Veto threat by Gov. Mark Dayton hangs over legislative session's final bills

Minnesota lawmakers adjourned late Sunday after finalizing a handful of tax and spending measures, but with little chance they'd have much to show for three months of work as Gov. Mark Dayton vowed to veto most of their major efforts.

"Every year it's a little bit different," Senate Majority Leader Paul Gazelka, R-Nisswa, said Sunday night. "It's a little bit messy."

Caught up in the tense political fight between the DFL governor and Republican legislative leaders were changes to the state's tax code, including an income-tax cut; new protections for nursing home residents; money for school districts facing budget shortfalls; money to combat the opioid epidemic; and a public works bonding bill to help pay for statewide infrastructure upgrades.

Sunday was the last day lawmakers could approve legislation, and the House and Senate met on and off in floor sessions to finalize those and other pieces of legislation. A few hours after midnight Sunday, they sent Dayton a nearly 1,000-page spending and policy "omnibus" bill; the governor reiterated Sunday night that he plans to veto it, along with the tax bill.

"It's all about themselves and their own re-election, and it is disgusting," Dayton said Sunday night. He accused Republicans of kowtowing to corporate interest groups at the expense of broader aims, called the session a "debacle," and said Republicans were "beholden to special interests."

Because Dayton has 14 days in which to act on the bills headed to his desk, the final outcome will stay cloudy as the governor considers his options. But he repeated vows to veto the tax bill and the hefty spending and policy bill, which together comprise much of the major work product of lawmakers in Dayton's final legislative session.

And while Dayton won't face voters again, all 134 state House seats are on the ballot in November — creating high political stakes for many of the major players.

GOP leaders said they hoped Dayton would reconsider his promised vetoes.

"There are so many good provisions" in the omnibus bill, said House Speaker Kurt Daudt, R-Crown. "At the end of the day, I believe the governor will sign that bill."

Republican lawmakers said they were particularly concerned about the fate of a bill that brings Minnesota's tax code in line with changes to federal policy. The bill was meant to make filing taxes simpler next year while heading off unfavorable consequences if the state and federal codes are in conflict. The measure also includes the income tax reductions.

"If we don't do this — if we don't pass a tax bill — taxes are going to go up on Minnesotans," said House Majority Leader Joyce Peppin, R-Rogers.

Senate Minority Leader Tom Bakk, DFL-Cook, reiterated criticism from Dayton that the GOP-crafted plan was too favorable to big business.

"This bill is a huge giveaway to huge corporations that are making huge profits in this state and don't want to be taxed on them," Bakk said. "That's shameful. Shameful."

The tax measure's fate became entwined with a request from the governor to dedicate $138 million in emergency funding to school districts struggling with budget shortfalls. After Dayton vetoed a first tax bill last week, Republicans repassed it Sunday with a handful of DFL votes in the House — and included some new money for schools and redirected money from other funds.

Rep. Jenifer Loon, R-Eden Prairie, the school finance chief in the House, begged Dayton in a floor speech to reconsider.

"I say this sincerely, governor, and I hope you're listening," Loon said. "We have listened. We want this to work. We want this to be possible for our schools. Let's all swallow our pride over what we had to have, and thumped our chests over, and recognize that we've all come a long ways toward meeting in the middle."

Among their last votes, lawmakers approved a major infrastructure spending package that showers borrowed money on public works projects. On Sunday, Republicans agreed on a compromise package of projects that included $79 million for the University of Minnesota and $129 million for Minnesota State; and more than $500 million for the Department of Transportation, among dozens of other projects large and small, from the school safety grants and veterans homes to a 50-meter pool for the city of New Hope. It includes $25 million for school safety measures in response to recent mass shootings.

DFL Rep. Alice Hausman of St. Paul spoke out in favor of the bonding bill: "You are voting for a huge amount of infrastructure all over the state," she said.

Most DFL senators were not satisfied: "It's inadequate for the needs of the state," said Sen. Sandra Pappas, DFL-St. Paul.

Although the bill's total spending was $1.57 billion, $400 million of the transportation spending would be delayed until 2022-2024.

Minnesota Management and Budget Commissioner Myron Frans, who was deeply involved in negotiations with legislative leaders as Dayton's budget chief, called the bonding measure a "disappointment" and a "missed opportunity," critiquing the amount of spending and the choice of projects. Still, Dayton refrained from threatening to veto it.

Many lawmakers expressed frustration with different priorities that appeared likely to go unaddressed this year.

"I'll go back to my district and say I fought really hard to push back against special interests that kept us from making progress in protecting our vulnerable adults and tackling the opioid epidemic by asking the drug manufacturers to pay their fair share," said Rep. Liz Olson, DFL-Duluth.

But she was hopeful for a bonding bill, and a measure to shore up unfunded pension liabilities, both of which did pass in the session's final minutes.

"Four minutes to spare," Bakk said as the Senate adjourned at 11:56 p.m.

House Republicans failed late Sunday to override a bill Dayton vetoed about 24 hours earlier that would have dedicated $9 million to vehicle and driver's licensing offices that have faced nearly a year of glitches because of the state's shift to a new software system.

After a few lawmakers held a news conference urging their colleagues to vote to override the governor, Dayton fired off a letter in which he said he would not approve the requested funding, unless the Legislature also approved another nearly $33 million to help fix the troubled software system.

Rep. Jim Nash, R-Waconia, still hoped that the governor would support the other bills making their way through the final hours.

"If he's trying to put together a legacy, he's got to recognize some of his legacy is in these bills," Nash said.

Erin Golden • 612-673-4790

Jessie Van Berkel • 651-925-5044

J. Patrick Coolican • 651-925-5042