Dayton Floats Smaller Tax Hike; GOP Not Interested

ST. PAUL, Minn. (AP) -- Gov. Mark Dayton opened budget talks Monday by shrinking his proposal for new taxes, an offer immediately rejected by tax-averse Republican lawmakers, with a week left in the session.

The latest moves showed the deep differences between the first-term Democratic governor and a Legislature newly under GOP control, where majorities adamantly oppose tax increases. The standoff over taxes and the level of spending raises the chances of a special session and potential state government shutdown starting in July.

Dayton said he won't consider signing budget bills until he has a deal for $1.8 billion in new revenue.

Republicans have vowed to erase a $5 billion budget shortfall solely by reducing spending.

"I'm not going to agree to that," Dayton said at a news conference. "I've offered to meet them halfway and I'm not going to do any more than that. It's their responsibility to meet me halfway."

In his latest offer, Dayton dropped a proposed new property tax on $1 million-plus homes and raised the threshold for a new top income tax tier to more than $300,000 for couples and about $180,000 for individuals. With both sides planning to continue a $1.4 billion payment delay for public schools, the governor said his tax plan would cover half the remaining deficit. The rest would come from spending cuts he wants to negotiate with legislators.

Dayton also agreed to a Senate plan to increase K-12 school funding by $50 per pupil for each of the next two years. He said that would require an additional $128 million in spending cuts from other areas of the budget.

House Speaker Kurt Zellers and Senate Majority Leader Amy Koch emerged from a 40-minute meeting with Dayton looking somber. Later, they held a news conference flanked by more than 50 GOP colleagues in a show of unity against tax increases and additional revenue.

"When it comes to holding the line on taxes and spending, we cannot compromise," said Koch, R-Buffalo.

Asked whether the GOP caucuses would stick together if the session goes into overtime, possibly forcing a shutdown, Zellers said: "You don't see any weak knees in the room."

Others nodded. Koch said the GOP majorities elected last year were "historic." Republicans took over the state Senate for the first time in 38 years, since before modern party labels were used. They also flipped the House after four years in the minority.

The legislative leaders are eager for Dayton to weigh in on a slate of budget bills they have been finalizing since last week. Koch held out hope that the governor could agree to pieces of the budget, possibly the K-12 package, which accounts for about two-fifths of the general fund budget. She and Zellers said they will pass a full set of budget bills by the May 23 adjournment deadline.

The GOP caucuses posted figures Monday showing that legislative spending in the next two-year budget period would total $34 billion, an amount they say the state can live with. A February budget forecast showed state spending climbing to $39 billion if no changes were adopted. Dayton is seeking to spend about $37 billion.

Dayton rejected the idea of signing individual areas of the budget into law, even though he signed a small budget for farm programs into law last month after a bipartisan compromise. He said Monday he won't support any more budget bills without an overall agreement.

The governor said the new income taxes would affect less than 2 percent of Minnesota residents. He said taxing the wealthy is better than the GOP's "draconian all-cuts budget," which he said would throw people off subsidized health care and disability services and strain the state's public colleges and universities.

"I just don't think Minnesotans want to do that to their fellow citizens, and good for Minnesotans. We're better than that," Dayton said.

House Minority Leader Paul Thissen and Senate Minority Leader Tom Bakk predicted that Dayton's latest proposal would get "near-unanimous" support from Democratic legislative minorities if put to a vote. Zellers said the bills don't have the votes to pass either chamber.

Zellers and Koch are scheduled to meet Dayton over breakfast on Tuesday.

Meanwhile, action at the Capitol on Monday focused on anything but the budget. The Senate approved two bills with new abortion restrictions even though both face near-certain vetoes from the governor, who supports abortion rights. The House debated issues including political contribution refunds.

Hundreds of protesters opposed to a statewide vote banning gay marriage milled outside the House chamber, the next front for a constitutional amendment that cleared the Senate last week.

Dayton also met with Ramsey County commissioners to discuss a proposal to build a new Vikings stadium in Arden Hills.

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