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Deal moves special session closer

State Auditor Rebecca Otto on Monday wrote on Twitter that she would “pursue all avenues” to “stop the unjust gutting of a constitutional office that belongs to the people of [Minnesota].” (File photo)

State Auditor Rebecca Otto on Monday wrote on Twitter that she would “pursue all avenues” to “stop the unjust gutting of a constitutional office that belongs to the people of [Minnesota].” (File photo)

Gov. Mark Dayton and the House Republican leadership issued similar but slightly different statements to the public on Monday. Both said the distance between the negotiating parties was not worth risking a state government shutdown, and both pushed for the two sides to end the standoff in the next few days.

It was only Dayton, though, who indicated that they might not. While dropping his opposition to a provision curtailing the responsibilities of State Auditor Rebecca Otto’s office, Dayton also produced another set of demands before he would call for a special session.

Another 36 hours passed with no movement from either side, and it began to look like the exchange of messages through public channels was less promising than first appeared. But the impasse finally broke Wednesday morning, as Dayton announced that a comprehensive deal had been reached and that he would call a special session once the four caucus leaders could sign off on its agenda.

Dayton said the continued negotiations had been “extremely difficult,” and said it was necessary to give up his stubborn fight to avoid a state government shutdown.

“Proponents and opponents of various policies across the political spectrum will be as unhappy with certain features as we, who ultimately had to accept them to avoid another government shutdown, the indefinite layoffs of 9,500 state employees, and severe disruptions of important public services,” Dayton said.

Dayton, who had previously treated the question over Otto’s role as the last sticking point holding up the special session, eventually moved from unwilling to merely unhappy, and he suggested on Monday that the remaining disagreements could be disposed of in time for a special session later in the week.

House Speaker Kurt Daudt and his caucus had played first on Monday, going public with a letter that asked the governor to drop his enduring opposition to the auditor change. If Dayton does not support the concept of letting counties choosing private firms instead of Otto’s staff, Daudt wrote, the Legislature can revisit the issue prior to the next session, or before the law’s 2017 enactment date.

“[T]here is no urgent need to alter this provision,” Daudt wrote. He added: “If changes need to occur, we can make those decisions with more information next session.”

Dayton apparently relented to that argument later Monday afternoon, though he said it was only Republican “intransigence” that had preserved the new policy on the auditor’s office, which he said had been “massacred by the conference committee.” Dayton said he planned to go public with his case on Otto’s office, which he held early in his political career. He also said the legislation could ultimately be deemed an unconstitutional, saying the Legislature’s act against a Cabinet position might violate separation of powers.

It was not clear if a lawsuit challenge would come from the state itself or be filed by Otto personally. Otto has been an outspoken advocate for her own cause since the idea of trimming her duties emerged, both in-person and on her prolific Twitter account. On Monday, she wrote that she would “pursue all avenues” to “stop the unjust gutting of a constitutional office that belongs to the people of [Minnesota].”

Ascribing some blame to “some Senate leaders, as well,” Dayton said the move against Otto’s power is “shameful,” as was the “backhanded way in which it was done.” House Republicans have consistently pitched the state auditor proposal as a fiscally conservative measure, letting counties shop between different accounting firms to find the best deal.

The role of Senate Democrats in the deal might be more personal, or at least political: The limiting of that office has been portrayed as an outgrowth of the so-called Dump Otto movement among Iron Range Democrats, who faulted Otto for her vociferous opposition to the granting of nonferrous mining leases in northern Minnesota. In 2013, Otto incorporated her environmentalist stance into fundraising materials, drawing the ire of DFL legislators in mining country.

The new must-have initiatives Dayton named on Monday called for a $5 million allocation to disabilities services and eliminating a change made to net metering, which Dayton acknowledged he did not understand well. In his announcement that a deal had been reached, Dayton specified that he had gained legislative support for the former provision, but not the latter.

The governor also demanded different language on a break for electricity costs for heavy industry, such as forestry and logging, which Dayton said would come “at the expense of residential and small-business ratepayers.” Here, again, Dayton’s statement Wednesday morning said legislators had assented to consumer protection measures on the rate break for industries, though he did not give details on that agreement.

Gaining some measurable ground in the final deal seemed to be a vital element for the governor to call the session. Speaking Monday, Dayton, flanked by Lt. Gov. Tina Flint Smith, had said he and his staff would be willing to meet with Republicans at any time to work through the remaining issues, but said he wanted the result to be a compromise.

“If I’m required, threatened again by House leadership, to go 100 percent of the way, then we’re far apart,” Dayton said. “If we can get a reasonable compromise … on these other matters, then we can solve this in a matter of hours.”

In addition to his three prerequisite positions, Dayton said the Legislature should add clarifying language for the local sales tax law Rochester will use to fund the Destination Medical Center (DMC); that language is noncontroversial, but had been included as part of tax bills that now seem virtually certain to be pushed back to 2016. His letter on Wednesday indicated that the DMC fix was also part of the framework agreement.

Dayton also named more funds for the Minnesota Sex Offender Program (MSOP) facilities, railroad safety and rural broadband infrastructure as things he wanted but would not demand before convening a special session. On the latter point, Dayton explained that he did not know about $10 million worth of broadband expansion in the jobs and energy omnibus bill until the morning after session had ended. According to Dayton, the funding was granted in his name, though without his knowledge, as House and Senate leaders tried to strike a deal on the last night of session.

Funds for MSOP, railroads and broadband were not mentioned specifically in the letter released Wednesday.

The missing pieces Dayton specified on Monday would all be part of the jobs and energy omnibus bill, the last outstanding piece of business that stands before a special session. All other omnibus budget bills were introduced at the end of the previous week and reviewed during a joint hearing of the House and Senate finance committees on Friday afternoon. There, lawmakers got a first look at the compromise struck on the education budget bill, where $125 million was added to the spending total that passed late in the regular session. Just over half of that total will go toward the general education formula, and a combined $27 million will go toward early learning scholarships and Head Start programs.

The education bill also still contains a delay in the effective date on a sales tax exemption for joint powers agreements among local government bodies. Moving the date of the exemption back one year would bring in $20 million in state revenue at the expense of local governments; Dayton said Monday he would like to see that language removed in the special session, but did not say he would make it a required part of the deal.

During Friday’s hearing, Sen. Richard Cohen, DFL-St. Paul, told members that the committee would be ready to take up the economic development bill whenever it became available, though he did not expect leaders to continue negotiations through the weekend.

Daudt had issued a guarded reply to Dayton’s offer on Monday, welcoming the DFL governor’s agreement to drop the state auditor matter, and said he wanted to provide “job security to 9,400 state employees” who could be furloughed in the event of state government shutdown.

Tuesday brought another call from legislators for more transparency and public input into the staging of the special session, as Sens. Jeremy Miller (R-Winona) and Roger Reinert (DFL-Duluth), co-chairs of the bipartisan “Purple Caucus,” asked that all bills up for consideration be made available 48 hours in advance of the session. The joint statement echoed a letter from the previous week, signed by dozens of House and Senate Democrats, who wanted more openness in the private negotiations leading in to the special session.

Dayton responded that legislators had been given five months to work together on bills that he would agree to sign, and failed, and said greater involvement from backbench members would only muddle the deal-making process.

“This is not the optimal way to handle this, but that’s the way it came down to it,” he said. “If all 201 legislators were still involved with those of us making these negotiations… we wouldn’t have reached first base yet.”

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