Revenue plan furthers rift

Martiga Lohn

Thursday, July 7, 2005 | 9:32 a.m.

ST. PAUL -- Gov. Tim Pawlenty and Senate Democrats continued to disagree over gambling revenue early this morning, as talks to end the unprecedented state government shutdown took on their most serious tone since the stoppage began seven days ago.

Pawlenty's latest offer includes revenue from a casino at Canterbury Park racetrack, and the Republican governor pushed for floor votes in the House and Senate on the issue. Democrats said the so-called racino is a no-go.

House Minority Leader Matt Entenza, DFL-St. Paul, predicted a racino would face legal challenges that would prevent it from generating roughly $210 million for the state's two-year budget. Attorney General Mike Hatch said earlier this year that courts would probably strike down a new casino unless voters amended the constitution to allow it.

"We don't want to waste our time on it," Entenza told reporters during a break in talks. "It's an illegal proposal that won't generate revenue."

Negotiations broke off around 1 a.m. today, with both sides saying they wanted to crunch numbers from Pawlenty's newest proposal for subsidized health care, which he said would require less revenue than previously thought. They planned to pick up negotiations this morning.

"We are trying to redouble our efforts to get the negotiations moving forward," Pawlenty said Wednesday evening at a news conference. "The gridlock needs to come to an end."

An offer from Senate Democrats on Wednesday afternoon contained what they said were major concessions to Pawlenty, including a measure to implement performance-based pay for teachers.

Their offer spurred the governor to hold direct talks with all four top legislative leaders, his first face-to-face meeting with that group since talks broke down last week and the state government was shut down for the first time in Minnesota history.

The continuing stalemate has forced about 8,900 state employees off the job since Friday. Highway rest areas are barricaded, and residents can't get new drivers licenses or an array of services provided by nonprofits that rely on state funding.

The most controversial part of Pawlenty's latest offer would authorize a casino at the racetrack in Shakopee and use the state's share of the revenue to raise pay for state employees, give tax benefits to married couples and middle-income taxpayers, clean up the state's waters and boost aid to cities and counties.

Democrats say the racino won't pass either house, an argument the governor challenged.

"There's a realistic chance that racino would pass the House and the Senate, particularly if it was part of a package," Pawlenty said. "It wouldn't take that long to vote on it."

Both sides want to add $867 million in new K-12 education spending, which works out to 5-percent increases in per-pupil funding for schools in each of the next two years.

They continued to haggle over details of health and welfare spending. Pawlenty said his latest offer would preserve MinnesotaCare, the state's health insurance program for the working poor, for most current recipients. Democrats have been against any cuts to the program.

Pawlenty's offer ties spending for schools, health care and transit to $404 million over two years from a 75-cent-a-pack cigarette charge, which he calls a fee even though others have dubbed it a tax. It also taps $273 million in other revenue sources that both sides agree on.

The Democrats pushed a proposal to restore lost pay and benefits for furloughed state workers. The governor said he was open to the plan, although details have yet to be worked out.

Both House and Senate were scheduled to reconvene Thursday. If a budget deal is reached, both houses could then take up legislation to end the shutdown, said Senate Majority Leader Dean Johnson, of Willmar.