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Last budget bill passes at midnight

ST. PAUL - The Minnesota House dissolved into a shouting match as midnight approached Monday, just completing passage of a $35 billion budget and the House sustaining a transportation funding veto.

More than $30 billion of spending zipped through the Senate and House by the midnight constitutional deadline. But Democratic legislative leaders never received assurances from Republican Gov. Tim Pawlenty that he would sign the bills, leaving open the possibility of a special session if he vetoes a major funding bill.

The most excitement came at 11:45 p.m. when the House voted 83-50 to uphold Pawlenty's veto of a $7 billion transportation funding measure. It would have raised gasoline taxes 5 cents a gallon, with another 2.5-cent surcharge to repay borrowed money.

Moments later, House Minority Leader Marty Seifert, R-Marshall, warned that a tax bill the House was about to pass would be vetoed.

Republicans, in the House minority, tried to out-shout House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, as she fought to end the session before midnight. She failed by one minute (senators adjourned at 12:03 a.m.).

Senators went first in passing bills funding public education, health care, state agencies and higher education, with the House taking them up later, debating right up until midnight.

Pawlenty said he did not expect a forth straight budget special session, an indication he could sign the budget bills.

"I would think on the last day, the Senate needs more than a hope and a wish that the governor will sign things," Sen. Geoff Michel, R-Edina, said.

"It may not have had the customary handshake, but I'll tell you - it's a deal that's going to last," Kelliher said.

Pawlenty told reporters he will study each bill carefully and would retain his right to veto entire bills or remove specific appropriations from the bills.

"I have a duty to review these bills to make sure they're not goofed up, off track, flawed," Pawlenty said.

The governor has signed just $2.6 billion out of a $35 billion, two-year budget.

Senators on a 51-15 vote backed a public education spending bill costing $13.7 billion, an increase of $794 million over the current budget. Representatives followed on a 94-36 vote.

School districts would receive 2 percent funding increases next year and 1 percent the following year on the general state aid formula.

The bill also puts $326 million into special education, while Senate leaders had sought $480 million. It spends $32.5 million to expand all-day, every-day kindergarten, down from $300 million senators wanted.

The disparity in education funding between the Twin Cities and greater Minnesota schools "is going to grow by leaps and bounds" under the bill, said Rep. Steve Sviggum, R-Kenyon, adding that the funding formula is "underwhelming."

The second-largest bill, which funds health and welfare programs, would cost $9.5 billion, an 18 percent increase from the current budget. Senators passed it 43-23 and representatives backed it 95-38.

A group representing long-term care providers such as nursing homes was not happy with the bill. It would increase long-term care worker pay 2 percent each of the next two years.

"This is less than half of what is needed to fully fund the cost of providing quality care," leaders of the Long-Term Care group wrote to legislators.

After approving the full bill, senators later passed 67-0 a proposal to raise the nursing home increases to 2.5 percent, but it was unclear whether the House would have time to take a vote on the issue.

A smaller bill funding a variety of state agencies passed the Senate 65-1 with no debate. The House passed it 91-42. Legislators restored a cut of $7.2 million in cuts to the governor's office before passing it.

With the Legislature's ability to override Pawlenty's veto of a $7 billion transportation package uncertain, the House and Senate approved a backup bill Monday afternoon. The Senate approved it 65-0 and the House 95-39.

The bill would continue to fund basic Transportation Department operations after the new budget period begins July 1, but it spends no new money on road and transit projects.

The Senate approved a bill funding higher education, including the University of Minnesota and Minnesota State Colleges and Universities systems, on a 65-0 vote. Representatives passed it 127-7.

Supporters said the higher education package would keep tuition increases lower than in recent years, but would not freeze them as some wanted.

"We came as close as we could to a freeze," Rep. Bud Nornes, R-Fergus Falls, said.

Rep. Tom Rukavina, DFL-Virginia, said the bill is not as rich as he would like: "When it passed the House, it was an excellent bill. When it came back from conference committee, it was a great bill. ... It still is a very good bill."

Property tax relief was a high priority of House and Senate leaders, but senators voted to spend no more than $138 million on it - not enough to actually cut taxes. It would make increases smaller than otherwise would occur.

A slimmed down tax bill passed the Senate at 53-13 and the House, as midnight passed, by an 82-48 vote.

Senate tax Chairman Tom Bakk, DFL-Cook, said the only new revenue in his tax bill is forcing some Minnesota companies with overseas operations to pay more taxes. That is the main source for providing $138 million for property tax relief, both directly to homeowners and sending money to local government with the theory that would lower property tax levies.

His voice breaking, Bakk urged senators to back $500,000 in relief for his area to recover from the recent Ham Lake fire.

"The people of Cook County need our help," he said. "I stand here and challenge anybody to call it pork."

The bill continues the Job Opportunity Building Zones program for rural economic development, with eligibility changes.

Lawmakers failed to vote on a constitutional amendment that would raise the sales tax to fund outdoors, clean water and arts programs. They also did not get to a public works funding bill.

Rep. Frank Moe, DFL-Bemidji, said the final day wasn't the time for Democrats to roll over for Pawlenty.

Democrats had "to go down fighting," Moe said.

It was practical to end the political fight on the last day, rather than to gamble on the prospects of a special session, said Sen. Jim Vickerman, DFL-Tracy.

"You go into overtime," Vickerman said, "you get less."

Question marks remained at the end of the day, but Rep. Loren Solberg, DFL-Grand Rapids, said that is because Pawlenty's "frustrating style" meant not reaching agreements with legislative leaders.

"You live with that," Solberg said.

Included in bills making their way through the Legislature late Monday:

-- $500,000 for relief after northeastern Minnesota's Ham Lake fire.

-- Another $500,000 for homeowner property tax relief in the Ham Lake fire area.

-- Small resort tax breaks.

-- Local option sales taxes would be allowed in Duluth, Cook County, Proctor and Bemidji.

-- Tax credit for dairy operations is expanded.

-- Moorhead, Dilworth, Breckenridge, Ortonville and East Grand Forks would be able to continue receiving $1.5 billion to better compete with North Dakota and South Dakota.

State Capitol Bureau reporters Mike Longaecker and Scott Wente contributed to this report.

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.