Gov. Dayton ignores last-minute pleas, lets $260M tax cut bill expire

Gov. Mark Dayton followed through on his pledge to veto a $260 million package of tax cuts at midnight Monday.

The veto came after Republican legislators again urged the governor to sign the bill, which would cut rates for a variety of taxpayers, including farmers, working families, veterans and student-loan debtors.

While Dayton said he supported many of the bill's provisions, his administration caught an error that officials said would have cost the state treasury $101 million over the next three years. He also insisted that legislators renew a sales tax exemption for the Minnesota State High School League that funded scholarships for low-income athletes, a change accidentally left out.

The so-called pocket veto, in which the governor takes no action and lets the measure expire, abruptly reset negotiations between Dayton and legislative leaders for a special session. In order to call a legislative session, Dayton wants to fix the tax measure, but also is seeking millions of dollars in new spending for the University of Minnesota, clean-water projects and a new light-rail line from downtown Minneapolis to Eden Prairie.

Republicans said they agreed to fix the tax bill, but objected to the new spending.

Dayton did not make any public statements or public appearances on the bill Monday, the legal deadline to make a decision on the measure.

As uncertainty mounted during the day, Dayton spokesman Matt Swenson said only that the governor's "position has not changed."

Dayton and legislative leaders in recent days had been locked in a stalemate, as Republicans refused to budge on Dayton's new spending requirements.

The veto came with strong election overtones, because all 201 legislators are on the ballot in November, as is control of the House and Senate.

Dayton's veto deals a blow to what had been a signature accomplishment of House Republicans, who swept into power pledging to lower taxes for a wide swath of Minnesotans.

House GOP leaders made a last-ditch effort Monday to pressure Dayton to sign the bill, calling a news conference where they were joined by a handful of constituents who were in line for tax breaks.

"We are encouraging the governor to sign this tax bill," said House Speaker Kurt Daudt, R-Crown. "This affects every walk of life, every corner of the state."

Among those to speak was Scott Winslow, a farmer from Fountain, in southeastern Minnesota.

The tax bill includes $90 million in tax relief for farmers over the next three years, which Winslow said was badly needed.

"This bill would mean a lot to us," Winslow said. "We have some high tax bills we're dealing with. Farmers are really struggling."

Veterans, business owner and a college student also spoke in favor of the bill.

House DFLers seized on the breakdown, painting Republicans as ineffective leaders whose last-minute rush to pass the measure caused the error.

"We're expected to get our work done, to get our work done right and to take responsibility when that doesn't happen," said House Minority Leader Paul Thissen, DFL-Minneapolis.

"We urge Speaker Daudt to step away from the microphone and step forward to show some leadership. Minnesotans are tired of excuses. They want results."

State Sen. Jeremy Miller, R-Winona, wrote Dayton on Monday, highlighting the bipartisan nature of the legislation, which passed the House and Senate by overwhelming margins.

"This isn't a Democrat or Republican tax bill," Miller said in his letter.

"This is a bipartisan tax bill that provides substantial relief for college students, low and middle income families, veterans, farmers, and small businesses."

Miller, a leader in the Senate's "Purple Caucus," a group of Republican and DFL legislators, also issued a plea to set aside partisan differences.

"I am not interested in participating in the political rhetoric which tends to dominate the conversations at the Capitol," Miller said.

"Let's show Minnesotans that Democrats and Republicans can in fact work together in the best interest of the state by making the tax bill law and convening for special session."

Constituents of House GOP legislators also wrote and called Dayton's office, urging him to approve the legislation.

Monday by midnight was the deadline for Dayton to act on the tax bill, which the Legislature passed last month. It would have cut taxes for a variety of taxpayers by about $800 million over the next three years.

Other beneficiaries included small-business owners, people saving for college educations, child care customers and cigarette smokers.

Dayton let the bill expire, as opposed to explicitly rejecting it. In Capitol parlance, that's known as a "pocket veto."

It was only Dayton's second full veto in a session marked by little outright conflict between him and legislators.

Lawmakers began the session in the enviable position of having a $900 million budget surplus and strong interest to spend at least some of it on tax cuts.

Dayton spokesman Swenson said the governor has invited all four legislative leaders to meet Tuesday and restart discussions about a possible special session.

Dayton and Daudt have not met or talked since Friday afternoon.

Lawmakers adjourned their regular session last month, after failing to finish a $1 billion borrowing-and-spending bill for public works and transportation projects.

Dayton, and DFL and GOP lawmakers alike have all spoken of wanting a special session to make another try at passing it, but the impasse over the tax bill complicated that effort.

"The further we get from where we are right now, the harder it gets to put this all back together," Daudt said.

Patrick Condon • 651-925-5049

Ricardo Lopez • 651-925-5044