With the state sliding into an economic slump and budget troubles looming, the Minnesota Legislature will be gaveled into session on Tuesday for what is sure to be a fractious few months.
A governor riding high in the polls and with a rising national profile based on his long-standing opposition to tax increases will square off against a DFL-dominated Legislature determined to raise revenue for public investments they say the state badly needs.
The struggle will determine whether Minnesotans see increases in gas taxes, license tab fees and sales taxes, along with improvements for roads, bridges and transit, plus job stimulus, health care and other programs.
Much could depend on the strength of a thin red line in the state House of Representatives -- the outnumbered band of 48 Republicans that gave Gov. Tim Pawlenty the upper hand last year by sustaining every one of his vetoes.
Unlike the veto-proof majority in the Senate, House DFLers still need to persuade at least a handful of Republicans to break ranks with Pawlenty to help them enact any tax increase over the governor's objections.
House Minority Leader Marty Seifert, R-Marshall, says that's not going to happen.
What really needs protecting this session, Seifert said, is Minnesotans' wallets.
House Majority Leader Tony Sertich, DFL-Chisholm, said his party has a sharper message this year and a zeal not only for making headway on their issues, but also for blocking the kinds of cuts Republicans have resorted to in previous budget crises.
"We want to cooperate, but we won't get rolled," Sertich said. "There are certain things we want to see happen this year, critical investments that need to be made."
Compromise elusive
Front and center on the agenda is a bonding, or borrowing, bill that everyone agrees will be close to $1 billion. But that's where agreement ends. Republicans want at least $400 million of the capital spending devoted to roads and bridges -- exactly the type of projects DFLers say should be paid for with a gas tax hike and other increased transportation revenues.
Combine that dispute with the need to resolve a $373 million projected budget shortfall that could rise dramatically as the economy falters, and the stage is set for conflict.
"This could get ugly," said Senate Taxes Chairman Tom Bakk. "We could be looking at a very tough economic situation. Real cuts are going to get made and they will cause very real pain."
If the debate over tax increases gets too acrimonious, it could poison months of behind-the-scenes efforts between Pawlenty and members of both parties on two issues he hopes can cement a legacy as a change agent: health care reform and renewable energy.
"We're approaching things from the perspective of trying to work things out," said Brian McClung, Pawlenty's spokesman.
Since December, Pawlenty has quietly invited legislators of all ranks to informal gatherings at the governor's residence and private chats in his office, using his persuasive powers to broker agreements on energy and health care that won't jeopardize his conservative bona fides on taxes.
To that end, McClung has declared any tax increase "dead on arrival" unless accompanied by corresponding revenue cuts elsewhere.
In other words, a modest gas tax increase might be possible if legislators were willing to cut the rest of the budget by a similar amount.
Even some Republicans call that an illusory compromise.
"In a year where there's a shortfall, how do you reduce general-fund dollars?" said Rep. Ron Erhardt, R-Edina, who supports a gas tax increase. "That's not a very practical idea. We need road money and every time we go away from here without a transportation bill, more people get beat up in their hometowns. I think pretty soon, people will have to figure out they represent their districts rather than guess who?"
Sensing different moods
McClung said Pawlenty is already bringing the fiscal hammer down on state agencies, telling them to look for places to trim costs, especially in health care and welfare, favorite cost-cutting targets of Pawlenty's.
But Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said that Minnesotans have tired of that strategy and that public sentiment now favors the Democrats' message of higher investments made possible by tax increases.
"People get this connection between increased revenues and better roads, better schools, better health care," she said. The safety net, she said, "is an important part of the economic recovery. When working Minnesotans are struggling to keep health care, they don't need to worry about whether they can take their child to the doctor."
Seifert remains certain that DFLers will overreach and that their higher taxes message will backfire.
"Democrats are playing into the stereotype of tax-and-spend liberals whose first solution to anything is to jack up taxes on ordinary working people," Seifert said. "Their first two bills are going to be large, regressive tax increases on the working class. Incomes are tight. Larding in more regressive tax increases is not what they're asking for."
In addition to a transportation bill, the House expects, as its first bill, to bring forward a constitutional ballot measure that would increase the sales tax by 3/8 of one cent for clean water, conservation and the arts. It would generate $276 million a year, including $91 million for clean water and $54 million for the arts.
Picking off strays
Rep. Michael Beard, R-Shakopee, said that Republicans are in potentially vulnerable spot this year. He acknowledges that pressure to funnel more money to roads and bridges has been building across the state.
"The DFL knows us pretty well," he said. "They're going to try to pick us off, one by one. But we know that, to the extent we stay with the governor, we'll have some ability to slow the freight train down and exert some influence."
That influence is already producing results, in the form of discussions to shrink the transportation bill, with a scaled-back, phased-in hike in the gas tax and license tab fees.
Should that version surface, Beard said, "I couldn't predict that we would uphold a veto of that kind of bill. That's when a fissure might appear."
Patricia Lopez 651-222-1288
