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Final budget talks open with Dayton movement; McNamara says 'big divide' still there

Gov. Mark Dayton announces Monday that he will accept a tax increase half as large as he originally wanted. Photo by Don Davis/State Capitol Bureau1 / 2
House Speaker Kurt Zellers of Maple Grove watches Senate Majority Leader Amy Koch of Buffalo tells reporters Monday that Republicans reject any tax increases. Photo by Don Davis/State Capitol Bureau2 / 2

ST. PAUL -- Democratic Gov. Mark Dayton Monday morning told Republicans he would cut his tax increase plan in half, but said that is as far as he will go.

Republican legislative leaders left the meeting saying they never will agree to a tax increase.

In that case, Dayton told reporters, Republicans need to come up with other new revenue to balance the state budget.

"I will go halfway," Dayton said. "I won't go further."

A week remains before Minnesota legislators must adjourn. Dayton's announcement this morning was the biggest change since legislative arrived in St. Paul on Jan. 4.

While he wanted to raise taxes on the richest 5 percent of Minnesotans, Dayton's new plan would increase income taxes on the 1.9 percent richest, he said. He also dropped a proposal to raise property taxes on homes worth more than $1 million.

Dayton said he would agree to more state program cuts than he earlier wanted.

Republicans want to spend no more than $34 billion in the next two years, leaving the $1.8 billion in new revenue that Dayton wants as the major stumbling block. However, Dayton and Republicans also disagree with how money is spent and raised within 10 spending and tax bills.

Now, Dayton said, it is up to legislative Republicans to act. If budget negotiators cannot reach a deal by May 23, "it's their fault," the governor said.

The last of nine spending bills from the House and Senate are to be posted on line today, giving Dayton a full view of how Republicans would like to spend $34 billion.

House Speaker Kurt Zellers, R-Maple Grove, said he is not thinking about a special session, although most in the Capitol doubt the two sides can complete budget talks in the next week.

"Every time we meet we are making progress," Zellers said, although he and Senate Majority Leader Amy Koch, R-Buffalo, could point to no specific point where progress was made Monday morning.

Rep. Denny McNamara, R-Hastings, said Monday it is possible to get a deal done within a week, but there remains a "very, very wide philosophical divide" between Dayton and legislative Republicans.

"The big, big divide is still there," he said in a Bulletin interview. "Is it doable? Sure, it's doable. Is it going to happen? That's going to be a tough call."

The many freshman Republican lawmakers feel strongly in sticking to the GOP's position of balancing the budget without raising taxes, McNamara said, to the point that they are not saying a deal must be reached by the constitutional deadline next Tuesday.

"New members are pretty close to the pulse of the electorate," McNamara said. "The freshman members really feel that folks back home are telling us ... (they) expect the government to live within its means."

Don Davis reports for Forum Communications Co.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.