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Legislative session hinges on resolution of budget differences
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Senate Finance Committee Chair Dick Cohen, DFL-St. Paul, and Senate Majority Leader confer during a break in Senate debate on a budget-balancing bill (MPR Photo/Laura McCallum)
The Minnesota Senate completed work on a budget package in a marathon floor session that began Wednesday morning and ended early Thursday. The plan arrived in two pieces: one that erases a $160 million projected deficit and a second that provides more than $40 million for a wide spectrum of new or restored initiatives. The Republican minority criticized DFLers for loading their new spending and policy changes into one comprehensive plan, arguing the process overwhelmed any chance for careful consideration or debate.

St. Paul, Minn. — Both budget bills passed the DFL-controlled Senate on straight party-line votes. The first would balance the budget using accounting shifts, changes in the corporate tax code, and 5 percent cuts to state agency budgets.

By the time work began on the second around 5 p.m., Wednesday evening, Republicans were sharply critical of the process. GOP members complained the legislation violates the state constitution's requirement that bills embrace only one subject.

Sheila Kiscaden of Rochester, the Legislature's sole Independence Party member, but who caucuses with the Republicans, says loading most of the session's important topics into one bill empowers the relatively few lawmakers who will negotiate bill differences with their House counterparts.

"What you're doing is you're concentrating all of the power, all of the decision-making in a handful of people. And I don't think that the people of Minnesota expected us to get elected to come here and then say to somebody else, well, 'you go and decide and tell us what to do,'" she said.

But DFLers underlined the need to advance their plan quickly so that talks can begin with the Republican-controlled House. House Republicans spread their budget proposals over eight bills, the last of which they also approved on Wednesday.

DFLer Dick Cohen of St. Paul, chair of the Senate Finance Committee, says the procedural complaints simply weren't persuasive.

"That's no reason to stop the work of the Senate, stop the progress toward conference committee, and re-invent the wheel," he said.

The plan addresses initiatives and policies at all levels of state government. It directs the Education Department to halt compliance with new federal education requirements unless lawmakers give their consent next year to proceed. It requires Metropolitan Transit officials and bus drivers to submit to binding arbitration in order to end the month-old Twin Cities bus strike. And it toughens penalties for certain sexual predators, including potential life sentences for repeat offenders.

That drew an unsuccessful proposal from Republican Dave Kleis of St. Cloud to lock up first-degree sex offenders for life with no possibility of parole. Kleis says those offenders shouldn't have a second chance.

"So if you're willing to have multiple victims, I'm not. That's the whole purpose of my amendment. First time. First victim. Life without release," he said.

The House version is similar to Kleis's. But Senate DFLers say that approach goes too far, equating the sentence for first degree sexual assault with that for murder. Wes Skoglund of Minneapolis says that could prompt some offenders to silence their victims.

"Some of these creeps are going to figure it out: I'm safer, pardon me, destroying them than I am keeping them alive. Somebody may die because of this, because one of these creeps is thinking that," he said.

Republicans lost on most of their other initiatives, too, including attempts to prohibit family planning dollars from going to organizations that provide abortions or refer clients for the procedure. The abortion-related language was rejected for not being related to the bill at hand -- despite GOP complaints that it fit the section on health and human services. That section restores many of the reductions made last year to state health programs. But it does so, in part, by eliminating coverage for procedures considered unnecessary.

One of the Senate's bills would ban state-funded out-of-state travel by the Pawlenty administration, the Legislature and the judicial branch, with a few exceptions. The governor could visit Minnesota troops on active duty, and he and other state officials could travel to Washington, D.C.

The bill would also prevent the governor from filling judicial vacancies until July of next year. Republicans objected to the provision. Republican Sen. Tom Neuville of Northfield says the court system is already backlogged.

"The judges can't keep their heads above water now," he said. It's irresponsible for those of you who know better not to take this out of the bill."

DFL Senator Larry Pogemiller of Minneapolis, who proposed not filling the judgeships, said highly-paid judges should also feel the budget pain.

Another controversial portion of the bill would generate nearly $58 million by collecting taxes from some Minnesota companies that now qualify as foreign corporations. Pogemiller, who chairs the tax committee, says changes in the corporate tax code would close paper tax shelters.

"It was not the intent of the Legislature to allow such large gaps in the corporate code where there could be some tax avoidance," he said.

Republicans argue that the tax changes are a business tax increase.

"This is not closing loopholes, it's raising taxes. It's raising over $50 million at the expense of corporations," said Sen. Julianne Ortman, R-Chanhassen, who says the changes could prevent businesses from expanding and creating jobs.

The tax changes are not included in either Gov. Pawlenty's budget proposal or the House plan. The House plan relies in part on money from expanded gambling. The Senate bill doesn't include the so-called racino, a proposed casino at Canterbury Park, which frustrates Republican Minority Leader Dick Day of Owatonna.

"You said 'no' to Minnesota's horse industry, 'no' to our rural economy, 'no' to 1,400 new jobs, 'no' to $900 million in private investment, 'no' to 70 percent and more on every poll that's been taken. Seven out of every 10 people in the state of Minnesota want it," Day said.

DFL leaders say gambling revenues are too volatile, and shouldn't be used to balance the budget.

The Senate plan must now be reconciled with the competing House proposals. Lawmakers hope to begin those discussions when the return from the Easter break.

Last year, lawmakers tackled a much larger deficit of about $4.5 billion. Then, they used accounting shifts, one-time money and spending cuts to balance the budget. Republican House Speaker Steve Sviggum of Kenyon says this year's shortfall is "a speed bump."

"If we can solve a $4.5 billion problem last year, we should be able to solve a $160 million problem this year," he said.

Sviggum and Senate Majority Leader Johnson agree that the House and Senate differences aren't insurmountable, if both sides are willing to compromise. But so far this session, there's been little evidence of that.

The House and Senate couldn't even agree on the number of budget bills -- the House passed 8 different bills while the Senate passed two. That makes it more complicated to create conference committees to work out the differences.

Pawlenty chief of staff Dan McElroy says the governor expects the House and Senate to reach a budget agreement.

"It is just common sense - Minnesota families balance their budget, we need to balance the community budget."

If the House and Senate fail to reach a budget deal, Gov. Pawlenty could draw down the state's cash reserves. But McElroy says the governor is opposed to using the reserves. He says that could put the state in a precarious situation next year, when the state may face another budget deficit.

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