matter of fairness,” Bruce Nelson, ARRM CEO said in a statement, adding that nursing home and disability care staff “do essentially the same work.”

Also disappointed was the Coalition of Greater Minnesota Cities (CGMC), whose president, Heidi Omerza, said the lack of local government aid (LGA) funding is a statement that the governor “doesn’t have the commitment, resources or will” to invest in Greater Minnesota communities.

Senate Majority Leader Tom Bakk’s response offered no specific value judgment, good or bad, instead saying his caucus “shares many of the priorities” seen in Dayton’s budget.

Republicans have yet to begin rolling out their own spending targets, though their budget resolution is expected to get a first introduction in the House Ways and Means Committee next week.

Figures in the lower chamber have already engaged in a bit of gamesmanship over the budget, as Rep. Ryan Winkler, DFL-Golden Valley, introduced a resolution that would bind the Legislature to the $39 billion budget passed under DFL control, which Republicans have criticized as wasteful.

In response, Rep. Jim Knoblach, R-St. Cloud, had Winkler’s floor resolution — which even the author admitted was offered to prove a point — recalled to the Ways and Means Committee, where legislators took testimony on Monday morning. Lobbyists dutifully appeared there to argue for more money aimed at their various categories, but the hearing was more perfunctory than functional.

Asked, at that time, how Knoblach was approaching the setting of budget targets for different areas of state government, the committee chair said he was looking forward to hearing testimony, and that it would be “inappropriate” to speculate before the panel received more input.