Gov. Mark Dayton takes issue with Minnesota legislators' budget plan

Minnesota House and Senate leaders said late Friday that they had struck a tentative spending deal that would allow them to finish the legislative session on time, but Gov. Mark Dayton had not yet signed off on the agreement, which does not deliver the money necessary for his top priority of universal public prekindergarten.

"We feel like we're there, and we're happy about that," GOP House Speaker Kurt Daudt said in a joint news conference with DFL Senate Majority Leader Tom Bakk, standing in front of the governor's residence in St. Paul after a long day of negotiations.

"We are going home before midnight on Monday," Bakk said, adding that he and Daudt "are as close as we can possibly be to having an agreement." Monday at midnight is the constitutional deadline to adjourn and avoid a special session.

But late Friday, Dayton said he intends to stand firm on his demands. "Either they refuse to fund E-12 education at [an additional] $550 million in the next fiscal year or they can come back in the special session to do so," he said.

Dayton said that he was in education funding discussions with Bakk and Daudt until about 4 p.m., when they asked to negotiate in private. Two hours later, there still wasn't a resolution, so he declined to join them when they met with reporters.

Dayton also wants $173 million for half-day universal prekindergarten, according to deputy chief of staff Linden Zakula.

Bakk said they were planning to review the numbers Friday night before other specifics were released. The Legislature is expected to suspend the rules to allow committees to work through the night, starting immediately.

As part of the still-forming deal, Daudt, of Crown, said House Republicans would give up their controversial plan to eliminate MinnesotaCare, a public health program for about 90,000 low-income people. Bakk had long said that eliminating the program was a "nonstarter." However, House Republicans will get what has been one of their major priorities: a spending boost of about $160 million in state funds for nursing homes.

Left by the wayside for now is the DFL plan for an expansive, gas-tax-fueled transportation bill that would have funded road, bridge and transit projects statewide and the GOP plan to cut taxes by $2 billion — a little more than the state's entire projected $1.9 billion surplus.

Bakk and Daudt said there was very little chance a deal on taxes and transportation could be produced in the session's waning days, though they did not close the door entirely. They said the focus of budget talks in recent days has been on the eight spending bills needed to operate state government for the next two years.

Daudt said that if transportation and tax cuts aren't addressed this year, "there will be a significant amount of money left in the bottom line that we can address them next session."

Dayton's top spending priority of the session has been a $348 million spending boost so that public schools statewide could offer all-day preschool for 4-year-olds, but Bakk and Daudt said that would not be delivered in the form sought by Dayton and not at the amount he has been seeking. Bakk and Daudt said that public schools would see the largest spending boost over the next two years of any state spending category, but said most of it would come via per-pupil spending.

The public schools' funding level "is not going to be as high as he wants," Bakk, of Cook, said of the governor.

Notably, Dayton did not appear with the two legislative leaders at the news conference where they announced their agreement.

Daudt and Bakk said there would likely be a very small public construction bill, though Dayton originally had proposed one with a price tag of $850 million. The legislative leaders said Dayton was likely to see at least one high-profile request fulfilled: his proposal to require some form of buffer strips around bodies of water to protect water quality.

In addition to surrendering on tax cuts, House Republicans also wanted a major spending boost on roads and bridges, though not funded by a gas tax increase, as DFLers wanted.

Instead of eliminating MinnesotaCare, Daudt said he agreed to a commission that would study its future viability and possible replacements. Republicans had argued that MNsure, the state's health insurance exchange, is making MinnesotaCare redundant. In addition, a 2 percent tax on medical providers that currently funds MinnesotaCare is set to expire in 2019.

With spending agreements coming together at the last possible minute, legislators were looking ahead to a long and bumpy weekend.

Dayton's unwillingness to sign off on the final product also leaves significant questions of whether the final deal will come together smoothly and on time.

"It's going to take some breakneck work over the next three days to get that done, but we feel like we're there," Daudt said. Of the negotiations, he said, "I think we came to a place, or are about to come to a place, everybody's going to be able to say I got a win."

Patrick Condon • 651-925-5049

Abby Simons • 651-925-5043