Last night of session brings confusion at Minnesota Capitol, uncertainty over schools funding

Minnesota legislators came to a messy finish Monday at midnight, scrambling to finalize decisions about tens of billions of taxpayer dollars amid uncertainty about the likely political fallout if Gov. Mark Dayton lives up to his threat to veto $17 billion in education spending.

The GOP-led House adjourned just before midnight, after muscling through a jobs bill over shouted objections from DFLers who said they had not even been allowed to read the bill. The Senate passed a $107 million bonding bill at 12:02, too late for the House to act on it.

Both the GOP-led House and DFL-controlled Senate passed the education budget bill over Dayton's repeated warnings that it shorted funds for his top priority — expansion of prekindergarten classes for 4-year-olds at public schools.

"I say this very respectfully to the governor: You've had five months to build the support and gain the votes in the Legislature for his number one priority, and unfortunately it didn't pass either body," GOP House Speaker Kurt Daudt said. "That's not my problem."

Still, Daudt acknowledged he had been working as late as 11:30 p.m. to strike a last-minute education spending compromise and head off a veto. He acknowledged the likelihood of a special session and said he hoped Dayton would call it quickly.

Dayton kept a low profile Monday as lawmakers worked to finish up. But that was only after a series of weekend news conferences where he blasted Republicans for not supporting the roughly $170 million he is seeking to allow elementary schools to offer half-day prekindergarten.

The closing hours of the session were confusing and full of uncertainty over how it would finish, with an ironclad midnight deadline to adjourn.

When Republicans suggested that Democrats were trying to slow House debate, Rep. Ryan Winkler, DFL-Golden Valley, said "You're already free-falling to the concrete for getting this thing done on time."

Tensions were running high in both bodies over the knowledge that a veto of the education bill — one of the two biggest appropriations bills in the state budget — would make a special session all but definite. When such a session might start was not immediately apparent. Only the governor can convene a special session. The next regular session is set for March 8, 2016.

"I feel pretty good about where we're at," Senate Majority Leader Tom Bakk, DFL-Cook, told reporters earlier on Monday, despite ending the regular session with no deal on significant tax cuts or a major transportation spending package funded by a new gas tax, which were the main priorities respectively of House Republicans and Senate Democrats.

"Transportation was supposed to be the issue of this session, and this is where we are," said House Minority Leader Paul Thissen, DFL-Minneapolis, minutes before the House passed a vastly scaled-back transportation funding bill that even its backers described as a "lights on" approach.

Still up in the air was the fate of the bonding bill, which includes a $30 million pot for ongoing Capitol renovation. Because the House adjourned without taking it up, the bonding bill may have to wait for a special session if one is called.

Bakk stressed in recent days that he personally supports Dayton's prekindergarten funding request but could not get House Republicans on board. By late Monday, Bakk seemed to consider a special session inevitable. "The governor's going to do what the governor's going to do," he said. His main request was that Dayton not call it immediately.

"People need to go home and recharge and let some of the emotion out," Bakk said. But as more days pass without definitive resolution to the next two years of education funding, political pressure is likely to rise. The administration has warned that the Department of Education would have to shut down on July 1, other state educational institutions would also be shuttered, and teachers could start getting layoff notices.

The Capitol renovation project has made holding a special session inside the building most likely impossible. While Dayton on Sunday suggested a special session could be held in a tent on the Capitol lawn, on Monday the possibility of tonier digs surfaced: The St. Paul Hotel issued a news release offering its premises as a possibility.

Also unclear was whether $25 billion in spending spelled out in the remaining half-dozen budget bills, many of which are also threaded with policy changes, would pass muster with Dayton.

The governor has three days to accept or reject budget bills, and Dayton's staff plans to comb through them, looking for possible red flags.

A budget bill funding state agency operations drew the ire of DFL State Auditor Rebecca Otto, as it would allow counties to hire private firms to audit their finances rather than review by Otto's office.

"This is why this work should not be done in the middle of the night," Otto said.

Other DFL-aligned interest groups called for vetoes of several of the budget bills, including one that funds agricultural and environmental programs, and another for the courts and public safety.

Dayton's staff said he hasn't yet zeroed in on details of the other budget bills so far, saving his focus in recent days for the education spending dispute. Despite numerous warning shots from their fellow Democrat in the governor's office, Senate DFLers mostly lined up behind the education bill, which increases state spending on schools by $400 million over the next two years. Much of that increase goes directly to yearly state aid increases to schools of 1.5 percent next year and 2 percent the following year.

In a heated exchange at 2 a.m. Monday on the same bill, Rep. Ann Lenczewski, DFL-Bloomington, said during the House debate that it contained $30.5 million in tax increases.

Rep. Jenifer Loon, R-Eden Prairie, said they included a delay of a sales tax exemption as well as the disallowance of a working family credit by Wisconsin residents who worked in Minnesota, and came at the request Senate and House leadership. The House passed the E-12 bill 71-59 just before 5 a.m., with House DFLers lining up behind Dayton and voting against it. The Senate passed it by 52-14 a few hours later, with just a few DFLers and Republicans peeling off.

The final education bill did not include changes to seniority-based school hiring, which had been a major priority for House Republicans.

While the prospect of Dayton's next steps hung over the final-night festivities, state Rep. Nick Zerwas, R-Elk River, said both political parties accomplished enough to call the session a success.

"I think there's enough for both parties to feel like they didn't get everything they wanted, and they got some of the stuff they wanted," Zerwas said. "To me that's balanced government, that's compromise."

Staff writer Abby Simons contributed to this report.