The deadlock over Minnesota's projected $5 billion budget deficit showed the smallest signs of cracking Friday, but the Republican-controlled Legislature and DFL Gov. Mark Dayton remain fundamentally opposed over the best way to erase the shortfall.
Republicans started working on Thursday night to reach agreement between House and Senate budget bills so that the public and Dayton know where lawmakers stand. Legislative leaders had hoped Dayton would agree to negotiate before conference committees agreed on budget numbers, but Dayton refused to talk until there was a single GOP position.
Republicans finished up a K-12 budget, a health and human services budget, a state government finance budget and a transportation budget. Democrats were quick to criticize the plans as being too harsh on Minnesotans.
The biggest reduction would be in the health and human services area. Republicans are proposing to cut $1.8 billion in projected spending in that area.
The Republican budget plans face a major hurdle to becoming law -- Dayton's veto pen. Dayton is proposing to raise income taxes on Minnesota's top earners to erase the $5 billion budget gap. Republicans say they can balance the budget through spending cuts alone.
“I don't believe Gov. Dayton will shut down state government for a tax increase.”Sen. Geoff Michel, R-Edina
Democrats quickly moved to give Dayton support as he prepares to negotiate. In particular, Democrats said the health and human services budget bill would mean 200,000 Minnesotans would lose their current health insurance coverage.
A quarter of those people would be rolled into a high-deductible plan that many would be unlikely to join. Another 150,000 people on the federal Medicaid program would be shifted into a new care model, but Democrats said the Republican budget does not provide enough money for hospitals to meet their needs.
"I think this is almost worse than completely eliminating their health insurance," Rep. Erin Murphy, DFL-St. Paul, said. "This makes it seem like they have care, when they really don't."
Republicans argue that the changes in health insurance for the state's poorest residents don't mean they would go without care. They say the budget cuts would force the state's hospitals, HMOs and health care providers to improve how they deliver their health care.
Lobbyists for those particular groups say those types of cuts would mean significant reductions in treatment.
Health and Human Services is only one budget area facing deep budget reductions. A conference committee on taxes proposed a cut of $310 million in state aid payments to cities. The plan hits Minneapolis, St. Paul and Duluth the hardest, because it would eventually phase out their aid altogether. Rural and suburban cities would also see their state aid reduced.
That plan also brought complaints from Democrats.
"Minnesotans want a balanced approach to solving this budget crisis, but Republicans are choosing to protect the richest Minnesotans and make the middle class pick up the tab," said Minneapolis Mayor R.T. Rybak. "Businesses and homeowners can't afford the property tax increases that the Republican leadership is forcing on them."
By 2012, Minneapolis would lose $55.5 million, St. Paul would lose $37 million and Duluth would lose $17.2 million in Local Government Aid under the current Republican proposal, according to a statement from Rybak, St. Paul Mayor Chris Coleman and Duluth Mayor Don Ness.
Dayton and lawmakers are facing two deadlines: the constitutional deadline to finish the regular session on May 23, and the the end of the fiscal year on June 30. That's when state government would have to shut down if there isn't a budget in place to fund operations for the next biennium.
Despite the wide differences, Republicans seem optimistic they'll prevail in budget negotiations.
"I don't believe Gov. Dayton will shut down state government for a tax increase," Sen. Geoff Michel, R-Edina, told reporters.
But both Dayton and Democrats in the Legislature say they're underestimating Dayton if they believe he'll agree to a budget that doesn't increase revenues.
GOP Senate Majority Leader Amy Koch said she's still confident that Republicans will reach a budget deal with Dayton before May 23. But if there is no deal, she said Republicans are prepared to pass their plan and let Dayton decide what to do with it.