Legislators, Pawlenty reach compromise budget deal
ST. PAUL - Tax breaks and a park. A balanced budget and health-care reform. More education money and improved nursing home funding.
Those are among issues Minnesota lawmakers approved during a rare Sunday session before adjourning for the year. The House ended its work at 11:44 p.m., followed four minutes later by the Senate.
The 201 legislators worked late into the night, the second time lawmakers met for business on a Sunday, following more than two weeks of intense negotiation that wrapped up early in the afternoon between Republican Gov. Tim Pawlenty and Democrats who control the Legislature.
"Minnesotans deserve tax relief and a state government that lives within its means," Pawlenty said. "This agreement delivers both."
House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said the agreement is good, given Minnesota's tough budget times.
The key session-ending bills passed with large margins late Sunday afternoon and night.
The 2008 legislative session will be remembered more about what happened in its first few weeks than its last few. Lawmakers came out of the chute at full speed, passing a 10-year $6.6 billion transportation funding package, supporting a constitutional amendment to raise the sales tax to fund outdoors and arts programs and funding state construction projects.
Late Sunday, lawmakers expanded the construction project bill, bringing it to $823 million. Sen. Keith Langseth, DFL-Glyndon, worked with legislative leaders and Pawlenty to add $117.5 million.
Lawmakers expected to pass tax, budget reduction and other remaining bills before midnight, then head home for the year.
It was not clear how many Minnesotans would benefit from property tax changes.
"This is good news for taxpayers," Rep. Paul Marquart, DFL-Dilworth said.
The agreement provides $130 million in property tax relief, Marquart said.
Legislative leaders and Pawlenty agreed to set a limit of 3.9 percent on how much cities larger than 2,500 population, counties and townships may raise property taxes each of the next three years.
Senate Property Tax Chairman Rod Skoe, DFL-Clearbrook, said the tax cap will hurt.
"It's going to put a squeeze on local governments," he said.
Cities would be allowed to increase property taxes beyond 3.9 percent to do things such as improving public safety.
The property tax cap should save taxpayers $67 million.
Part of the tax plan are provisions increasing Local Government Aid to cities $42 million in 20010-11 and upping county aid $22 million, with the theory that more state aid will help keep local property taxes low. Both are 4 percent increases.
Skoe said he would like to see still more aid sent to local governments. The Senate started with $90 million in local aid.
About 70,000 Minnesota homeowners - 5 percent of those in the state - would receive new or larger tax refunds than under an existing property tax refund program, Marquart said.
Also in the session-ending agreement was a plan to settle the state's $935 million budget deficit by a series of program cuts and use of surplus money from various funds. And $109 million to plug the budget hole will come from closing a loophole some companies with operations overseas use to skirt state tax law.
Pawlenty's rural economic development program, known as the Job Opportunity Building Zones, was tightened slightly in the tax bill. Several proposals would have eliminated or curtailed the tax-free zone program.
Veterans and military personnel will get tax breaks under the bill.
The overall budget provides a $51-per-student increase in public school funding, and allows districts to transfer some funds from building improvement reserves to the classroom.
"Education has fared well," said Sen. LeRoy Stumpf, DFL-Plummer, the top senator on early-childhood-through-grade-12 education finance.
Yet Stumpf added: "Even though we're doing this to help the school districts, the reality is that cuts are going on out there."
Nursing home workers will see a 2 percent pay increase under the budget package.
Pawlenty got funds to buy parkland along Lake Vermilion and $10.1 million for a new Minneapolis Veterans' Home facility, while Democrats won approval for a $70 passenger rail line between downtown St. Paul and downtown Minneapolis. A health-care reform package was approved.
One public works project Langseth sought but that did not get money was $1 million to begin work on a Twin Cities-to-Duluth passenger rail project.
Also failing to get money was a $3.3 million proposal to move some Mesabi Range Community and Technical College programs to campus from a location four miles away.
Rep. Tom Rukavina, DFL-Virginia, said Pawlenty rejected the Mesabi request because he was punishing House Majority Leader Tony Sertich, DFL-Chisholm, for comments he made about Pawlenty.
"I don't think students and communities should suffer because Gov. Pawlenty can't take some jabbing," Rukavina said.
A proposal to spend $6 million for a new Red Lake schools kitchen was rejected by negotiators. Pawlenty earlier vetoed a proposal to fund a new school on the American Indian reservation.
A proposal to allow Bloomington to help build parking ramps to serve a Mall of America addition was cut back. The agreement allows the city to enact a sales tax on mall sales and a lodging tax across the city to fund the ramps.
Davis and Wente work for Forum Communications Co., which owns DL Newspapers