Moments that led to Capitol dead end

07/03/2005

Dane Smith and Patricia Lopez,
Star Tribune

A phrase used by Gov. Tim Pawlenty provokes a backlash. A junior legislator discovers an obscure “fee” that could raise oodles of revenue. A major bill passes, and some see trouble ahead.

The script for public legislative drama is often written in behind-the-scenes events. Here are a few of the moments that mattered in the ill-fated 2005 session, the first to end in a partial shutdown of state government.

Nov. 23, 2004: Renewing a vow

About three weeks after an election that nearly cost House Republicans their majority, Pawlenty had a private 90-minute talk with businessman Mike Wigley, founder of the mighty Taxpayers League of Minnesota, and David Strom, its voluble president.

Wigley and Strom were intent on holding Pawlenty to his trademark no-new-taxes pledge, made during the 2002 campaign. Declining to disclose who said what, Strom recalled last week that Pawlenty reaffirmed the commitment.

Before the regular session ended, Pawlenty broke with the league and proposed a “health impact fee” on cigarettes. That has allowed him to claim that only he compromised enough to offend an important ally.

But since last week’s breakdown, Pawlenty has said that the fee was off the table.

By any reckoning, the pledge has been a major force in all three of Pawlenty’s legislative sessions. His refusal to budge on income taxes, sales taxes and gasoline taxes, even when promoted by moderates in his own party, was crucial in this year’s impasse.

Jan. 19, 2005: Poverty tour

The scene was a playroom filled with toys and kids’ artwork at a day-care center at St. Matthew’s parish on the multi-ethnic West Side of St. Paul. Representing the state’s two largest religious denominations, Catholic Archbishop Harry Flynn and Lutheran Bishop Peter Rogness were on a daylong tour to draw attention to the problems of the poor and the damage done by budget cuts.

The emotional peak, said Kathy Tomlin, director of the Catholic Office for Social Justice, was when a 4-year-old Hispanic girl at the center piped up and said that she always ate at the center because there was no food at home.

Several times over the next few months, the bishops referred to that hungry child in explaining their unusually aggressive advocacy in the budget debate. Joined by leaders of the Jewish and Islamic faiths, the bishops were the most prominent voices in a muscular coalition, including labor and nonprofit groups, that kept up pressure for tapping into the income tax and restoring some of the cuts from the 2003 session.

And that helped provide plenty of cover for DFLers to propose raising almost a billion dollars in new revenue from the top 3 percent of households, even though they knew that of all tax options, the income tax was the least acceptable to Pawlenty. Yet DFLers stuck to it long after the regular session and withdrew it just two days before the shutdown, leaving few alternatives.

Jan. 25: Fighting words

On cold winter mornings, Maureen O’Connell, a lawyer and mother of two who lives in St. Paul’s Crocus Hill neighborhood, likes to read her paper in bed. Two words she saw in the Star Tribune on Jan. 25 heated her blood to boiling.

Pawlenty, in previewing his budget roll-out that day, had started using the phrase “welfare health-care” to describe the subsidized health-care coverage for about 45,000 working Minnesotans.

“I work every day with people who are officially below the poverty level and who are also working hard at low-paying jobs, and that term (welfare) is extremely stigmatizing,” said O’Connell, who is a director of the Legal Services Advocacy Project. “It was so inflammatory it just galvanized the advocate groups.”

This backlash was another encouragement for DFLers to draw a line in the sand. Led by Sen. Linda Berglin of Minneapolis, the weaver of much of the state’s generous safety net, the Senate refused any deal that did not protect Minnesota Care.

Republicans largely dropped the disputed phrase and gave ground on the program cuts in bargaining. But at the very end, DFLers said Republican back-tracking on those concessions was crucial in the breakdown that led to shutdown.

March 29: Bonding early

On an early spring evening, House Republicans filed down a private hall off the old Supreme Court chambers to room 217 to talk about something daring: early passage of a huge bonding bill for public construction projects.

Momentum had been building since Pawlenty had first urged an early special session in November to pass a bonding bill. Senate DFLers had been eager for one ever since the previous year’s legislative meltdown.

That evening, Rep. Dan Dorman, first-time chairman of the Capital Investment Committee, watched as member after member got up to support the bill. “There was this upbeat feeling,” said Dorman, R-Albert Lea. “It was this sense of optimism, that if we could get this done, maybe there was hope for the session.”

But former Capital Investment Chairman Phil Krinkie had an “uh-oh” feeling. Historically, the bonding bill had always come last and has been relied on as important leverage in deal-making.

“You’ve got to make the kids eat their broccoli before they get dessert,” said Krinkie, R-Lino Lakes. “Anything that could have been used to persuade members to modify their positions would have been helpful at the end of the session,” he said.

The theory that Pawlenty gave away too much too soon and got nothing for it now is gaining favor among Republicans.

April 7: The little fee that could

Junior legislators usually don’t get much face time with the governor, so Rep. Ray Cox, R-Northfield, was excited in early April when he got a summons to the governor’s inner sanctum. Cox, a building contractor from Northfield only in his second term, had something the governor wanted.

A moderate in a swing district, Cox narrowly won reelection in 2004 with a message that he favored increases in taxes on gasoline and tobacco to avert the kinds of severe cuts that occurred in the 2003 session. Plunging into the statute books, he discovered a little-known “distributor fee” on cigarettes at the wholesale level. The fee raises only about $100,000 a year for the state, Cox said, but the real value is that it is clearly described in law as a fee.

Pawlenty has maintained that fee increases are okay, and that if something traditionally has been called a fee, then it should not be called a tax. Cox introduced a bill for a restructured “cigarette cost mitigation fee” that would raise $50 million.

“People kind of laughed at it,” Cox said. But Pawlenty, knowing that he might need a revenue-raising option later in the session, called Cox in for a serious chat in a little conversation pit away from his desk.

At the end of the regular session, Pawlenty startled practically everybody by transforming Cox’s idea into a 75-cent-per pack “health impact fee,” which would raise a whopping $380 million for the biennium. Critics on the left and right derided it as a tax pure and simple, and a regressive one at that.

But by the end of the special session, it was one of the few major revenue increases both sides could embrace.

April 11: “Our involvement was over”

Leech Lake Tribal Chairman George Goggleye was striding across the vast floor of the San Diego Convention Center, getting ready for a workshop at the National Indian Gaming Association’s annual trade show, when his cell phone rang. On the other end was an unlikely voice—Randy Sampson, president of Canterbury Park racetrack in Shakopee.

The tingling of apprehension Goggleye had felt ever since Pawlenty first proposed a state/tribal casino to bring a measure of wealth to his band—along with the Red Lake and White Earth bands—turned into full-blown anxiety. There was only one reason for Sampson to call—he wanted Goggleye to sign on to a deal that would bring Canterbury in as a partner in the state’s first non-Indian commercial casino.

“That was the signal to me we were never going to get the deal we had envisioned,” Goggleye said. “That’s when we knew we’d have to pull out.”

The northern bands had hoped for a pure partnership with the state. They were uncomfortable with going into business with a private non-Indian entity near another tribe’s casino, Mystic Lake.

Soon Leech Lake and Red Lake withdrew from the partnership. White Earth remains on the periphery, openly chary of the governor’s vague offer to satisfy his commitment to them by making the tribe a racino “stakeholder.”

The collapse of the much-heralded partnership proved a blow to Pawlenty, who had counted on revenues from both a state-tribal casino and racino to help close the budget gap. The racino, the only sort of gambling expansion that found measurable legislative support, remains a dark horse option, but it was removed from the table by Pawlenty on the day before the shutdown.

June 30: The bitter end

With two and half hours left in the two-year budget period, the Senate was in recess. Republican senators were eating sandwiches in their offices across the street from the Capitol. Senate Minority Leader Dick Day was waiting for delivery of a pizza.

He was summoned to the governor’s office and told that a deal was very close. But when Day got there he heard the flash that Senate Majority Leader Dean Johnson was going to unilaterally adjourn the session, ensuring a shutdown.

Day said he rushed to the stairs leading to the chamber but saw staff members and senators walking out. “I went back to the governor’s office, and they were stunned; they were beside themselves,” Day said.

Johnson said DFLers suspected that Republicans were preparing a “lights-on” bill that contained unacceptable amendments.

The next morning on the Senate floor, Day probably spoke for many citizens and those involved in the process when he shouted: “What the hell is this all about?”

After a furious exchange of finger-pointing, the gavel ended the session. Assistant Majority Leader Ann Rest, DFL-New Hope, worried about the reputation of the state’s entire political leadership, was overheard wryly observing: “We’re in a heap of trouble.”