House Speaker Margaret Kelliher and Senate Majority Leader Larry Pogemiller emerged from the governor's office around 2 Sunday morning with the news that they still haven't reached an overall budget agreement. But Kelliher say she's optimistic that they can reach agreement even though time in the session is running out.
"We're all very optimistic at this point. We are close to that bull's eye point and we're going to work hard at this," she said.
Neither Kelliher nor Pogemiller would offer any specifics on what was holding up budget discussions. The discussions center on an estimated $35 billion two-year budget. Lawmakers have said that the size of the budget and how the money will be spent are major sticking points.
Another issue has been whether to tighten taxation on companies that shelter income through foreign subsidiaries. Gov. Pawlenty's spokesman, Brian McClung, was also optimistic that an agreement will be reached on Sunday.
"The outline of an agreement is coming into focus but there are a number of outstanding issues that need to be settled and it's too early to predict the outcome at this point," he said.
It could be a mad dash for lawmakers to finish their work on time if a budget agreement is reached. Both the House and Senate would have to pass six tax and spending bills that focus on everything from school funding to nursing homes to state agencies. That's on top of taking the time to process the bills and have the attorneys double check the language.
"I wanted Monday to be a ceremonial day and it apparently won't be ceremonial, said Sen. Pogemiller. "Hopefully we'll be passing legislation."
The House and Senate did pass some legislation while closed-door budget talks continued. The House passed a proposed constitutional amendment that would ask the voters whether to raise the state sales tax and dedicate the proceeds for environmental causes and the arts.
DFL House Majority Leader Tony Sertich of Chisholm said the proposal would establish long-term, permanent funding for programs that have been neglected in past budgets.
"When there's new revenue, if we can get new revenue, it goes to other areas. Our water, our habitat, our heritage needs this funding," Sertich said.
The proposal differs from a Senate plan that passed earlier this session. If the House and Senate can reach a compromise and pass it again, a question would go on the 2008 ballot asking voters if they want to increase the sales tax three eighths of 1 percent for the environment and cultural programs. The tax is expected to raise about $290 million a year.
Several Republicans, including Tom Hackbarth of Cedar, worried that voters would not support a new tax to fund the arts.
"They'll have turned it down because it is a huge tax increase. A tax increase that they will see everyday when they go to the store to fund the arts," he said.
Another bill that provides $2 million in flood relief for Browns Valley is on its way to Gov. Pawlenty.
House Republicans were also unsuccessful in their attempts to advance a transportation package that does not include a gas tax increase. Republican House Minority Leader Marty Seifert offered the proposal because he said there was no chance of overriding Governor Pawlenty's veto of a bill that includes a gas tax increase and other revenue raisers.
"We have two days left in session members and people are interested in a compromise," Seifert said. "This is a compromise that the governor would be interested in signing. This is a compromise that would get money out to your districts."
DFL leaders may still try to override Pawlenty's veto of the transportation bill.