Minnesota budget impasse leads to government shutdown

DENVER — In another example of political gridlock over deep budget deficits, the Minnesota state government shut down on Friday after Republicans and Democrats remained at odds over whether to raise taxes for the rich or cut government spending.

Minnesota Gov. Mark Dayton, a Democrat, and the GOP-controlled legislature failed to resolve the state’s $5 billion deficit by the July beginning of the fiscal year. Without a budget in place, state operations largely ceased, halting paychecks for some 20,000 state employees and shuttering state parks just before the busy holiday weekend.

Dayton wants to raise taxes for people earning over $1 million annually, while the legislature proposes deeper cuts in government programs.

“We have divided government, and a governor that believes that he has a mandate to raise taxes and increase spending, and we have a legislature that believes we should cut taxes and reduce spending,” said Assembly Majority Leader Matt Dean. “It is a sort of a microcosm, in the middle of the country, of what’s going on throughout the nation.”

While Democrats and Republicans have battled in statehouses across the country over how to close deficits, Minnesota is the first to shut down the government. In some states, budget negotiations went down to the wire as the fiscal year ended Thursday.

In Connecticut, the legislature early Friday approved a budget that allowed Democratic Gov. Dannel Malloy to lay off thousands of state workers to bridge a $1.6 billion deficit. In California, after vetoing the first budget the legislature sent him, Gov. Jerry Brown signed a budget Thursday that made deep cuts in higher education and elsewhere and assumed billions of dollars in new revenue to avoid rolling back the school week.

In Washington the ongoing political divide on the national deficit is similar. Republicans who control the House of Representatives refuse to raise the country’s debt ceiling unless Democrats agree to a package of all spending cuts and no tax increases. Many economists believe the failure to raise the ceiling by August 2 could send the country into another recession.

Minnesota party leaders swiftly released statements Friday blaming each other for the shutdown.

“Republicans put millionaires over Minnesotans and drove our state government to shutdown in order to protect a handful of our state’s richest residents,” said Ken Martin, chair of the Democratic-Farmer-Labor party. “Their choice to force a shutdown is short-sighted, self-centered and shameful.”

Minnesota Republican Party Chairman Tony Sutton shot back: “What a piece of work is Gov. Dayton. On the campaign trail he pledged NOT to shut down the state over a tax increase. Tonight he broke that promise, making this shutdown his shutdown.”

The retired judge who has been appointed special master to oversee the shutdown ruled that all non-essential operations must cease until a budget is approved. State prisons and law enforcement and firefighting agencies remain operational. Institutions ranging from battered women’s shelters to the Minnesota Zoo pleaded Friday for special dispensation to stay open.

Dayton’s office told Minnesota reporters it’s unlikely he’d negotiate with Republicans until after the holiday weekend, a time when legislators are sure to receive an earful from outraged constituents.

“People are angry,” said Kathryn Pearson, a political scientist at the University of Minnesota. “But the political bases are not necessarily urging compromise. They’re urging their representatives to hold firm.”

Republicans offered a two-page “lights on” budget bill that would have kept the state operational another 10 days. Dayton rejected it, saying he wanted a full budget. In a late-night news conference Thursday, the governor blamed Republicans for the impasse. The two sides are $1.4 billion apart.

“Instead of taxing their friends, they would prefer very damaging cuts to health care, K-12 and higher education, state and local public safety, mass transit, and other essential services,” Dayton said of the GOP.

Dayton narrowly won election last year on a platform of higher taxes for the wealthy. Republicans took over the statehouse at the same time, pledging no new taxes and deep cuts in government spending.

Pearson said that Dayton may have the upper hand, only because he is not up for re-election until 2014 and legislators must face voters next year. “The longer this goes on,” she said, “the more it will be an issue in November of 2012.”