Gov. Mark Dayton rejected a $259 million tax cut bill at midnight Tuesday by declining to sign it (pocket veto). The Omnibus Tax Bill would have delivered new credits, exemptions and deductions for farmers, businesses and college graduates. The plan also included a property tax provision sought by the developers of a new professional soccer stadium in St. Paul.
The Governor convened a meeting of top Republican and Democratic lawmakers Tuesday afternoon to discuss what it would take to revive the tax measure and other items in a possible special session. In a press conference Tuesday morning, Dayton said he is willing to resurrect the tax bill and meet half way on a bonding bill at a price of $1.1 billion.
Dayton has said he supported the tax bill and would have signed it if not for a wording error. The error was in a section dealing with tax rates for bingo halls. It has the potential to cost the state $101 million and threaten the funding stream for the new Vikings football stadium. He also wants lawmakers to restore a tax break the Minnesota High School League uses to fund sports programs for low-income students. The Governor warned of reopening the tax bill beyond those two changes, saying it would be a “free for all.”
Among Dayton’s conditions for a special session are that lawmakers complete work on a transportation finance proposal that contains funding for both roads and mass transit, that they pass a bonding plan with projects he endorses, and they revisit some budget items he says were left out of a bill he signed last week. He is also pushing to include money for repairs at Minnesota State Colleges and Universities institutions, as well as a new life sciences building for the University of Minnesota.
Republicans quickly agreed to fix the problem in the tax bill, and restore the High School League tax break. However, House Speaker Kurt Daudt (R-Crown) noted that their objection is that Dayton requires agreement on the entirety of his additional spending demands in order for that to happen.
The collapse of the bonding bill on the last night of session was brought on by a dispute over Southwest Light Rail funding. House Republicans remain firmly opposed to any funding for Southwest Light Rail, while Dayton and Senate Democrats still insist on funding for the project with a metro county sales tax option.
Daudt said he’d rather not take up Southwest in a special session, although he is open to a legislative hearing to vet the project.
House Transportation Chair Rep. Tim Kelly (R-Red Wing) spent the past two years trying to craft a bipartisan transportation spending package. By the closing days of session last month, Kelly and his Senate counterpart, Sen. Scott Dibble (DFL-Minneapolis) felt they had struck a workable compromise. It would have infused about $400 million more a year over the next decade into the transportation system and solved the light-rail funding problem. Kelly said he couldn’t get Daudt on board.
Republicans would like to take tax and transportation bills back to their districts to highlight the two biggest issues that they ran on in the last election. The Speaker said that he worries about a special session languishing as the plate gets too crowded and lawmakers move too far into campaign season.
House and Senate negotiators are meeting June 14 to begin reviewing projects for a new bonding bill. The governor and legislative leaders plant to meet next Wednesday to continue their special session negotiations.
