Capitol leaders ready for high-stakes budget poker

What do you get when you put a long-time labor negotiator, an ex-car salesman and a two-term governor with nothing to lose in a room together?

This year's budget negotiations at the state Capitol.

With two and a half weeks to go until the deadline to finish their work, DFL Senate Majority Leader Tom Bakk, Republican House Speaker Kurt Daudt and DFL Gov. Mark Dayton are still far apart on major issues.

You'd think it would be easy to reach a budget deal when the state has a $1.9 billion surplus. But the pot of money is so big — and the political philosophies so different — that a way out seems hard to find.

Lawmakers have until May 18 to come to terms. Whatever deal they cut could mean major changes for education, health care, tax policy and transportation. If they fall short, Dayton will be forced to call lawmakers back into a special session.

Four years ago a standoff over the budget between Dayton and Republican legislative leaders forced a partial government shutdown. That's something all sides this year said wouldn't happen again.

But now with the clock ticking, no one is ruling it out.

"There's no question that in at least of terms of actual dollars, we're as far apart as I've ever seen," said state Sen. Dick Cohen, DFL-St. Paul and the longtime chair of the Senate Finance Committee.

Cohen's served nearly 40 years in the Legislature, so he's been through plenty of budget battles. But these disagreements are new.

House Republicans are proposing a $2 billion tax cut, eliminating the popular MinnesotaCare health insurance program and just a small increase in school funding.

Senate Democrats want a smaller tax cut and more spending for all areas of the budget. Dayton proposed the smallest tax cut of the three and wants more money for early childhood education, schools, colleges and universities.

Cohen said for a deal to work all three sides need to walk away with something.

"It's a three-cornered negotiation, and not everybody gets their way all of the time," he said. "It doesn't work that way. It never has. It never should."

Each of the three main budget players is staking out his position.

Dayton is looking to build on his legacy in his final term in office. He has drawn a line on universal pre-kindergarten for four year olds and on improving water quality by requiring farmers to leave buffer strips near lakes, streams and rivers.

"I'm not going to back down from the things that I have identified that are absolutely essential for me to have and absolutely essential for Minnesota not to have," Dayton said "I'll be here for as long as it takes to achieve that."

House Speaker Kurt Daudt, R-Crown, is coming from a different perspective. The former car salesman has to make his pitch to skeptical Democrats that state government should shrink when there's a budget surplus, and that the extra money should be used to cut taxes.

On top of that, in order to end the session on time Daudt may have to sell a budget deal that doesn't include those priorities to a conservative caucus.

And like any car dealer, Daudt has to set a walk away price from Dayton.

"I told him that his budgets were just about as far off target as ours," Daudt said. "I hope the governor is willing to move. If he's not willing to move, we're going to have trouble."

Senate Majority Leader Tom Bakk, DFL-Cook, is a union negotiator who fancies himself a master dealmaker.

Outside of the Capitol, Bakk spends much of his time hunting and fishing, two hobbies that require lots of patience. Bakk signaled he's willing to wait Daudt out on taxes.

"He said, 'Well, I have to have a tax bill.' I said I really want to get a transportation bill. And he said a second time, 'Well, I have to have a tax bill,'" Bakk recounted. "And I said I'm willing to consider matching you dollar for dollar. For every dollar in gas tax money he's willing to give me in that bill, I'm willing to give him a dollar in tax relief."

Republicans have repeatedly said they won't support a higher gas tax for transportation projects. But House Tax Chair Greg Davids, R-Preston, said he also knows $2 billion is not likely to be the size of a final tax cut.

"I'm working on some scenarios," he said. "What if it's $1 billion? What if it's $500 million? What if it's $400 million? What are the priorities of the House? And then we'll make a determination."