The Free Press, Mankato, MN

State budget: a closer look

July 15, 2011

DFL legislators unlikely to provide votes for deal

MANKATO — Republican legislative leaders can’t count on much Democratic help in getting a budget deal passed through the House and Senate next week, including from Mankato DFL lawmakers.

Sen. Kathy Sheran and Rep. Kathy Brynaert didn’t make definitive statements that they would oppose the budget deal worked out between Democratic Gov. Mark Dayton, House Speaker Kurt Zellers and Senate Majority Leader Amy Koch.

But both Mankato Democrats said the deal’s primary provisions — delaying $700 million more in payments to K-12 schools and borrowing $700 million to be repaid with future payments from tobacco companies — were among the worst options available for closing the $5 billion budget shortfall.

“Among all the revenue options we considered, these were at the bottom of my list,” Brynaert said.

The tobacco bonding, in particular, is unprecedented in Minnesota history — borrowing against future revenue to cover operational costs, they said.

“There is no new revenue, that’s why it’s a bad choice,” Brynaert said. “... It’s digging the hole deeper, kicking the can down the road, you can use any number of analogies.”

Dayton offered, and Democrats supported, a better approach, they said, that would have raised taxes on high-income Minnesotans to generate revenue and equalize the percentage of income that all Minnesotans pay in state and local taxes.

Republicans adamantly opposed the idea, saying it would penalize job-creators, hurt the state’s ability to compete economically and perpetuate a state spending problem.

Sheran, though, said Dayton’s plan was more responsible than writing an I.O.U. to schools and selling bonds to be repaid with future earnings from a tobacco lawsuit settlement.

“Instead of asking high income earners to pay just their fair share, we’re using a borrowing plan,” Sheran said. “... I will have a very difficult time supporting this proposal.”

Sheran said Republicans, after failing to budge on their opposition to the income tax increases sought by Dayton, will need to generate the votes to get the debt-based budget deal through the Senate.

“I think they’re going to have to,” she said.

That means no more than three Senate Republicans can vote against budget bills when they come up for a vote, possibly as early as Monday. Without Democratic support in the House, 68 of 72 Republicans would need to support the budget deal.

Sheran said most Senate Democrats were similarly troubled by the school funding shift, which comes on top of the continuing $1.4 billion shift approved under Gov. Tim Pawlenty, and the tobacco-payment borrowing.

Even with the borrowing, cuts will still be required in higher education spending, state agencies and some property tax relief programs, she said. In other areas, projected increases in spending will be scaled back.

Sheran said that will lead to higher tuition for college students and reductions in support for families caring for children with disabilities or for elderly parents.

Aid to help counties operate a variety of programs for the poor, the mentally ill and the disabled will also be reduced, forcing property taxes higher, she said.

“If Republicans believe in those deep cuts, then they should take responsibility for voting for (the budget) and not ask the Democrats to do that,” she said.

Brynaert said the budget agreement could cause a further decline in the state’s bond rating, which was reduced by one rating firm last week. It also virtually guarantees future budget shortfalls.

“We get out of the storm,” she said. “But it doesn’t look good ahead. There’s another storm coming.”

Brynaert and Sheran, as critical as they are of the settlement, didn’t fault Dayton — saying Republicans had gone two weeks without making a single counter-offer to his proposals. Ultimately, he decided too much pain was being caused to allow the shutdown to continue.

Brynaert said Dayton and lawmakers were hearing from state workers going to the food shelf, parents who lost child care subsidies, workers with disabilities losing their jobs at places like MRCI. She talked to some small contractors earlier this week who had seen jobs dry up during the shutdown.

“They were frantic,” Brynaert said. “They thought that in less than two weeks, they could be out of business.”

The 2012 election could offer a clearer message from Minnesota voters about whether they want tax increases as part of future budgets or if they firmly support the Republican resistance to higher state taxes. But Brynaert said the message is likely to be muddled by a contentious presidential election and several constitutional amendments, including one dealing with gay marriage, on the Minnesota ballot.

Something, though, needs to change, according to Brynaert.

“Minnesota isn’t working,” she said. “Literally and figuratively.”

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