Budget talks focus on health and human services spending

With just two days to negotiate an agreement with Republican lawmakers before a potential government shutdown, Gov. Mark Dayton and Republican leaders are trying to find additional cuts in health and human services spending, the fastest-growing part of state government.

Dayton and GOP legislative leaders plan to resume budget negotiations Wednesday morning, following two closed-door meetings Tuesday. But neither side was willing to say whether a shutdown can still be avoided or if a budget deal is even within their reach.

Lawmakers must approve, and Dayton must sign, a new two-year budget deal by midnight Thursday, the last day of the current fiscal year. If they don't agree on a plan to close the projected $5 billion deficit, many state functions will be closed as of July 1.

With a self-imposed "cone of silence" still in place, neither Dayton nor Republicans had much to say before or after their two brief budget meetings.

They met for about an hour and 15 minutes in the morning and for about an hour in the afternoon before attending a memorial service for state Sen. Linda Schied, DFL-Brooklyn Park, who died nearly two weeks ago.

House Majority Leader Matt Dean offered only a brief but upbeat assessment of the talks.

"Things are still moving ahead," said Dean, R-Dellwood. "That's good news."

"Things are still moving ahead. That's good news."

Dayton described the meetings as constructive, but he said differences remain. He said health and human services funding was the focus of the afternoon discussions.

"That's a significant area of the budget, a significant area of disagreement based on our two budget proposals," he said. "So, we're going to focus on that."

The two sides remain about $1.3 billion apart on funding for health and social services programs.

During the regular session, Republicans had proposed much deeper spending reductions than Dayton, who said his proposed income tax increase on top earners would help soften the cuts in health and human services and other key budget areas. Republicans have consistently opposed any tax increases.

Still, state Sen. David Hann, chairman of the Senate Health and Human Services Committee, said he thought the latest negotiations were making some progress.

"Right now, we have the widest difference of spending targets between the governor's proposal and the conference report, and that clearly presents some challenges," said Hann, R-Eden Prairie.

Despite all of the uncertainty surrounding a potential shutdown, one aspect became clearer. The state court system will stay open for business.

In an order issued in Ramsey County District Court, retired Judge Bruce Christopherson said the Minnesota Judicial branch will continue to fulfill its obligations and continue to receive state funding after July 1.

By the end of the week, Judge Kathleen Gearin is expected to issue a much broader ruling on which other essential state services should continue to receive funding during a shutdown.

With a full plate of budget work, Dayton canceled a scheduled lunch-hour speech in Minneapolis to remain at the Capitol. Instead, his chief of staff Tina Smith spoke to the political group Women Winning. Smith told the crowd that Dayton was still hopeful about resolving what she termed the "budget crisis."

"There's so much at stake in terms of women's health, in terms of reproductive choice, in terms of the future of our children," Smith said. "And that is what the governor and many, many others are working on, on both sides of the aisle, back at the Capitol."

So far, there's been no sign of movement on one of the fundamental elements of the budget impasse. GOP leaders appear to be still standing firm against Dayton's tax increase, and one of their business allies was supporting that position.

Mike Hickey, state director of the National Federation of Independent Business, held a State Capitol news conference to argue that the plan would hurt business owners and make the state less competitive.

"I just don't know how aware the governor is about the successful entrepreneurs that he's slapping with this," Hickey said.

The governor and GOP legislators will resume negotiations Wednesday morning. Dayton said the final breakthroughs must come soon, or they won't be successful in avoiding the shutdown. He said the deadline will help produce an agreement if both sides are willing.

Senate Majority Leader Amy Koch, R-Buffalo, said she's telling lawmakers to be ready to return to St. Paul quickly in case a budget deal is reached.

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