Gov. Dayton says he won't sign tax cuts without a special session

Gov. Mark Dayton's standoff with GOP legislative leaders intensified Thursday, as he vowed to veto a $260 million tax-cut package unless there is a special session by early next week.

The DFL governor wants legislators to return to St. Paul in part to fix an error in the tax measure that would cost the state $101 million over three years.

"I'm not going to sign the tax bill with a $101 million error," Dayton told reporters, referring to a tax measure legislators approved nearly two weeks ago. "I'm not going to sign the tax bill if we don't have a special session by Monday."

The governor is also requiring GOP legislators to agree to more spending for statewide construction and road projects, along with new money to expand the Southwest Light-Rail Transit line. Additionally, Dayton wants legislators to reinstate a sales tax exemption for the Minnesota State High School League, which sends money to a scholarship program for low-income student athletes.

Republicans have rejected the call for new spending, saying they are happy to fix the tax bill and reinstate the tax break for the high school league. They say Dayton keeps changing his conditions for a special session and is exaggerating the impact of the drafting error on the tax bill.

"One thing that is vital in negotiating these final important issues is making sure we trust each other completely," House Speaker Kurt Daudt, R-Crown, wrote in a letter to Dayton. "In order for us to trust each other, we must make sure our word is good."

Dayton and House Republicans exchanged one accusatory letter after another Thursday, sending them to reporters in an increasingly public show of political gamesmanship.

Hanging in the balance is millions in tax cuts or credits for outstate residents, veterans and students with college debt, provisions that both sides have been eager to promote in a high-stakes election year when all 201 legislative seats are on the ballot.

Dayton faces a Monday deadline to decide the fate of the tax bill, putting pressure on legislators and the governor to strike a deal.

For the moment, the debate has centered on the error in the tax bill and its remedy.

House Republicans say legislative rules allow them to correct the tax error without summoning lawmakers to St. Paul for a special session. They said they would wait for the governor to take action on the tax bill before discussing a special session for statewide construction and transportation projects.

State officials said the error, which expands a tax break on pulltabs sold at bingo halls, threatens to drain money from the state's contribution to the new Minnesota Vikings stadium.

Republicans pointed to past instances in which leaders of the House and Senate clarified the meaning of statutory language with a letter of legislative intent. They said the procedure was used to correct drafting errors in the 2008 tax bill.

In a letter to Dayton, House Taxes Committee Chairman Greg Davids, R-Preston, wrote that legislators discovered an error in a state government finance bill last year and agreed to correct the mistake in the session that just ended.

Davids added that legislators agreed to permanently reinstate the high school league sales tax exemption and would separately introduce a measure to include that provision, along with correcting the tax bill error, in a special session or next year.

Matt Swenson, a spokesman for the governor, said in an e-mailed statement that the state's commissioners of revenue and Minnesota Management and Budget have made clear that the error could not be corrected with a letter. He said it could only be fixed by a legislative vote.

The governor told reporters earlier in the day that lawmakers didn't have to drag out the issue.

"It's really clear: one, two three," Dayton said. "If they're not willing to do it, they have no one to blame but themselves. We wouldn't be in this situation if they got their work done on time."

He wrote to Daudt, "It is certainly not my fault that the tax bill contained an error."

Michele Timmons, Minnesota's revisor of statutes, noted that her office is authorized to make small changes to legislation, including the correction of grammatical errors.

While the governor wants lawmakers to substitute an "and" for an "or" in the tax bill, the revision would change some of the legislation's substance. Minnesota law says that the revisor "may not alter the sense, meaning, or effect of any legislative act."

Maya Rao • 651-925-5043