Updated 6:08 p.m. | Posted 8:47 a.m.
The Minnesota Supreme Court on Thursday ruled that Gov. Mark Dayton acted within his power when he vetoed the operating budgets of the state House and Senate.
The court, however, declined to rule if the governor was acting in a coercive way when he tried to use his defunding of the Legislature as leverage to get GOP leaders back to the budget bargaining table.
Justices noted the line-item veto power is "expressly conferred" to Minnesota's governors.
• Minnesota Supreme Court: Read the ruling
"Whether it was wise for the people of Minnesota in 1876 to provide for a veto power over items of appropriation, in language that does not expressly exclude the appropriations for a coordinate branch of government, is not for us to judge," the court wrote.
The court backed Dayton 5-1 with Justice David Stras abstaining. This was the first time in Minnesota history that the state's high court had to rule on one branch of government suing another.
Justices issued their long-awaited ruling as the Legislature began to take emergency steps to at least temporarily avert layoffs and other disruptions as their account balances dwindled.
Dayton applauded the decision and noted the court found the Legislature has access to at least $26 million to continue operating until it reconvenes in February, adding that it was "time for us all to agree that this dispute has been concluded and resume working together for the best interests of Minnesota."
After the court's ruling was posted, GOP House Speaker Kurt Daudt said of the justices, "We had hoped they would end this debacle and they did not."
Senate Majority Leader Paul Gazelka, R-Nisswa, said he was shocked by the ruling and that the court did not recognize the hardship ahead for the Legislature as the money dries up.
"It's important that the legislative branch have equal power with the governor. Under this situation we don't," Gazelka said. "So, we have to make extraordinary decisions and take money from places that we know we should not, as a result of this decision."
Following the decision, Gazelka and other lawmakers met to take emergency action to replenish the dwindling finances of the House and Senate and prevent expected staff layoffs. They voted to transfer nearly $21 million from a separate legislative branch account.
The Republican-backed resolution making the money transfer also took aim at Dayton and his administration. It prevents any of those funds from being used to make payments on the 2-year-old Minnesota Senate building. Missed payments could put the state's credit rating in jeopardy. But Daudt defended the action.
"The governor has line-item vetoed the money that would pay the debt service on that Senate building," he said. "I am not looking under my couch cushions to find a way out of that for the governor. He needs to understand that his decisions do have consequences."
A separate resolution was passed that prohibits legislative staff from assisting the executive branch in preparing legislation.
DFL Senate Minority Leader Tom Bakk cautioned against the moves. Given the prolonged legal fight, Bakk told Republicans they were making a bad situation worse.
"This will be the biggest do-nothing session we've ever seen if this environment that we're in between the Legislature and the executive branch is still as toxic as it is today on Ferbuary 20," Bakk said.
With a temporary funding fix now in place, Republicans are planning to pass a permanent solution quickly next session. Dayton could choose to veto that funding too.
GOP House Majority Leader Joyce Peppin urged a united front for such a scenario.
"If the House and Senate Democrats will join with the House and Senate Republicans and override the governor's veto all of these problems will go away. We will be able to fund all of our operations," Peppin said.
The fight began in May when Dayton signed the new, two-year state budget but used line-item vetoes to wipe out $130 million to operate the House and Senate. He left intact a separate pool to run joint offices, such as the legislative auditor.
• Sept. 22: Dayton, GOP fail to reach deal to fund MN House, Senate
• June 2: Defund the Legislature? 'See you in court,' Daudt tells Dayton
The DFL governor said he wanted to force lawmakers back to the bargaining table to revisit tax and policy measures he didn't like but couldn't stop without bigger implications. The state government bill containing the Legislature's budget included a provision that would have canceled funding for the Department of Revenue if Dayton vetoed a tax-cut package.
Republican leaders of the Legislature quickly announced they would sue over their lost funding, and they won the first round in court. A Ramsey County judge invalidated the vetoes, saying Dayton overstepped his authority by taking such a drastic action against a separate branch of government.
Dayton appealed to the Supreme Court, which initially ordered the sides into mediation. That lasted less than two days. Dayton pulled away from the talks when it appeared clear to him they weren't making progress.
On Oct. 1, a temporary funding agreement for the Legislature expired. So the House and Senate began dipping into the reserve funds. Last week, Gazelka warned his chamber would run out of money in December and asked for an infusion from joint legislative accounts to keep the lights on until January.
After that, Gazelka said the Senate would lay off staff, withhold lawmaker paychecks and lock its building until the Legislature could replenish its budget. The next regular session isn't due to begin until Feb. 20, leaving lawmakers few options without court intervention.
Dayton also wanted the courts to issue a final verdict. He long maintained that his line-item veto rested squarely within the constitutional authority granted to governors.
On Thursday, the court rejected one of the Legislature's arguments, that Dayton's vetoes had "effectively abolished the Legislature. Justices found the Legislature had sufficient money in reserve.
But the court demurred on another of the Legislature's arguments: that it was unconstitutional for Dayton to veto the House and Senate's funding solely in an attempt to coerce the Legislature into passing bills Dayton wanted.
Chief Justice Lorie Gildea wrote that courts should whenever possible stay out of disputes that can be resolved politically.
A dissent by Justice Barry Anderson disagreed and argued that the coercive effect of Dayton's veto meant it was worth judicial intervention.
Despite letting Dayton's vetoes stand for now, Gildea issued a warning to both sides that the court's ruling did not mean future governors could necessarily veto the Legislature's funding in the future.
"Our decision today should not be read to foreclose the possibility of a judicial remedy in a different situation," she wrote. "We trust that, going forward, each branch of government will seek to avoid a constitutional stalemate by exercising its powers to promote the constitutional cooperation that Minnesotans expect and deserve."
It's unclear how much the legal fight will end up costing taxpayers. Both sides hired high-priced lawyers.
Gazelka said the combined bill is already in the millions. But he said has no regrets about suing the governor. Dayton says it never should have happened.
MPR News reporter David H. Montgomery contributed to this report.