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Published in Print: June 20, 2001, as Dispute Over Taxes, Education Threatens Shutdown in Minn.

Dispute Over Taxes, Education Threatens Shutdown in Minn.

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Ongoing disputes in the legislature over education spending and tax cuts last week left a government shutdown looking like a serious possibility in Minnesota.

As Senate and House negotiators continued to labor over the 2002-2003 biennial budget and central aspects of Gov. Jesse Ventura's tax-overhaul plan in a special session that the governor called on June 11, state agencies were preparing for a possible shutdown.

The commissioner of employee relations sent out notices informing state employees that noncritical workers would be told no later than 4:30 p.m. on June 29 not to report to work in the event of a shutdown. June 30 is the last day of the 2001 fiscal year.

"While we are confident the legislature will be able to reach an agreement on tax and spending issues, the absence of state government appropriations 20 days before the end of the fiscal year leaves us no alternative: We have to plan for a government shutdown," Commissioner Julien Carter said at a June 11 press conference.

The Ventura administration is leaning toward a furlough of state employees instead of a shutdown to avoid the expense of layoffs and unemployment pay, Steve LeBeau, a spokesman for Gov. Ventura, an Independent, said last week.

"Our approach is to furlough employees, because it's unofficial time off and it's cheaper," Mr. LeBeau said, adding that the administration projected an actual shutdown could cost some $240 million in a worst-case scenario.

Six public-employee groups filed suit Thursday to block the furlough plan.

An Impasse

Mr. Ventura, meanwhile, still refused to sign any budget bills last week unless the legislature sent him a tax bill that included his plan for shifting the basic costs of K-12 education from local property owners to the state.

"That's his line in the sand," Mr. LeBeau said.

Only last month, it looked as if the major differences over state spending and taxes were resolved with a Memorial Day weekend agreement brokered by Mr. Ventura. But talks broke down again in a matter of days between the Democratic-controlled Senate and the Republican House. ("Minnesota Poised To Shift More School Spending to State," June 6, 2001.)

Senate Democrats wanted proposed tax breaks for business and industry scaled back and more money directed to education. But Senate Education Chairwoman Sandra L. Pappas predicted the two sides would narrowly avoid a government shutdown.

"We won't let the government shut down, but it will go down to the wire," Ms. Pappas said. "The Senate Democrats really feel we're not adequately funding our schools. What's being offered would mean layoffs and larger class sizes."

When asked how far apart the two sides are on education funding, Ms. Pappas said, "I think $100 million would make a deal."

House Republicans, however, were holding firm on the tax reductions for business last week, and some legislators accused the Senate of reneging on the deal reached with the governor.

"We really haven't accomplished much, and it's all tied up with the tax plan," said Rep. Alice Seagren, the Republican chairwoman of the House education finance committee.

Earlier in the month, the governor and the House were "adamant about keeping the reform package intact," Ms. Seagren said. But during last week's special session, Mr. Ventura appeared unconcerned with the legislature's progress.

"He played golf Monday at a charity golfing event," Ms. Seagren noted. "When he called the special session, he basically took himself out of the negotiations, and I think that was a bad political move on his part. He has to decide how badly he wants this big tax-reform package."

Even if a tax bill is passed, implementing the changes for fiscal 2002 could be a major headache for schools and counties.

The deadline for informing local governments and school districts about property-tax rules for 2002 was June 11. Both must now calculate their budgets and send out tax bills based on current law—and be prepared to redo their work if a tax overhaul is approved this summer, the state revenue department warned in a June 11 letter to localities.

Vol. 20, Issue 41, Page 20

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