The threat of government shutdowns as a weapon should end, Minnesota House leaders said a Feb. 9 TwinWest Chamber of Commerce breakfast in Plymouth.

Following a state court case, a shutdown in Minnesota could have dire ramifications, the leaders warned.

The Minnesota Supreme Court’s ruling in a dispute between Gov. Mark Dayton and Republican leaders of the Minnesota Legislature makes clear that the judicial branch cannot appropriate money – even for vital needs, said Speaker of the House Kurt Daudt (R-Crown).

The ruling states that the Minnesota Constitution is unambiguous when it uses the language, “No money shall be paid out of the treasury of this state except in pursuance of an appropriation by law.” The ruling states that the court cannot order funding even in circumstances where constitutional rights are at stake.

Daudt said, “What that means is if there’s a shutdown in the state of Minnesota, the judicial branch can no longer step in, intervene and provide emergency core funding for core services. I don’t even know what that means if we have a shutdown. Let prisoners out? I have no idea. It would be really, really ugly. We have to deal with that issue.”

Because the Minnesota Supreme Court declined to rule whether Dayton had the authority to veto funding for the legislature, Daudt said a shutdown could be more likely in the future.

“It’s almost more likely you could end up in a shutdown scenario because the legislature’s probably not going to send a budget or a bill to fund the executive branch to the governor unless the governor has signed a bill funding the legislative branch,” Daudt said. “You need more time now at the end of session to get things done, and it’s probably less likely that we’ll get everything accomplished by that deadline.”

He suggested a system in which the government would continue to spend money at the same level if legislators and the governor fail to reach an agreement on a budget.

“I’m not sure exactly how to handle it, but we’ve got to do it together,” Daudt said.

While the legislature can effectively shut down the executive branch by refusing to fund it, the ruling essentially means that the governor can also shut down the legislative branch, said House Minority Leader Melissa Hortman (DFL-Brooklyn Park).

“That weapon can be aimed at either branch of government,” Hortman said. “I think it’s time for us all to say we’re going to take that weapon off the table. I’m really heartened by the speaker’s comments on the issue.”

She said she has spoken with Senate Majority Leader Paul Gazelka, (R-Nisswa), on the issue.

“I think there is a lot of agreement that we can’t use brinkmanship as a way to force deals at the end of the day because the people who pay the price when that doesn’t work out are innocent state employees in the executive branch or innocent state employees in the legislative branch,” Hortman said. “We should never use someone’s job, someone’s ability to pay their mortgage and buy groceries, as a bargaining chip in a budget negotiation.”

Senate Minority Leader Tom Bakk took issue with the idea of a continuing resolution that would prevent a government shutdown.

“I think that’s a very bad idea,” Bakk said. “My history around the legislature and negotiating end-of-session deals are people don’t really get down and cut bait until they’re out of time. That’s what it takes. You have to have a deadline. Otherwise, people just don’t get serious about putting their final cards on the table.”

Bakk warned that legislators would continue meeting later in the year if a hard deadline did not exist.

“It will be much harder to find people who have real careers and real jobs and a real pulse on what’s going on in your community when it’s a year-around job,” Bakk warned, adding that finding people who would commit to run for office would be difficult except for “those people who can’t find another job.”

But Daudt pointed out that Minnesota’s 2011 partial shutdown reportedly became the longest state government shutdown in U.S. history.

“I don’t think it was fun for anybody,” Daudt said.

He suggested that a system that funded state government at a lower amount than full funding if state leaders cannot reach a deal in a given session could provide an incentive to continue negotiations.

“We can’t go to a situation where it’s all of a sudden zero,” Daudt said. “What Sen. Bakk said is exactly the sort of brinkmanship that Rep. Hortman is talking about. I agree we need to take that gun off the table, if you want to use that terminology. It isn’t a good way to operate our government.”

Responding to Daudt’s suggestion, Hortman said the state could create a system in which a projected deficit would lead to across-the-board cuts for most parts of government while a projected surplus would lead to increases for health and human services and education. Such a system would lead conservatives and liberals to both have an incentive to make a deal, she said.

“You have to have a formula that treats certain things differently but that has everybody at the table because nobody wants the default,” Hortman said.

Despite being from different parties, she and Daudt voiced agreement with each other several times during the panel discussion. They posed for a selfie near the end of the event.

For his part, Bakk said negotiating deals in public is difficult, although he said that he, Daudt and former Speaker of the House Paul Thissen had reached deals in a timely manner in the past.

“I think for the most part, the place still works pretty well, but it’s bumpy,” Bakk said of the legislature. “It’s bumpy because it has to play out in the press every single day and on the news every single night.”

Federal tax bill prompts discussion

Legislators also said they will have to consider changes to the state’s tax policy as a result of the federal tax bill.

Making state tax law conform with the federal system would make filing taxes easier, but it would increase taxes by an estimated $850 million in the current two-year budget period, according to the Minnesota Department of Revenue. In the next period, the change would amount to an estimated increase in taxes of $1.5 billion.

“No, we don’t want to collect that revenue,” Daudt said. “What that means is people are going to get a huge tax increase. We don’t want to see that. We want to make sure that Minnesotans have the opportunity to really benefit from the federal bill that was passed.”

He added, “I think anything and everything is on the table, but I think we really need to work together. I really do see this as an issue we can work together in a bipartisan way.”

Bakk said, “I agree with the speaker. It will be a bipartisan issue.”

Experts recommend that the state conform its tax code to the federal system, Bakk said.

“If we don’t, your federal tax bill might fit on a postcard, but your Minnesota one is going to be the size of a phone book,” he said.

He agreed with Daudt that the state’s tax code affects human behavior. He cited incentives for charitable contributions, mortgages, historic building renovations and research and development.

“Raising $800 million by doing conformity is going to create a huge opportunity for us in Minnesota for us to be able to make decisions to try and drive behavior to continue to improve the quality of life and economy of our state,” said Bakk, who called the issue a “tremendous opportunity” as well as a challenge.

Sen. Michelle Benson, deputy majority leader of the Minnesota Senate, said she prepared taxes for two years as a certified public accountant.

“It was hard then,” Benson said. “It’s going to be impossible if we don’t conform.”

Legislators should look for ways to be competitive regionally and internationally, she said.

“Think about who your competition is and what their tax structure looks like and how you attract more of the talent you need to grow your business,” Benson advised business leaders.

She called the discussion “an opportunity for generational change in Minnesota’s economy.”

Bonding bill

Panelists also weighed in on Dayton’s proposal for a $1.5 billion bonding bill that would focus on deferred maintenance and infrastructure.

Republicans and DFLers on the panel all agreed that the state needs to focus on its core infrastructure in the bonding bill, which will likely come in at a lower final cost than the governor proposed.

Bakk suggested a separate bill for maintenance projects.

“Let’s take the politics out,” he said. “The problem is it always falls to the back of the line when legislators have bills for new, shiny, little things in their districts, and we’ve been falling further and further and further behind. Unless we break it out in a bill of its own it’s going to fall behind again this year.”

In addition to maintenance projects, Benson said the state must focus on health care, which she called “a present and accelerating crisis.”

Young children have had to wait in emergency rooms because not enough mental health crisis beds are available, she said. Veterans also need better access to mental health services, Benson added.

Daudt said, “That has been a growing issue, and it’s driving a lot of our cost increases in different areas because we’re not dealing with those problems early enough.”

The emergency room is the most expensive and least effective place to treat people who need mental health services, Daudt said.

“If there’s some investment we can make with bonding dollars to increase beds for mental health, I think that would be a great investment,” he said.

He also expressed support for transportation projects in the bonding bill. Hortman named higher education and a bridge in St. Paul as priorities.

On a separate issue, Hortman said the legislature must deal with the issue of sexual harassment. Policies must protect members, staff, the lobbying community and media professionals, she said. State leaders should gather ideas from human resources professionals and attorneys who have worked on policies that reduce the incidence of sexual harassment in professional workplaces in Minnesota, she said.

Hortman said, “I think it’s very important that we all bend over backward to not make it a partisan issue because it’s too important.”

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