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Deal reached on budget "framework"

After two weeks of state government shutdown, Gov. Mark Dayton and Republican legislative leaders agreed July 14 on a “framework” for a temporary solution to the state budget shortfall.

The agreement is based on the GOP’s final offer to Dayton on June 30, but with several important conditions added by the governor. It plugs the remaining $1.4 billion difference between the two sides with $1.4 billion in one-time revenue obtained by borrowing more money from schools and issuing tobacco bonds.

“School children should not be forced to pay for adult problems,” Education Minnesota President Tom Dooher said. “But that is exactly what happened in the deal to end the shutdown. It’s an incredibly short-sighted, irresponsible approach to school funding and the damage will last for many years.” Dayton said he agreed to the plan because it was the best he could do when legislative leaders refused any reasonable compromise.

The deal calls for no new taxes and none of the education “reform” and social issues the GOP had previously sought. The framework includes:

• An additional $700 million shift in state K-12 education aid, on top of the $1 billion-plus already shifted
• $700 million from issuance of bonds in anticipation of future tobacco settlement revenue
• A $128 million formula increase to cover school districts’ additional borrowing costs
• Additional conditions requested by Dayton as of July 14:
  • Removal of all previous GOP policy demands
  • Removal of the GOP proposal to arbitrarily cut 15 percent of the state workforce
  • Passage of a bonding bill of at least $500 million to put people back to work

Details must now be worked out in negotiations between department commissioners and legislative committee chairs before the governor will call a special session to pass the budget bills and end the shutdown.

Dayton made the move July 14 that ended the budget stalemate. He announced he was reluctantly agreeing to the GOP offer, despite serious misgivings, because “continuing the state government shutdown would be even more destructive for too many Minnesotans.”

With the revenue derived from borrowing and shifts, the agreement also preserves many services that would have been slashed in the Republicans’ all-cuts budget proposal.

July 15, 2011