CHICAGO – With the clock ticking on Minnesota’s legislative session, Gov. Mark Dayton and the Republicans in control of the legislature remain far apart on a new budget.

The legislature faces a May 22 adjournment deadline. After that, a special session would be needed if Dayton and his fellow Democratic-Farmer-Labor Party lawmakers can’t bridge their differences with the GOP over spending and tax cut proposals in the next biennial budget beginning July 1. Some government services would grind to a halt if a budget is not in place.

Dayton on Friday made good on his warning to veto budget bills passed by Republicans after negotiations broke down. He vetoed bills appropriating funds for public schools, health and human services, agriculture, and environmental and natural resources.

Minnesota Gov. Mark Dayton at the Democratic National Convention in 2016.
Minnesota Gov. Mark Dayton vetoed budget-related bills passed by the GOP-controlled legislature. Bloomberg News

In each, he laid out his reasoning with his explanations totaling 18 pages.

“With less than two weeks remaining in this legislative session, I urge you to return to work to craft a bill that demonstrates to Minnesotans the commitment to our children and our state’s future you promised at the start of this session,” the education bill veto message said.

Dayton opposes spending reductions and the size of tax cuts being pushed by the GOP. Education would receive more money but the Republican increase falls short of what Dayton wants.

“It's not easy for over 200 legislators from all parts of the state to agree, and the governor's vetoes ignore the wishes of the people they represent,” Senate Republican Majority Leader Paul Gazelka said in a statement Friday.

The state’s latest revenue estimate that projects a $1.65 billion surplus is fueling the arguments from both sides with Dayton saying the cuts are not needed in his proposed $46 billion two-year budget while Republicans believe $1.1 billion should go toward tax reductions.

The state’s capital budget known as the “bonding bill” and a transportation funding package also remain on the table although the budget is the top priority, said legislative aides. New borrowing requires a three-fifths majority so GOP and DFL votes are required on the capital plan.

Dayton earlier this year proposed a $1.5 billion bond-financed capital package billed as a job creator. The proposal is slightly bigger than the failed infrastructure package he proposed last year.

The state typically passes a capital budget in the legislature's even years and a biennial budget in odd years.

Last year, the bonding bill along with tax relief and a transportation funding bill got stuck in political gridlock due to divided state leadership.

The state’s February forecast added $250 million to the surplus bringing it to $1.65 billion. The long term view of state coffers also remains positive with a $2.1 billion surplus expected in the fiscal 2020-2021 biennium based on current spending patterns. The state's cash flow and budget reserve accounts hold $2 billion.

Minnesota won back one of its triple-A ratings last year when Fitch Ratings raised its rating to AAA from AA-plus. Moody's Investors Service and S&P Global Ratings rate it at the Aa1 and AA-plus. Rating agencies have warned of the negative impact a return to political gridlock could have on the state’s credit profile should its economic picture deteriorate. During past periods of divided leadership, the state relied heavily on one-shots to balance its books.

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