For Gov.-elect Mark Dayton, now comes the hard part

Now comes the hard part for Mark Dayton.

When he takes office next month as Minnesota's governor, Dayton will inherit a $6.2 billion state budget deficit, a 7 percent unemployment rate and concerns that Minnesota's schools are underfunded.

Both the House and Senate will be controlled by Republicans for the first time since 1972. That won't make things easy for the first Democrat to be elected governor in the state since 1986, and Dayton knows it.

After Republican Tom Emmer conceded the race on Tuesday, Gov.-elect Dayton acknowledged he faces serious challenges.

"It's a momentous day for me and it's also the first day of now this undertaking that will be even more challenging than the last two years of the campaign," he said.

Dayton said he plans to announce key hires for his administration in the coming days, promising to first name a chief of staff within 48 hours. When asked if the recount made it hard to assemble his administration, he simply said "No excuses. We'll be ready."

As he claimed victory at a state Capitol news conference Dayton stressed cooperation. He said voters will punish both him and lawmakers if they fail to fix the state's budget problems. He said the end result of political campaigning is to have the opportunity to improve the lives of the state's citizens.

"The reason that the taxpayers are paying our salaries to be in this building is to make decisions that are going to improve the quality of their lives," he said. "And that's how we'll all be judged properly."

Dayton said he'll continue to push to make taxes fair in Minnesota. During the campaign, he called for an income tax increase on Minnesota's top earners to help balance the state's budget. That will set up a showdown with Republicans who now control the Legislature.

Incoming House Speaker Kurt Zellers tried to strike a cooperative tone on the day Dayton won the governor's race. But he emphasized that he's opposed to tax increases of any kind.

"We have a fundamental philosophical difference on whether or not we should raise taxes in a down economy, but that's OK," Zellers said. "Minnesotans like a divided government."

The key issue in the first year of a Dayton administration will be how the governor and the new Legislature can tackle a rolling budget deficit that put Republican Gov. Tim Pawlenty at odds with a DFL -controlled Legislature over the past four years. The budget covers everything from school funding to health insurance for the poor and aid to cities and counties. It will be the focal point of the upcoming legislative session.

Tom Borman, a lifelong friend who advised Dayton in past campaigns and is helping with the transition, said he believes the new governor will continue to push for an income tax hike on those he believes can afford to pay higher taxes.

"He can make decisions. He can lead. I think he has very clear ideas as to where he wants to go with the governor's office," Borman said. "For better of for worse, he's inheriting a terrible budget situation and someone with guts is going to have to deal with that."

One thing Dayton and Republicans in Legislature already agree on is that improving the state's economy needs to be a top priority. Legislative leaders have said repeatedly that they want to work to make the state more business friendly. Dayton said he's willing to work with them

"I have my ideas. Legislators have their ideas," he said. "I think it's key that we start right in the very beginning and work together starting in January to pool our best ideas and see which ones we kind find agreement on and initiate from the very early stage so we can get as many people back to work as soon as possible."

Dayton said he intends to meet with the state's business leaders to discuss the economy. Members of The Minnesota Business Partnership and the Minnesota Chamber of Commerce spent millions of dollars working to defeat Dayton and elect Emmer. But Dayton said he will work with the business community.

"I'll do everything possible and as I said it during the campaign ... I'll go anywhere in this state or nation or world where there's a job to be gained for the state of Minnesota," he said.

At least one business leader thinks Dayton means it.

"I think that some people may believe that he doesn't understand the dynamics of having a business that's competitive in the world economy," said Bill Blazer, executive Vice President of the Minnesota Chamber of Commerce. "I think he understands that better than most."

Blazer has known Dayton since he served as policy director during Dayton's failed U.S. Senate run in 1982. Blazer said business leaders should remember that Dayton comes from a retailing family.

"Just because Mark Dayton hasn't worked in a Target store or a Dayton's store doesn't mean that he missed all of those dinner table conversations about giving customers a great value," Blazer said. "I think he's going to work hard to give the citizens a great value for every one of their hard earned dollars that they put into the treasury of a state and local government."

Those who have supported Dayton's campaign the longest say they're optimistic that Dayton will continue to stress the need to find more money for schools, nursing homes and other state services. Eliot Seide, who directs the public employee's union, AFSCME Council 5, said he believes Dayton will offer a very different agenda than Pawlenty.

"I think Mark Dayton is a man of principle. A man of integrity," Seide said. "This is a man who could have had a very different life. He could have had a life of leisure and luxury and he chose a life of public service. I think we have a serious governor with a vision supported by Minnesotans and a mandate for a change in policy."

Dayton is scheduled to meet with Pawlenty today to discuss the transition. Pawlenty has said he wants to ensure that the handoff is smooth regardless of who won.

Emmer, who was on the losing end of a month long recount, said during his concession speech that Dayton offered to have lunch with him in the next few weeks. Emmer struck a conciliatory tone pledging to help Dayton in any way he can.

"That doesn't mean agreeing with him all of the time. I suspect that there may be a disagreement or two, but it does mean giving him and his administration the respect it deserves," Emmer said. "Mark Dayton was not elected to be the governor of Democrats. Mark Dayton was elected to be the governor of the state of Minnesota."

Dayton said he plans to live in the governor's mansion with his two dogs. But he said he hasn't decided whether he'll accept a salary as governor.

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