Minnesota governor offers ideas, Republicans balk

Reuters News
Posted: Jul 06, 2011 6:18 PM
Minnesota governor offers ideas, Republicans balk

By David Bailey

MINNEAPOLIS (Reuters) - Minnesota's Democratic Governor Mark Dayton offered two proposals on Wednesday to end a budget impasse and government shutdown, but Republicans rejected the ideas as a step backward.

Dayton proposed a temporary income tax increase on people making more than $1 million per year or a $1 per pack tobacco tax increase along with healthcare surcharges and a delay in school aid payments. He said this would close an estimated gap of $1.4 billion between his spending plans and Republicans.

"What we have maintained all along ... it has always been about spending," Republican House Speaker Kurt Zellers told reporters afterward. "Adding additional tax increases at this point it is pretty clear to us things went backward today."

Minnesota state government has been shutdown since last Friday, when the political adversaries failed to reach a budget deal before the new fiscal year began.

The meeting between Dayton, Zellers and Republican Senate Majority Leader Amy Koch lasted about 25 minutes. Zellers and Koch said they would present the new offer to their House and Senate caucuses. No new meeting was scheduled.

Dayton told reporters afterward that the Republican leaders' reaction to his proposals was disappointing.

"It's their way or no way continues to be their position," Dayton said. "If somebody else has a rabbit to pull out of a hat than I look forward to them doing so, but there are only so many real world sources of making up this difference."

Zellers said a tax increase of any kind was off the table, but opened the door to other revenue possibilities such as expanded gambling at racetracks or a downtown casino.

He said he would need assurances that Dayton would approve such a proposal before taking that to the Republican caucuses.

Dayton said there had been several discussions about gaming expansion. While he had not ruled out a gambling expansion, a likely court challenge made it hard to predict revenue.

The state's first government shutdown is much broader in scope than a nine-day impasse in 2005 under then governor and now Republican presidential candidate Tim Pawlenty.

Neither Democrats nor Republicans have significantly changed their public positions, which echo differences in Washington and several other states. But other states managed to work out differences and Minnesota is the only one where the state government shutdown.

Just how long the shutdown could last is unclear. Dayton has proposed a $35.7 billion budget, while Republicans have proposed a $34.2 billion budget.

Both Dayton and Republican leaders have acknowledged that they have differences yet to negotiate in education and the health and human services program.

An unofficial committee of budget experts formed by former Democratic Vice President Walter Mondale and former Minnesota Republican Governor Arne Carlson also plans to offer by Friday a third option for bridging the gap between the two sides.

More than 20,000 of Minnesota's 36,000 state employees have been furloughed in the shutdown, leaving numerous departments at bare-bones staffing. Dozens of road construction projects have been suspended for the shutdown as was the state lottery.

Prisons, state police patrols and nursing and veterans homes and other critical services have been maintained.

(Reporting by David Bailey; Editing by Jerry Norton)