Monday, June 06, 2011

Reading between the lines

"They're still holding at $34 billion, if I read between the lines, and that is something that I will not agree to." - Mark Dayton

The latest "compromise offer" from legislative Republicans is mere posturing, but the shape of an eventual compromise is starting to emerge, if you read between the lines.

The "compromise offer" contains:
$80 million more (over the vetoed GOP bill) in K-12 funding, contingent on the acceptance of Republican "nation-leading reforms of education"
$30 million more in Judiciary and Public Safety funding
No new revenue
This means that the gap between Dayton and the GOP is exactly where it started. You might even say that it's grown to $1.91 billion since the $110 million will have to come from somewhere. Revenue will be one part of a viable budget compromise. Despite Dayton's desire to give the GOP some credit for moving, this offer does nothing but repackage the GOP's intransigence. Set your watches. By 3 PM Tuesday, Republicans will be demanding a Dayton counter-offer to their non-offer.

Reading between the lines, the takeaway from this offer is that language ("nation-leading reforms") will be a key negotiating point. Education Committee Chair Rep. Pat Garofolo seems ecstatic at the inclusion of demands for all the policy language in the offer. The "reforms" passed by the Republican-led Legislature include private school vouchers, restrictions on teacher collective bargaining, elimination of school desegregation aid, and other goodies.

These "reforms" have been one of the top talking points of the GOP and they want them included in any agreement. They're also specifically mentioned by Dayton as one of the many reasons he vetoed the K-12 bill. The HHS bill is full of similar policy provisions the GOP dearly wants included in a budget deal. Talk of these provisions has been notably absent up until now, but they represent key bargaining chips.

If the GOP wants their reforms (even some of them,) they are going to need to do better, much better, on a revenue offer. But where would that come from? The GOP staffer betting pool sheet contains the following list of possible revenue sources:
Expansion of gambling
Expansion of the sales tax
New fees on tobacco and booze
Increase fees
Increase in MN income tax
Bonding bill larger than 500 million
The revenue sources aren't anything new, but their inclusion on a sheet intended for distribution among GOP staffers indicates a recognition that some revenue will likely be part of a eventual compromise. The specificity of the bonding bill item is also interesting. While it will be difficult for Republicans to walk back their opposition to "running up the state's credit card," it will be easier to do that than back off their full-throated opposition to any new revenue.

The zone of possible agreement between the Republicans and Dayton is just starting to emerge. Could Dayton and the GOP live with a compromise of no new revenues, little GOP language, a more widespread LGA cut that doesn't annihilate Minneapolis, St. Paul and Duluth, and a big bonding bill? Alternatively, could Dayton and the GOP live with a blink off millionaire surtax, victories for GOP on health care and education policy and a $200-300 million bonding bill? I don't know, but the shape of a final package will force tough decisions from both sides.

Packages like these represent the moving parts of any viable compromise. Just remember, Dayton's right when he stresses that both sides will be unhappy with parts of any compromise. Policy provisions will ultimately be a big part of that unhappiness. Koch and Zellers's first "counter-offer" starts that process.

Follow me on Twitter @aaronklemz

(Image credit: Office of the Governor web page)

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