Accusations of political bias, payback in Annandale earmark veto

Annandale was not the only casualty of a governor's veto following the regular legislative session, but city officials there say their wound may have been politically motivated.

A small but growing city about an hour northwest of Minneapolis, Annandale has been desperate to upgrade its creaky Internet service, with connectivity so antiquated and unreliable that it goes dark up to five times a month for hours at a time, leaving local retailers unable to process credit card transactions.

They lobbied for and received a $2 million earmark for broadband development in the House jobs and energy bill, only to see it go down in a veto by Gov. Mark Dayton.

City officials met with Dayton's chief of staff, Jaime Tincher, to plead their case. In a notarized letter obtained by the Star Tribune, Mayor Dwight Gunnarson and City Administrator Kelly Hinnenkamp wrote that the governor's staff said they did not like earmarks.

But at one point in the meeting, city officials said, Tincher's tone changed. According to the letter, Tincher looked at Dan Dorman, a former House Republican-turned lobbyist who was working with Annandale, and said, "Don't forget, your firm spent an awful lot of time beating up on Democrats."

An awkward pause followed. Dorman later said he was taken aback and told Tincher, "I don't know how to respond to that."

After the meeting, Gunnarson said in the letter that he asked Dorman about the remark. Dorman told the mayor that he thought it was rooted in a bonding analysis his firm, Flaherty and Hood, prepared that showed the bonding proposal favored the metro area. Flaherty and Hood represents a number of outstate jurisdictions.

"I asked if the citizens of Annandale were being punished because of this," Gunnarson said in the letter, and Dorman replied that he thought so.

On Tuesday, Tincher acknowledged that she made the comment, but in a statement said: "It is completely false to suggest that opposition to Annandale's earmark was politically motivated." She added: "Our administration believes in a competitive process to distribute this funding and that it is wrong to allow one community to jump in front of others, simply because they have secured favor with a particular lawmaker."

In his veto letter, Dayton said the Annandale earmark undermined the competitive bidding process for state broadband funding and "sets a dangerous precedent."

The jobs and energy bill that contained the Annandale earmark is the last of the three bills that Dayton and GOP House leadership negotiated on Tuesday. The governor said he hopes to call the special legislative session as early as Friday, once he and Republican leadership finalize the bill.

House Speaker Kurt Daudt, R-Crown, said late Tuesday afternoon that his staff had sent the House GOP's latest offer on the bill over to Dayton's office. "As soon as we get a conceptual agreement, we'll get the final bill drafted," Daudt said.

In recent years, officials from Annandale have worked to improve their broadband network, which they describe as old and decaying.

Hinnenkamp said a local bus company recently tried to upload a document to send to a St. Cloud printing business, but "the upload speed was so slow it would be faster for them to drive the file there."

Annandale officials said they had applied for a grant through the state's broadband office but heard in February that they were not awarded the funds. They were among 40 applicants for funding last year. Only 17 received funding. They met with officials from the state's Department of Employment and Economic Development, the agency that administers the grants, to learn more about why they missed out on the funding. After two years of working the process with no success, they hired a lobbying firm to make their case directly to lawmakers.

"We need to do something for our community as soon as we possibly can," Gunnarson said. "That's the reason we went for the earmark."

The appropriation prevailed in the House energy and economic development committee, part of an overall $10.6 million Republicans had set aside for statewide broadband development. Initially, the House had proposed nothing for broadband, sparking an outcry from rural communities. The Annandale earmark represented 20 percent of that figure. In his original budget proposal, Dayton had sought $30 million for broadband infrastructure, a fact Tincher said she noted in the meeting.

Rep. Pat Garofalo, R-Farmington, said in an interview Tuesday that he asked the two city officials to draft the letter.

"I asked for this letter because as the chief author for the bill, I want to know the truth for why it was vetoed," he said.

Danna MacKenzie, executive director of the Office of Broadband Development, said her office opposed the earmark because many communities are in need of broadband development.

"We have met with this group many times and expressed support for the needs of their community," she said. "We all understand their community does have problems with service … [but] so do many, many dozens of other communities in the state. Each one has a unique set of variables, and Annandale was one of those."

Star Tribune staff writer Patrick Condon contributed to this report.