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Budget deal imminent
Worthington Minnesota 300 11th Street / P.O. Box 639 56187

ST. PAUL -- Legislative negotiators declared they have all but settled outstanding issues remaining in the 2008 session Friday night, expecting a full deal to follow soon balancing the state budget and lowering property taxes for at least some Minnesotans.


"We are very nearly done," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.

Republican and Democratic leaders said they should not need much more negotiating time with GOP Gov. Tim Pawlenty, but they could not meet with him for a few hours Friday night when he spoke to a Wisconsin political event.

They were working out details on property tax relief, how to fill a $935 million hole in the state budget, health care reform and education spending.

"These things took a little time but once we kind of worked through a bunch of issues -- and maybe a little bit of posturing -- I think we're on our way," Kelliher said when legislative leaders appeared Friday night on Twin Cities Public Television's "Almanac" show.

Kelliher said it was not clear if all loose ends could be tied up before today.

Assistant Senate Majority Leader Tarryl Clark, DFL-St. Cloud, held her fingers a half inch apart to show the small differences remaining, later saying: "It's very close."

Legislative leaders said they and Pawlenty have agreed to limit local property tax increases to 3.9 percent a year. Pawlenty wanted a strict lower cap, but Democrats say they fear a cap as small as 3.9 percent would hurt local governments' ability to raise money for services. Pawlenty said a property tax increase limit is the only thing that will keep property taxes in check.

Another method of property tax relief, sending state funds to local governments, may go up $85 million, Kelliher said. Democrats say more state money helps local governments keep taxes down.

"We're going to get some action on that," Kelliher said of property tax relief.

Kelliher said legislative leaders and Pawlenty were close to agreeing on how to use $109 million gained from closing a loophole that now allows multi-national corporations avoid paying state taxes. They also agreed to make $355 million in cuts to state programs, but not all details were decided.

Republicans and Democrats agree that a health-care reform bill is needed, but they still had work to do on that, Kelliher said.

Also outstanding was an education finance bill, but House Minority Leader Marty Seifert, R-Marshall, said he expects an agreement on a one-time increase in funding by $51 per student.

Seifert was optimistic about a deal being reached, in part because a compromise would include issues important to Republicans and Democrats.

"We all want to have some common ownership in the bills," he said.

Friday night's announcement came as somewhat of a surprise because not long before Kelliher said: "We were stuck in a rut." Legislative leaders and Pawlenty have met for more than a week, reporting little progress.

Democrats, who control the Legislature, said they should be able to wrap up the 2008 legislative session tonight or early Sunday, given the status of negotiations tonight.

Seifert said that out of the current $34 billion, two-year budget, little remains to balance the deficit of less than $1 billion.

"There is a few million here and a few million there," he said.

Not all work is done.

"There is a lot of little stuff outstanding," Kelliher said.

The speaker said she does not think anything will derail the agreement.

"As the train picks up speed and leaves the station it's going to be harder and harder for things to get in the way of stopping it," Kelliher said.

Lawmakers could vote on an actual train project before the session ends. Democratic lawmakers said if a budget deal is reached, they probably will put forward a bill borrowing funds for a rail transit project in Minneapolis and St. Paul, but Kelliher said the bill also could include funding for two of Pawlenty's wishes, a Minneapolis veterans' home and state park on Lake Vermilion.

"We're interested in putting together a package that works," Kelliher said.

Davis works for Forum Communications Co., which owns the Daily Globe.

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.