State budget deal, though flawed, reflects Minnesota compromise

The goal set Monday in the final hour of the Legislature's regular session — enactment of 70 percent of the state's 2018-19 budget by 7 a.m. Wednesday — proved to be unrealistically ambitious. That self-imposed deadline arrived without work complete on any of the seven bills on a special session agenda set with a handshake by DFL Gov. Mark Dayton and leaders of the Legislature's Republican majority and DFL minority caucuses.

We doubt that Minnesotans will fault them for tardiness — provided that legislators and the governor set the budget into law well before Minnesotans need worry about the disruption of a government shutdown, which would ensue on July 1 if no budget has been enacted.

Legislators reconvened Wednesday afternoon to try again. That delay brought one silver lining: a few more hours of opportunity for the public to review bills that in some cases were still not available Wednesday afternoon. That lack of transparency is a bad habit that does the Legislature no credit.

When Minnesotans take a hard look, we suspect that few of them will find the bills wholly satisfactory. That's the nature of bipartisan compromise. Count the Star Tribune Editorial Board among those with qualms about the course that Monday night's deal set. But against the backdrop of the last two years of futility, Monday's deal qualifies as a breakthrough. It includes three bills that were stalled in 2015 and 2016: a tax bill that both cuts taxes and improves tax policy; a boost in funding for both roads and transit; and a $1 billion public works bill that, among other things, would help municipalities improve aging water treatment systems.

Those three measures along with more generous funding for education, human services and state agencies than Republicans originally contemplated — yet less than Dayton sought — add up to a "meet in the middle" package that we think many Minnesotans would deem fair.

Unfortunately, some of that satisfaction will be purchased with one-time money. The proposed deal contemplates a $700 million drawdown through 2021 of the special fund created to pay the state's share of MinnesotaCare. That fund is well in the black today, but its revenue source is due to dry up in 2019. Coming as the Trump administration is announcing its plan to cut Medicaid and other safety net programs, the future cost of this choice could prove high indeed.

Raiding that fund made fiscal room for tax cuts totaling $650 million over two years — $300 million more than the Editorial Board deemed affordable. The tax bill, sent to Dayton Wednesday afternoon, would offer relief to owners of farms and business property, middle-income Social Security recipients, and heirs of large estates. It includes tax credits for the repayment of student loans and for families that save for college educations.

Some of those features are forecast to take a rapidly growing bite out of state revenue in coming years. Already in 2020-21, the tax bill's drain on the state treasury will be $790 million, 21 percent more than in 2018-19. A smaller tax bill would have been prudent. So would have been an increase in the highway-dedicated gas tax and metro transit sales tax, which Republicans rejected in favor of tapping the state's general fund for transportation to the tune of an additional $300 million. When the next downturn comes, sustaining that much general fund spending for transportation could prove difficult.

That much short-term expediency is worrisome in a state budget. But if the alternative is a government shutdown — as divided government brought in 2005 and 2011 — we'll take the Monday night deal and invite Minnesotans to join us in asking the 2018 Legislature to make it better.