Legislature races to finish spending deals, transportation before Sunday night finish

Legislative leaders and DFL Gov. Mark Dayton failed to broker an agreement on the largest issues of the session Saturday with only a day before the adjournment deadline.

"I think it's getting awful close" to the deadline, Senate Majority Leader Tom Bakk said between closed-door negotiating sessions.

The legislative session began 11 weeks ago to resolve a relatively small set of issues — including transportation, how to use a $900 million budget surplus and a major package of public works projects — but even those modest goals had yet to be accomplished.

Major legislation on tax cuts, spending on Dayton's key priorities and borrowing for a suite of public works projects had yet to pass either the GOP-controlled House or DFL-controlled Senate in final form Saturday evening, although negotiators had tentative agreements on taxes and some contentious spending items.

The stakes of the race to the finish were heightened by the looming November election, when voters will choose the next 201 legislators in a volatile year.

Bakk, DFL-Cook, said Saturday that negotiators have agreements on contentious issues like spending on rural broadband Internet development, prekindergarten funding and programs to close the wide economic gap between whites and people of color.

As of Saturday evening, the two sides had no agreement on the size or makeup of the public works package, which is a staple of Minnesota government in legislative sessions when no budget is in play.

There was also no agreement on a transportation package. Even as the House GOP, Senate DFL and Dayton all agreed the state needs to spend $6 billion during the next 10 years to maintain and upgrade the state's roads and bridges, they could not agree where to find the money or how to pay for mass transit upgrades in the metro area.

Senate Transportation Committee chairman Scott Dibble, DFL-Minneapolis, pegged the chances for a wide-ranging transportation agreement at 40 percent. He and House Transportation Committee chairman Tim Kelly, R-Red Wing, held a brief conference committee meeting to discuss a possible compromise package, but as of late Saturday had not gotten consent from their respective caucuses and went back to work trying to finalize a deal.

Dibble said there's also consideration in the Capitol of "doing some smallish, one-time projects and not really doing an actual meaningful transportation bill."

Complicating matters, House and Senate negotiators could not agree on a bill to bring the state into compliance with the federal Real ID law. The key sticking point: House language that would prevent undocumented immigrants from getting driver's licenses.

House Speaker Kurt Daudt, R-Crown, made no public comments as of Saturday afternoon as he shuttled between negotiations and his caucus.

Dayton, whose staffers were engaged in the negotiations, was taking a wait-and-see approach after insisting Friday evening that without his spending priorities, he will veto the package of tax cuts agreed to by legislative negotiators.

Bakk said lawmakers have agreed to spend more than $300 million this year on priorities laid out by Dayton.

If a tax-and-spending deal comes together, it would end a conflict that began early last year over how to use the state budget surplus. The House GOP and Senate DFL ended last year's session with a stalemate on that question as well as on a long-term transportation package, setting aside those debates until this year.

Now, those questions are again being resolved during the legislative session's final hours.

Bakk said budget negotiators agreed the state will spend $35 million on rural broadband Internet development; $35 million on closing economic disparities for people of color with another $17.5 million every year going forward; and $25 million on prekindergarten access, with $55 million every year thereafter to help disadvantaged children get ready for school.

Dayton had been seeking $100 million in broadband funding and $100 million in spending on racial disparities, but House GOP lawmakers are keen on reining in the size of government.

The tax cut package agreed to by negotiators Friday includes breaks for farmers, working parents, veterans, student loan debtors and business property owners. It will cost $259 million this year and about $544 million in the next two-year budget cycle.

Bakk also said he presented two transportation offers to Daudt to take up with his caucus.

The first was a one-year deal only, providing $300 million for roads and bridges, plus another $300 million in borrowing. There would be no money for transit.

This was unlikely to meet the requirements of Dayton, who has said he wanted $600 million per year, dedicated funding and money for transit.

The second offer would include $300 million this year, plus possibly allowing voters to adopt a constitutional amendment to dedicate certain tax proceeds — like on auto parts — to roads and bridges. The plan would also impose a half-cent sales tax on metro counties for transit, though the counties would enact the tax, not the Legislature.

If all seven metro counties were to raise the sales tax a half-cent, the increase would raise $280 million in new revenue for light rail, buses and other transit.

The Legislature did make progress on two fronts. The Minnesota House late Friday unanimously approved a compromise bill that would overhaul state drug laws, prioritizing crackdowns on "kingpin" drug dealers and helping addicts seek treatment. Lawmakers also sent Dayton a bill that would establish a presidential primary system.

Staff writers Ricardo Lopez and Maya Rao contributed to this report.