Impasse lives on at Capitol, as Dayton, Daudt fail to find agreement in state auditor dispute

Republican House Speaker Kurt Daudt turned down an offer Friday from DFL Gov. Mark Dayton to end a state budget standoff that has stretched past two weeks, blowing their chances to finish the Legislature's business this weekend and keeping alive the prospect of a partial state government shutdown on July 1.

At the beginning of the past week, Dayton and Daudt said they had a tentative deal to break their impasse, and by Friday, legislators were anticipating a Saturday special session. But Dayton and Daudt proved unable to settle a continued and increasingly intractable dispute over what both sides acknowledge is their sole remaining sticking point: a dispute over changes to the job responsibilities of Minnesota's elected state auditor.

While the issue is tangential to the billions in state spending that Dayton and Republicans have already agreed on, the governor has refused to call a special session until the auditor dispute is resolved. On Friday, he made public his most recent attempt to solve it, saying he would accept a plan to let Minnesota counties privately contract for financial audits rather than submitting to ones performed by the state auditor, as long as Republicans would agree to delay its planned July 2016 implementation by an additional year, to July 2017.

"I don't expect House Republicans to like this compromise any more than I do," Dayton said in a statement released by his office. "I ask them to agree to it, while not agreeing with it, to conclude the people's business."

But a short while later, Daudt said he wasn't having it.

"He's offered a solution that doesn't make any sense," said Daudt, R-Crown. "I haven't had anyone explain to me what difference that would make. It doesn't solve anything. It's a little too cute by half."

A special session is needed so legislators can approve remaining pieces of the budget and avoid a partial shutdown of state government on July 1, but only the governor can call it.

As an alternative to Dayton's offer, Daudt said that he'd let the House vote on a bill to undo recent changes to the auditor's responsibilities but that he was not willing to provide the votes necessary to ensure its passage.

"The governor himself signed this into law not two weeks ago," Daudt said.

That's true. At the end of the regular session, the auditor language was inserted into a much broader spending bill that funds a number of state agencies. The bill was approved by both the DFL-led Senate and the GOP-led House. Dayton said he signed the broader bill because a veto would have left thousands more state workers in line for temporary layoffs in the event of a partial shutdown. But he immediately made it known that repealing the auditor job changes were one of his conditions for calling a special session.

Daudt noted the approaching June 30 deadline for having new state budgets in place in order to avoid a partial shutdown that would leave some 10,000 state workers without paychecks. He also pointed out that the new budget bills include money for avian flu response and flood relief, as well as unemployment benefits for laid-off steel workers.

"I would ask him to put those people first," Daudt said. He later added: "My guess is the governor's going to come to his senses."

Daudt said after the latest falling out that he hoped to meet with Dayton and other top legislative leaders on Friday afternoon. But a Dayton spokesman said the governor had no plans to meet with legislators Friday or over the weekend.

While the prospects for a Saturday special session had evaporated by Friday afternoon, several dozen legislators on a joint House-Senate budget panel were reviewing the compromise spending bills. The biggest, the $17 billion education bill, includes 2-percent yearly increases in the state's per-pupil aid allotment, along with significant spending boosts for several early-education initiatives.

Not included is money to provide full or partial universal prekindergarten classes at Minnesota public schools. That had been Dayton's top priority, but he abandoned it in a compromise with House Republicans. The early-education programs that do get funded are school readiness grants, which get a $30.7 million boost. Early education scholarships increase by $48.2 million and Head Start will get an additional $10 million.

Patrick Condon • 651-925-5049