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Tough sailing ahead for budget deal

Not scheduled to attend Saturday’s meeting aboard Senate Majority Leader Tom Bakk’s boat was Lt. Gov. Tina Smith, who had been a key player in previous budget talks when she was Gov. Mark Dayton’s chief of staff. (File photo)

Not scheduled to attend Saturday’s meeting aboard Senate Majority Leader Tom Bakk’s boat was Lt. Gov. Tina Smith, who had been a key player in previous budget talks when she was Gov. Mark Dayton’s chief of staff. (File photo)

A career politician, a union leader and a young conservative get into a boat.

The punch lines write themselves. But budgets don’t.

Gov. Mark Dayton, Senate Majority Leader Tom Bakk and House Speaker Kurt Daudt were scheduled to spend time together Saturday on Bakk’s boat in Lake Vermilion, the northern Minnesota resort location where Bakk grew up and resides still today. The scenario lends itself to a cozy private meeting where the three figures could hash out an agreement on spending, tax cuts and policy details to end the session before the May 18 deadline.

It won’t be easy, though, for reasons of principle and personality.

Daudt committed his caucus to a wholly unrealistic, $2 billion tax cut just weeks ago, one that cannot possibly get signed into law. Dayton wants to spend as much of the state surplus as possible on Minnesota’s youngest residents and their parents, with hundreds of millions of dollars aimed at early-childhood education and a tax credit for working parents. Bakk’s priorities are so geared toward stabilizing state and local budgets that few, if any, have a grasp on their monetary or political impact.

Daudt met with the governor Thursday morning, and with Bakk just hours later, though little progress was made in that time, and a global budget deal is not anticipated until early the next week. Dayton, days earlier, had said the triumvirate’s boat meeting would be the “centerpiece” of budget negotiations, and many were hoping the three would return to the Capitol on Monday with the framework of a plan to end the session on time.

But the distance between the leaders and their agendas is still so vast that a path to agreement is difficult to envision.

“There’s no doubt that all signs right now point to a car crash,” said Larry Jacobs, political science professor at the University of Minnesota. “It’s not one thing. It’s not like there’s one bill where there are disagreements.”

Neither Dayton nor Daudt is known to immerse themselves in the weeds of budget line-items or tax language. Bakk, a former leader of the taxes committee, has now thrown that expertise behind the repaying of a local government due date shift that few legislators would have heard of, to say nothing of likely voters.

The negotiating gulf remains unsettled, and unsettling, to some, who fear the two majority caucuses cannot adequately work through any budget agreement on time. During the past several days, conference committees have begun meeting, ostensibly to sort through the massive distinctions between their bills. But progress is limited, conferees admit, by the lack of settled targets. In the health and human services sector alone, the two chambers are more than a billion dollars apart, with the House looking to eliminate spending and find savings, while the Senate adds and reallocates funds.

“Timing is a huge issue — and growing, by the hour,” said Sen. Tony Lourey, DFL-Kerrick, the Senate leader on that conference committee. “I’m quite worried about the timing in an area as large and complex as health and human services … because, to just throw things together at the last minute runs the risk of getting things wrong.”

Negotiations on services spending and education could be complicated, observers say, by the fact that the three leaders prefer to stay above the fray of details, and defer to committee leaders and cabinet commissioners. Daudt has mostly adhered to a few central themes in his public utterances, leaving more complex pieces to veterans like Rep. Jim Knoblach, R-St. Cloud, chair of the House Ways and Means Committee, and Rep. Greg Davids, R-Preston, who has spent more than a decade combing the state’s tax code.

“To this point, [Daudt] has been very good at allowing his chairs to do their work in their areas of expertise,” Davids said. “At some point in time, a corner may come … and [Daudt] will say, we’ve cut a deal with the governor and Majority Leader Bakk, and we need to do this, this and this.”

The “this” elements of that statement are still undefined. Marty Seifert, a former House minority leader who now lobbies for the Coalition of Greater Minnesota Cities, observed that Dayton’s top priorities seem to have fallen on deaf ears. The governor staked his positions this session on universal pre-kindergarten and a statewide buffer zone of 50 feet from all of Minnesota’s lakes and streams; neither got much traction in the House or Senate.

“It’s a little amazing that, this far into session, everyone’s essentially not giving the governor anything,” Seifert said. “Like, nothing.”

Rep. Ann Lenczewski, DFL-Bloomington, the lone House Democrat joining Davids on the taxes conference, said her experience negotiating the 2013 tax bill suggests Dayton’s administration will not go down without a fight.

“Dayton’s not running for office again,” she said. “And I think people underestimate his resolve.”

Both Daudt and Bakk have an eye on the 2016 elections, where both chambers will be on the ballot, and most see the House GOP’s agenda of slashing taxes across the board as an appeal to voters. The Senate’s tax bill, with its complex rewriting of business property excises and the undoing of a previously enacted shift, is a harder sell, admitted Ken Martin, chair of the DFL Party.

“I don’t think people understand that kind of detail quite as much,” Martin said. “But what Minnesotans don’t appreciate is when legislators govern through gimmicks, and smoke and mirrors, like [House] Republicans are. The Senate’s proposing to have a budget that’s an honest reflection of where we’re at.”

Dayton’s style of proclaiming his priorities, succeed or fail, is in contrast to the Senate DFL majority’s guarded approach of subtly pushing middle-ground positions that are sometimes buried in otherwise unremarkable bills. Seifert said the Senate’s opaque negotiating positions have been “befuddling” for the lobbyist crowd.

House Republicans, through Daudt especially, have championed a variety of bills and spending priorities that would favor Greater Minnesota over the Twin Cities, most notably — and controversially — a cut to local government aid (LGA) aimed at Minneapolis, St. Paul and Duluth. Could Daudt and Bakk, an Iron Ranger whose district abuts the Canadian border, find compromise on deals that hurt the metro area?

Unlikely, said Sen. Jeff Hayden, DFL-Minneapolis, who said he is assured Bakk would not risk his caucus’ metropolitan members, and their dozens of votes, to reach an unsavory but timely agreement.

“[Bakk] understands what the economic engine of the state is,” Hayden said. “They still need our votes to pass a bill … and I haven’t found Tom Bakk to be someone who would sacrifice the metro area. He’s very pragmatic in that way.”

The three-men-in-a-boat scene is hardly a new one, commented former GOP Senate leader Amy Koch, though she said the negotiations this time around have a frequently unforeseen wrinkle. When Koch helmed the Senate in 2011, Dayton’s then-chief of staff, Tina Smith, was a key player: wonky, well-versed and trusted to work with the governor’s best interests in mind. Now, as lieutenant governor, Koch theorized that Smith might have one eye on the future.

“If [Smith] is running for governor in four years, and I think she might, then she has more of an electoral dog in the fight than Dayton does,” Koch said. “It doesn’t seem like [Smith] was invited to go fishing.”

Hayden, for one, was comfortable trusting his leader’s ability to land a palatable deal over the weekend, pairing Bakk’s experience in dealmaking with the added home-field advantage.

“I’m more than confident in my guy, taking them up on his own lake, on his own boat,” Hayden said, laughing. “And I know there’s willingness on all sides to get a deal done.”

Some Capitol watchers are anticipating that the House, Senate and administration can agree on little more than a “lights-on” budget package, which would include slight increases for education and human services but, more importantly, would exclude any new transportation deal. Jacobs suggested that a “minimalist” budget could actually help Democrats in the coming election, as Dayton and others finger the GOP for holding up a broader agenda.

Seifert sounded a similar note, saying there was plenty of time to strike a deal, though few in the lobbying crowd anticipated a winning year for their issues.

“We all agree the airplane is going to land at some point,” he said. “But it probably won’t have wings, or landing gear, and the fuselage will be on fire.”

Not so, said Davids, who thinks he and Senate Democrats can find common ground on a tax bill. The enormous House tax-cut target was designed to be “scalable,” he said, and he can rearrange big-ticket items like a cut of Social Security income or phasing out the commercial-industrial property tax to fit the right shape. (To his way of thinking, he’d prefer to adjust rates rather than effective dates, saying he wants to “get things started now.”) Davids does, like everyone else, need a figure to aim for.

“What we need from the speaker, and from the other leaders, is numbers,” he said.

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