Brewing state budget deal spares health program, ups school spending while deferring tax cuts

Minnesota's legislative leaders announced late Friday that they were closing in on a sweeping deal for a new two-year budget that pumps more than $400 million into public schools and preserves a health care program for the working poor, but likely leaves a transportation funding plan and a package of tax cuts until next year.

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After five days of on-and-off private talks, Democratic Senate Majority Leader Tom Bakk and Republican House Speaker Kurt Daudt emerged from the governor's residence with the framework of a deal they will rush to pass by Monday's adjournment deadline. They withheld key details on much of it until meeting with rank-and-file members.

"Sometimes the best negotiations are when everyone walks away from the table grumbling a little bit," Bakk said. "No one walks away angry, but everybody is grumbling a little bit."

The tentative deal still lacks Gov. Mark Dayton's endorsement. Spokesman Matt Swenson said Dayton offered a counterproposal that would ramp up new education spending to $550 million, with some of that going toward a new state-paid preschool program for all 4-year-olds.

Barring a late change in negotiations, a "significant" amount of money will be left in the state's coffers to take another stab next year at a long-term transportation funding plan and tax breaks, Bakk and Daudt said. Minnesota had a nearly $1.9 billion projected surplus to use while crafting the $40 billion-plus budget.

Though they still need to work out some areas of disagreement, both legislative leaders vowed the emerging deal paves the way for a timely finish.

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"It's going to take some breakneck work over the next three days to get that done," Daudt said.

Despite hosting the talks, Dayton was absent as the leaders appeared to discuss their outline. State-paid preschool, a top priority of his, wasn't included in the legislative plan. The fate of other signature initiatives also wasn't clear.

The amount for education is less than what Dayton wanted but more than either the House or Senate approved. That likely means schools get more on the per-pupil formula that comes with maximum flexibility.

The two sides agreed to leave MinnesotaCare, the state's subsidized health care program that serves nearly 100,000 low-income Minnesota residents, largely untouched for the next two years. House Republicans put that program on the chopping block, citing its growing costs and a funding source due to expire in 2019. The agreement calls for a task force to review the program's viability.

House Minority Leader Paul Thissen, a Democrat, said his caucus wouldn't throw up procedural obstacles to a timely finish. But he took issue with the wait-and-try-again approach, specifically leaving money behind for potential tax cuts.

"It's fair for Minnesotans to ask: Why are you leaving that money on the bottom line when you could freeze tuition or do these other things?" he said. "The idea that getting done on time is victory is a pretty low standard to apply. We had a big opportunity to continue to build on progress and it doesn't look like we're going to be able to do that."