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These negotiations (which I wrote about here) produced some of the biggest winners and losers in recent history. Let’s start with the biggest losers.

It’s impossible to imagine a bigger loser than Tim Walz. He lost on his tax increases, including the gas tax, the sick tax and the income tax increases. He and the DFL lost on spending, too. Another major loser was DFL Speaker Melissa Hortman. She was present throughout the negotiations but didn’t seem to be an active participant in those negotiations. I’d give her a ‘Potted Plant Award’ for participation.

Another major loser throughout the negotiations was DFL House Majority Leader Ryan Winkler. Friday night on Almanac, his first time on the big stage, DFL Rep. Winkler was used like a whipping post, first by Sen. Roger Chamberlain, then by House Minority leader Kurt Daudt. (More on them later.)

The other major loser in these negotiations was Education Minnesota, the people most famous for owning the DFL:

The biggest winners in this negotiations are Minnesota’s taxpayers. They didn’t get hit with one of the biggest tax increases in Minnesota history. That alone makes them a big winner.

The next biggest winner was Roger Chamberlain. Throughout these negotiations, he fought for the taxpayers, reminding the politicians who they worked for, aka the people. He took Rep. Winkler to the proverbial wood shed multiple times. After Rep. Winkler spurted out that “there are no free lunches”, Sen. Chamberlain reminded Rep. Winkler that the people not represented at the Capitol were “the people who pay the bills”, aka the taxpayers.

It’s hard to see how Kurt Daudt, the former and hopefully future GOP Speaker of the House, could’ve been more effective. He stated emphatically on Almanac that the DFL could raise spending by 7.3% without raising taxes a penny. That statement might’ve done more to finish the talks than anything else.

I’d be remiss if I didn’t praise Senate Majority Leader Gazelka for his job in negotiating this budget. Let’s remember that he won a significant tax cut by getting the 7.05% rate dropped to 6.8%. Rest assured that the DFL didn’t fight to include that policy change in the budget agreement.

Finally, I’d have to apologize if I didn’t include the House DFL legislators. They all voted for the Walz/DFL tax increases, which will hurt them in 2020, then saw Gov. Walz throw them under the proverbial bus in final negotiations. I can’t imagine them being too happy with Gov. Walz and the DFL leadership for that ‘favor’. That makes the DFL, especially the DFL House majority, a major loser in these negotiations.

From where I’m sitting, it’s pretty clear that the DFL got smoked in this year’s budget negotiations. First, the DFL didn’t get its 20-cent-a-gallon gas tax increase. Next, the DFL didn’t get its $12,000,000,000 overall tax increase. Third, the DFL had to settle for a cut in the HCAF, aka Sick Tax, rate. Included in this agreement is a drop from 2% to 1.8% on the Sick Tax rate. Further, the final budget will spend approximately $48,000,000,000 instead of the $51,000,000,000 that Gov. Walz and the DFL wanted.

Finally and perhaps most surprising of all, Gov. Walz and the DFL got talked into dropping the middle class tax rate from 7.05% to 6.8%. I’m betting that the DFL didn’t push that during negotiations. I’m betting that Sen. Gazelka pushed that tax cut.

Minnesota Gov. Tim Walz and legislative leaders announced a state budget agreement at a Capitol news conference Sunday night. “This is a budget that invests in education, health care and community prosperity in a fiscally responsible manner,” Walz said just after 6:30 p.m. Sunday, joined by Republican Senate Majority Leader Paul Gazelka and Democratic House Speaker Melissa Hortman at a Capitol news conference. “Today we proved that divided government can work for the betterment of the people we serve.”

Significantly, the deal does not include an increase in the state’s gas tax. The total budget will be a little over $48 billion. Other provisions of the deal include:

  1. a 2 percent increase each year of the biennium for the E-12 education funding formula
  2. an income tax rate cut in the second bracket
  3. continuation of the medical provider tax at 1.8 percent instead of 2 percent
  4. $500 million in bonding, with a large portion of that going to housing projects

I found this part of MPR’s article interesting:

The Senate on Saturday approved a Republican plan for preventing a state government shutdown if a stalemate persists, throwing down a challenge to House Democrats and Walz to either agree or take the blame for a shutdown when the current budget expires June 30. But Democrats had little to gain by taking a vote on the “lights on” proposal, given that Republicans would then have few incentives to keep negotiating.

The bill would fund government for up to two years at current projected levels assuming autopilot growth in the budget of about $1.9 billion. It just happens to be close to the Senate GOP’s original budget proposal, with none of the tax increases sought by Walz and House Democrats to put more into education, health care, transportation and other programs.

Democratic House Minority Leader Tom Bakk dismissed the gambit as throwing in the towel and accused Republicans of bargaining in bad faith.

Isn’t it interesting that, hours after Sen. Bakk “accused Republicans of bargaining in bad faith”, a budget deal was reached? I’d say that Sen. Bakk’s statement looks rather foolish at this point. Perhaps, Sen. Bakk felt stung by the fact that he wasn’t an integral part of these negotiations. Notice who isn’t part of this picture:

Whichever way you slice it, Gov. Walz and the DFL got smoked in his first negotiations.

Based on Briana Bierschbach’s article, there’s 4 things hanging up a budget agreement. Here are the 4 items:

1) Provider tax
2) Gas tax
3) Other tax increases
4) Spending

What it really comes down to is the DFL wants to spend Minnesota into oblivion. We’re already running a surplus because we’re taxed too much. That expected surplus is already being revised upward. There’s a ton of money flowing into Minnesota’s coffers. Tim Walz and the DFL want to raise taxes even higher and spend money at an unsustainable rate.

Gazelka, R-Nisswa, said there are several pots of money that already exist in the state to spend more on education and public safety, including the state’s $1 billion budget surplus, as well as the more than $2 billion in state budget reserves, which were recently fed even more when revenue collections came in nearly $500 million higher than expected last month. “We can get to places of compromise that still do not need any tax increases to work,” Gazelka said.

Republicans need to say no to the DFL’s tax increases and spending increases, starting with the HCAF tax increase. (HCAF = the Health Care Access Fund.) HCAF funds some subsidized health insurance programs but it frequently gets raided, too. A loyal reader of LFR contacted me and told me that monies have been shifted out of HCAF and into the general fund, where it can be used for who knows what.

Further, I read a recent commentary that says that 77% of the money in HCAF gets moved into the general fund as a sort of “slush fund” to pay off the DFL’s special interest allies. In other words, they could cut the HCAF tax substantially and still have enough money to fund the programs they currently want to fund. That’s before we talk about the gas tax increase, which is obscene, and the other tax increases. Let’s put it this way:

  1. we’re already running a surplus
  2. revenues are coming in faster than predicted
  3. Minnesota’s Rainy Day Fund has $2,523,000,000 in it, the largest in state history
  4. Despite all this, the DFL wants to increase taxes by another $12,000,000,000 over the next 4 years.

What types of drugs are the DFL using? Perhaps the DFL has gotten ahold of the newly legalized magic mushrooms and are using them. This isn’t insane. It’s galaxies beyond insane.

Tim Walz and the DFL continue insisting upon a budget that’s best described as insane, stupid or counterproductive. The DFL’s goal, apparently, is to make Minnesota uncompetitive with other states. We’re already the highest-taxed state according to Kiplinger’s. That isn’t good enough for Tim Walz and the DFL, though. They’re pushing a $12,000,000,000 tax increase over the next 4 years.

What’s worse is that it hits the lowest incomes the hardest. That isn’t just my opinion. That’s the official summary of Gov. Walz’s Department of Revenue’s Tax Incidence Report! The latest word is that Walz and the DFL have ‘offered’ a 16-cent-a-gallon gas tax instead of a 20-cent-a-gallon gas tax. WOW! How generous. Walz and the DFL have also offered to trim $300,000,000 of spending from a $51,000,000,000 biennial budget.

If Walz and the DFL want to run on that in 2020, bring it on. That’ll be as popular as a Packer fanatic at a Vikings game. Good luck with that.

Thanks to the DFL, we’ll soon have 4 of the last 5 budget sessions ending with either a government shutdown or a contentious special session. In other words, the DFL has made governing dysfunctional again. No wonder why wealth keeps fleeing the state.

The first 6 seconds of this video of the Republicans’ press availability last night shows how determined the DFL is to overtax Minnesotans:

For instance, the budget surplus from the November forecast is over $1,000,000,000. Additionally, the year-to-date additional surplus is $573,000,000, which is 3.1% above forecast, including $489,000,000 in unexpected revenues in April, 2019. That’s before factoring in $2,523,000,000 in Minnesota’s Rainy Day Fund. That’s a record amount in the Rainy Day Fund, BTW.

What’s obscene about that is that that’s money stolen from Minnesotans who would otherwise use that money to create jobs. Instead, the DFL has confiscated that wealth to protect government. That’s how not to govern.

Republicans should stand their ground. Period. This isn’t just a budget fight. It’s a fight to restore sanity to the budget. At no point has the DFL offered reforms to fix the problems that’ve been identified by various OLA audit reports.

In summary, the DFL is gaining the reputation of spending recklessly and ignoring existing problems. Let’s see them run on that in 2020.

It’s insulting to hear DFL legislators and Democrat Gov. Tim Walz complain that Republicans hadn’t moved from their position of being unwilling to raise Minnesota’s taxpayers burden by $12,000,000,000 over the next 4 years. According to this AP article, the DFL expected GOP lawmakers to accept that $12,000,000,000 tax increase in exchange for the DFL cutting $332,000,000 out of the DFL’s $50,000,000,000 budget.

That isn’t a compromise. That’s a total capitulation if it happened. Thankfully, it won’t happen. That’s because the GOP majority in the Senate won’t budge on these (or any other) tax increases.

Minnesota’s tax and regulatory system has already made it one of the least competitive states in the US. According to Walz’s own Department of Revenue report, the Walz-DFL monster tax increases promise to hit lower income taxpayers the hardest:

The tax plan proposed by Gov. Tim Walz would hit lower income Minnesotans harder than wealthier earners. That’s the outcome of analysis by the Democratic governor’s own Department of Revenue, which carried out a tax incidence analysis of Walz’s plan, which includes, among other things, a reduction in state income taxes but increases in business, estate, gas and vehicle sales tax, among other changes.

According to the revenue department, the overall tax burden on Minnesotans would increase from 11.63 percent currently to 12.39 percent under Walz’s plan, an increase of 0.76 percent. However it’s the lowest earners who would see a bigger increase in their taxes.

The so-called Party of the Little Guy wants to soak the little guy? That fits the DFL’s identity since the DFL seems to think that President Trump’s broad-based recovery is only being felt by millionaires and billionaires, not the blue collar workers that’ve experienced a 4.5% growth in wages compared with the 1% seeing a 3% increase in wages:

The governor said in an interview on Minnesota Public Radio that his budget was based on what the state needs to spend to maintain quality education and other programs at a time when the state’s population is growing, and that he’d like to see some reciprocity from Republicans.

That’s BS! Minnesota doesn’t need to become less competitive taxwise. Republicans’ campaign slogan should be ‘Make Minnesota competitive again.’ There isn’t a polite way to put this so I’ll just say it. Tim Walz and Melissa Hortman are economic illiterates. Walz was a nobody in Washington, DC. Hortman’s list of accomplishments is shorter than Barack Obama’s.

If the DFL keeps insisting on their massive tax increases, Hortman will be a 1-term speaker and Republicans will gain seats in the Senate, too. These tax increases are, to put it politely, counterproductive. The DFL should be sued for economic malpractice.

The DFL’s anti-tax cut argument amounts to this: Spending increases, especially to K-12 education, always takes precedent over cutting taxes. In the DFL’s mind, there’s never a time when tax cuts are justified. That’s perfectly understandable considering who the DFL’s special interest allies are. Sitting atop their list are the environmental activists and Education Minnesota. Now that House and Senate Republicans have reconciled their tax cut/conformity bills, it’ll be interesting to see how Gov. Dayton will rationalize his veto of another set of tax cuts.

While it’s true that Gov. Dayton signed tax cut legislation last year, it’s also true that Gov. Dayton defunded the legislature after he signed the tax cut legislation. Further, Gov. Dayton fought those tax cuts tooth-and-nail but was forced to sign it. He was heading towards shutting government down again so, rather than shutting it down like Gov. Dayton and the DFL did in 2011, Gov. Dayton signed the tax cuts, then line-item-vetoed out the legislature’s operations budget. Let’s not forget that Gov. Dayton reneged on the previous year’s tax cuts after promising to sign those cuts.

Here are the details of the proposed tax cuts:

The House and Senate deal lowers the state’s first tax bracket from 5.35 percent to 5.25 percent. The change affects a single filer’s earnings below $25,890 and a couple’s below $37,850. The second tax bracket rate drops from 7.05 percent to 6.85 percent. This decrease affects a single filer’s income between $25,891 and $85,060 and a couple’s between $37,851 and $150,380. The rate reductions would take place over two fiscal years, so the lower rates would be in place by 2020. The changes would cost $137 million this year and $341 million by 2020.

Here’s a fearless prediction: the DFL will criticize the House-Senate GOP tax cuts as tax breaks for big corporations. What the legislation says is irrelevant to the DFL. What’s important to the DFL is that they’ve rehearsed their lines properly.

If Gov. Dayton vetoes the GOP tax cuts/conformity bill, the DFL will have to justify to voters why they voted unanimously against the bill. PS- I suspect Gov. Dayton will veto the bill, though I also think he’ll try negotiating a smaller tax cut. If Republicans push him on this, they’ll win the policy fight and gain a big issue for the campaign.

Thursday will be D-Day for Gov. Dayton and the Minnesota Supreme Court. According to Brian Bakst’s reporting, the “Minnesota Supreme Court is expected to deliver its long-awaited decision Thursday in a court case between the governor and Legislature. A notice from the clerk of courts to parties in the case said a decision has been made in the lawsuit regarding Gov. Mark Dayton’s vetoes.”

Bakst continued, saying “If [the] high court invalidates the line-item vetoes, it would cause funding to spring back. If [the] justices uphold the vetoes, it will push the Legislature toward a financial crisis.” That’s true but more than that, if the Supreme Court sides with Gov. Dayton, it will have reversed itself.

In this post, I highlighted the fact that the Supreme Court ruled that Gov. Dayton, like previous governors, has line-item veto authority. I also highlighted the fact that the Supreme Court said that a constitutional provision (the line-item veto) can’t “be used to achieve an unconstitutional result.” In the Supreme Court’s ruling, they also said that Minnesotans have a “constitutional right to three independent branches of government.”

The Minnesota Supreme Court, whether it realizes it or not, is on trial here. If they rule that the legislature must spend down the money appropriated to the Legislative Coordinating Commission, aka the LCC, they will be violating multiple Minnesota statutes. First, part of the money appropriated to the LCC pays for the operations of the Office of Legislative Auditor, aka OLA. In this post, I wrote “Legislative Auditor Jim Nobles has already expressed concerns about certain functions of his office being suspended – specifically the certification of state financial reports that support the state’s credit rating and the receipt of federal funds.” It’s inconceivable to me that the Supreme Court would rule against funding the OLA simply for those reasons.

I don’t doubt that the DFL operatives in black robes want to justify siding with Gov. Dayton. It’s just that I can’t imagine them saying in their preliminary ruling that you can’t use part of the state constitution to achieve an unconstitutional result. Saying that a governor has the right to temporarily disable the part of the government that represents the people is incomprehensible.

Check in with LFR Thursday for the Supreme Court’s final ruling in this important case.

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Something jumped out at me while reading this article. Specifically, I’m upset with Melissa Hortman after she said “I think that Senator Gazelka should work with Democrats like Governor Dayton and me and Senator Bakk to solve a problem rather than using people as pawns in a political dispute.” Actually, Gov. Dayton is the problem. If he hadn’t negotiated in bad faith, this wouldn’t have happened. In fact, he negotiated in bad faith twice, once when he said he’d sign the Republicans’ tax relief plan 2 years ago. He negotiated in bad faith this year when he signed the tax relief bill, then line-item vetoed the funding for the legislature.

Gov. Dayton’s holding the people of Minnesota hostage because he wants to renegotiate legislation he’s already signed. Giving a governor that type of authority is unforgiveable. With that authority, governors could hold the legislature hostage every budget session. Is the Supreme Court willing to give the executive branch that authority over the legislative branch? If they’re willing to do that, then the Supreme Court is corrupt. They’re willing to give one branch of government the upper hand in budget negotiations. It isn’t difficult to envision a governor holding the legislature hostage if the legislature doesn’t give him what he wants.

Here’s what I’d tell Rep. Hortman. Rather than defending people in the DFL, she should defend the people of Minnesota. Thus far, she’s defended the DFL. She hasn’t defended Minnesotans.

By vetoing the legislature’s funding, then filing the appeal after losing the first court case, Gov. Dayton has endangered the funding for the Office of Legislative Auditor, aka OLA, and the Revisor’s Office. I wrote in this post that those offices aren’t inconsequential offices:

The office of the Legislative Auditor is funded through the LCC. Legislative Auditor Jim Nobles has already expressed concerns about certain functions of his office being suspended – specifically the certification of state financial reports that support the state’s credit rating and the receipt of federal funds.

The Office of the Revisor of Statutes is also funded through the LCC and they work year-round with state agencies on rule making authority. The Revisor’s office would also be necessary to draft a bill to restore legislative functions once session begins in February.

Thanks to Gov. Dayton’s line-item veto, the office that certifies Minnesota’s financial reports that keep our credit rating healthy is getting its funding stripped. The Revisor of Statutes Office is essential to Minnesota’s rule-making and legislation writing processes. What is Gov. Dayton thinking when he’s stripping funding from these essential offices? Was Gov. Dayton thinking when he forced the stripping of these funds?

Anyone that’s willing to shortchange these offices just so he can renegotiate a bill that he’s already signed is disgusting. Gov. Dayton isn’t a man of integrity. He’s a man who thinks that the ends justify the means. How pathetic.

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Minutes ago, Senate Majority Leader Paul Gazelka announced that the Minnesota Senate is suspending operations. Specifically, his statement says “Senate Majority Leader Paul Gazelka announced today the Minnesota Senate will run out of money on December 1, 2017 unless new funding becomes available or the courts restore the legislative appropriation vetoed by Gov. Mark Dayton.”

Sen. Gazelka continues, saying ““We don’t take the suspension of operations of the Minnesota Senate lightly – this is not a game – but we really have no other choice today. The Senate is running out of money due to Governor Dayton’s veto of our appropriation. Even though we prevailed in our lawsuit in Ramsey County District Court, the Governor refuses to recognize that order and is forcing us to spend down our carry forward.”

It’s worth noting that the Senate isn’t the only institution affected by Gov. Dayton’s petulant behavior. The statement highlights the fact that “The office of the Legislative Auditor is funded through the LCC. Legislative Auditor Jim Nobles has already expressed concerns about certain functions of his office being suspended – specifically the certification of state financial reports that support the state’s credit rating and the receipt of federal funds.”

This is the Supreme Court’s moment of truth. They punted, leaving many unresolved questions. One thing they said in their ruling was that Minnesotans had the right to a “fully-functioning legislature.” As part of the legislative branch, the OLA has the obligation to certify “state financial reports that support the state’s credit rating and the receipt of federal funds.”

Sen. Gazelka added this reminder to his statement:

“Further, a proper respect for our co-equal branches of government counsels that we intervene in their dispute only when absolutely necessary. It has become ‘absolutely necessary’ for the court to weigh in. The people of Minnesota will no longer have a voice in the legislative branch after the first of the year, not to mention the pain inflicted on our employees.”

That’s from the Court’s ruling. The question now is whether the Court will enforce the principles it stated in its rulings. If they don’t, I’ll know that they’re just DFL politicians in black robes. I’ll know that they aren’t jurists making rulings based on the Constitution. I’ll know that they’re politicians first.

Finally, there’s this:

The Office of the Revisor of Statutes is also funded through the LCC and they work year-round with state agencies on rule making authority. The Revisor’s office would also be necessary to draft a bill to restore legislative functions once session begins in February.

It’s time for the Supreme Court to issue a ruling. Their spineless dithering put the state in this mess. It’s time they stopped their dithering and did their jobs as jurists.

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Articles like this one verify something that I’ve suspected since the Supreme Court’s initial ruling in the Legislature’s lawsuit against Gov. Dayton’s line-item veto fiasco. It verifies that these justices are either spineless or they’re politically motivated.

Last week, the Supreme Court “demanded more answers about the budget clash between DFL Gov. Mark Dayton and the Republican-controlled Legislature.” The article continues, saying “To be clear, the court requires specific statements that identify all funds the Legislature may use,” said the Thursday order, signed by Supreme Court Chief Justice Lorie Gildea. The word ‘all’ in her order was in italics.”

That’s a dodge. With all due respect to Chief Justice Gildea, that’s BS. That’s because this doesn’t settle the constitutional issue raised when Gov. Dayton used his line-item veto to cripple the legislative branch. The question that the Court hasn’t addressed is whether Gov. Dayton’s constitutional authority is absolute. Sam Hanson, Gov. Dayton’s attorney, insisted that it is. That’s BS. Frankly, he should have his license suspended for making such a bad faith argument.

First, finding out how much money the legislature has isn’t relevant because Gov. Dayton vetoed the legislature’s operating budget for the entire biennium. Next, finding out how much money the legislature has doesn’t determine whether the people have the right to a fully functioning legislative branch. The Supreme Court has essentially ruled that a governor’s authority to control a budget is greater than the people’s right to be represented.

If the Supreme Cowards Court doesn’t rule expeditiously on this aspect of the fight, Minnesotans should consider impeaching these justices for not upholding the Constitution. Any black-robed idiot that thinks a governor’s budgetary authorities are more important than the people’s right to representation needs to be impeached because their thinking is totally screwed up. They’re incapable of thinking things through.

Chief Justice Gildea, if you won’t stand up for the people’s right to representation, then you’ll have to go. Ditto with the other justices that voted with you.

UPDATE: I just sent the Supreme Court of Minnesota this email:

I’ve written something about the Supreme Court’s unwillingness (thus far) to issue a FINAL RULING on whether a governor’s right to a line-item veto is more important than the people’s right to representation at the state capitol.

It’s time to make a final ruling on which constitutional provision is most important.

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