Sunday, February 13, 2011

Dead on Arrival

Mark Dayton’s budget, to be announced on Tuesday, is dead on arrival at the Legislature. At least that will be the message at the GOP press conference responding to his proposal.

Here’s a message you won’t hear but is also true: the all-cuts budget the GOP would like to propose is similarly DOA if it lands on the Governor’s desk. The real question is how much each side will bend to create a budget compromise, and how public opinion will shape an eventual compromise. Tuesday’s posturing will eventually give way to hard reality: Dayton and Legislature need to work with each other.

Dayton’s budget will include cuts and new revenue. While the drafting of this budget has occurred in pretty remarkable secrecy, there have been a few hints. It will include a temporary increase on the wealthiest Minnesotans. It will include a small increase in education spending, but will probably not repay the $1.9 billion shift in one biennium. It will include cuts that will go well beyond the $900 million GOP proposal he vetoed last week. And it will include a few surprises, perhaps one of the reform proposals offered by MAPE, the Association of Minnesota Counties, or health care providers.

How the GOP will respond is equally shrouded in mystery, but again we know a few things. Republicans will not propose a budget that exceeds projected revenues of $32 billion. The Republican leadership has put themselves into a tighter rhetorical straightjacket than a “no new taxes” pledge. While Pawlenty wriggled out of a tight corner by declaring increased tobacco taxes a “health impact fee,” there’s no rhetorical flexibility in the GOP position.

The Republicans might choose to respond to Dayton’s budget with a fully formed proposal of their own, then move their budget through the committee process with those targets. They aren’t required to do so. In 2008 the DFL-led legislature never proposed an alternative budget. The GOP leadership could continue their piecemeal budgeting approach by taking cuts proposed by Dayton and sending him a bill with only his cuts but not his revenue increases.

That seems to be their most likely path. Of course, this is the same failed approach of the DFL legislative leadership in 2008, criticized and defeated by Governor Tim Pawlenty. The conclusion of Governor Dayton’s Thursday letter vetoing HF130 pointedly quoted a Pawlenty veto letter from last year:

“As the state struggles to resolve a $1.2 billion deficit [for the current biennium], the passage of this legislation is at best premature. Legislation that appropriates significant funds simply cannot be passed in a piecemeal fashion.”

Expect several attempts to maneuver piecemeal cut packages through the legislature followed by inevitable vetoes. The rhetorical fireworks will ratchet up a few notches each time, but the longer the legislature goes without presenting a full budget solution, the longer it will take to start the real work of resolving the impasse.

And it will be an intractable budget impasse, more reminiscent of Al Quie’s tenure than Tim Pawlenty’s. Nearly every avenue for compromise seems to be closed down already. Assistant Majority Leader Sen. Geoff Michel (R - Edina) threw cold water on those who thought that reform of tax expenditures might result in new revenues without a tax “increase,” declaring the GOP wouldn’t vote for any budget that exceeds current revenues. Subsequently, Senate Tax Committee Chair Julianne Ortman (R - Chanhassen) who seemed to welcome consideration of tax expenditures, now makes a distinction between long-term reform and short-term changes.

Dayton’s State of the State address and first veto drew only a few lines in the sand on the shape of a budget resolution that he could sign. First, no cuts to education. Second, it has to make the tax structure more progressive and limit property tax increases.

The collision between “no new revenue” and “make taxes more progressive and limit property tax increases” is where the real action will take place. There’s no apparent flexibility in the positions of the negotiators, nor in the negotiators themselves. The GOP has become accustomed to winning with stubborn insistence and inevitable DFL concessions. However, part of the success of this negotiating approach was due to the structural aspects of power between the Governor and Legislature, and that structure has flipped. At the same time, Governor Dayton and the DFL minority have no power to impose their preferred budget solutions.

It will be the public that decides. Expect the budget battle to spill out of the Capitol into the public sphere, whether by choice or necessity. The choice may be to take the arguments directly to the people in an extension of a 2010 campaign that never seems to end. And if all efforts fail, the looming deadline of the end of the biennium on June 30th may involve the public in the form of a government shutdown.

It’s impossible to predict the outcome, but I predict we’ll still be talking about this in late June in the context of a looming government shutdown. While Dayton's budget may be dead on arrival on Tuesday, it's a starting point for the discussion. Don't forget that he also gets the final word.

Follow me on Twitter @aaronklemz

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