Done Deal: Budget Issue Wasn't Solved, Just Delayed, Hoeppner says

Minnesota’s legislators—and thousands of state workers—will soon be heading back to work.

Gov. Mark Dayton and state Republican leaders Thursday afternoon agreed on a preliminary budget and took the first steps toward ending the government shutdown.

During a three-hour meeting in the governor’s office, the parties agreed to a June 30 GOP budget proposal that would not raise taxes, but would borrow money to balance the budget. The deal will raise $1.4 billion by issuing state bonds against future tobacco revenue ($700 million) and shifting K12 education aid from 70/30 to 60/40 ($700 million).

Dayton said he expects to call a special session for legislators and to pass a budget “very soon. Within days.”

Lillie Responds

Sen. Ted Lillie, a Republican who represents Stillwater, said plenty of work still lies ahead as legislative leaders and the governor hammer out the finer points of the budget.

“I’m hopeful that we can work though the details and get the people of Minnesota back to work,” Lillie said.

Still, the mood today at the Capitol wasn’t jubilant, he said. “It’s hard to be excited and it’s hard not to be excited.”

“There are parts of it neither side will be happy with,” Lillie said.

It will be good to get transportation projects up and running again, and licensing issues sorted out, Lillie said. “And people can buy beer again.”

Stillwater Patch left messages requesting comments from Sen. Ray Vandeveer, House Majority Leader Matt Dean and Rep. Kathy Lohmer, but as of the time of this post, they hadn’t yet responded.

Public Schools Take One On The Chin, Again

Minnesota public schools are once again bracing to take a hit—with $700 million of the shortfall being resolved with a shift in K12 education aid from 70/30 to 60/40.

“Seventy-thirty was bad enough,” Stillwater Area School Board Member George Hoeppner said after Thursday night’s school board meeting. “The only good thing about 60-40 is that it’s not 50-50. I don’t see anything positive about (the budget deal) for school districts.”

“It’s obviously not our first choice," said Scott Croonquist, executive director of the Association of Metropolitan School Districts. "But if they do the shift and do include some revenue for school districts to pay for the interest costs [incurred from borrowing] that will make it less onerous.”

This is not a structural balance to the budget, this is one-time revenue, Croonquist said. “Our preference would have been that it was done more responsibly.”

“We will be right back here in two years,” he continued. “We are not balancing the state budget. That’s the real danger and downside here—the future.”

Lawmakers are “kicking the can down the road again—just like they did two years ago—and now they’re in the same bind,” Hoeppner said. “Noting was solved in this process. They are delaying having to make a decision.” 

And in the mean time many school districts, including District 834, will be tasked with the challenge of asking voters to pass a levy, while still being forced to make cuts to their budget.

Under the proposal, school districts with a healthy reserve won’t be hit as hard, Croonquist said. It’s not an even impact on school districts.

“You see the inequity with the districts to a great extent,” Hoeppner said. “You’re not going to be taxed by the state, so they can pat themselves on the back; but we have to go out to the taxpayers and ask them if they support kids' education in District 834.”

And what about the districts that can’t pass a levy?

“It’s the inequity of education in this state,” Hoeppner said.

So, is this continued shift a slippery slope?

“We are sliding down that slope very quickly," Croonquist said. "It’s a tool that the legislature has used over the years, but we’ve never gone this far.”

Is a shift a cut in the end?

“The borrowing cost you incur to make up for the shift is the cut," Croonquist said. "But Dayton’s agreement (as I understand it today) would pay for the borrowing costs schools would incur so the real financial hit could be mitigated.”

 ‘Disappointing’ Deal

Dayton said he expects he and Republican leadership will work late into the night and through the weekend.

“This is an agreement that is difficult for both sides,” said Senate Majority Leader Amy Koch, R-Buffalo. “There’s been some good discussions and some coming together on agreements for reforms.”

House Speaker Kurt Zellers (R-Maple Grove) agreed reaching a deal—as well as the shutdown—has been difficult.

“We are in an imperfect situation,” Zellers said. But in the end, “we’re focused on getting the lights back on and getting the government up and running again.”

Despite the agreement, Dayton reiterated his disappointment with the deal he announced Thursday morning.

“I’m disappointed I wasn’t able to persuade a legislative majority of the wisdom of my approach to raise taxes on the wealthiest Minnesotans,” Dayton said. “In the absence of that, however, this is an agreement today.”

As part of the agreement, Republicans agreed to three of Dayton’s conditions.

Koch said she expected the budget to pass the special session.

“We’re working with our caucus. We need to hammer out final details in these bills but we’re confident,” Koch said. “We’re focused solely on making sure these bills are processed as quickly as possible.”

Lillie said the timeframe for a special session is still undecided, though he anticipates it will happen early next week.