Minnesota Dem gov fights GOP's 'no new tax' stance (AP)

ST. PAUL, Minn. – Mark Dayton, the Democratic governor of Minnesota who let his state's government shut down rather than accept the refusal of Republican lawmakers to raise income taxes on the wealthy, was born into money.

It made him sure of something: "I grew up in that environment. I know people can afford it."

Most of Minnesota state government stands idle this weekend, the result of Dayton's and the GOP-controlled state legislature's failure to pass a new budget by Friday's deadline. State parks and the Minnesota Zoo are closed, highway projects are stalled and thousands of government workers are at home without pay for the foreseeable future.

The battle over the state budget in Minnesota echoes those underway in Washington and in other state capitals, as Republicans still energized from gains in 2010 focus on cutting spending and refuse to consider tax increases of any kind. New GOP governors such as New Jersey's Chris Christie and Florida's Rick Scott have made deep cuts in state programs and employee benefits, while even some of Dayton's fellow Democratic governors, such as New York's Andrew Cuomo, have eschewed tax hikes amid a fragile economic recovery.

The soft-spoken Dayton refuses to cave to the GOP's stance that higher taxes are verboten. Since taking office, he has championed tax hikes on rich Minnesotans — or at least some form of new state revenue — as a necessary part of any solution to closing the state's $5 billion budget deficit.

"My father's favorite quote was from the Bible: `Unto whomsoever much is given, of him shall be much required,'" Dayton told The Associated Press on Friday afternoon in his Capitol office. The front doors to the domed building were newly adorned with signs: "This building closed until further notice due to the state government service interruption."

Dayton's great-grandfather founded a Minneapolis-based dry goods store and along with family members built it into the department store chain that's now Target Corp. The Dayton family no longer controls the company, but it left Mark Dayton a wealthy man who's spent large chunks of his fortune on a quirky political career that took him to the U.S. Senate (he quit after one term) and now, at 64, to the state's top political office.

"I don't underestimate his resolve," said Doug Magnus, a Republican state senator and a farmer from the state's southwest corner. "Other people around the table, including the Republicans, have political things in mind. I believe the governor feels he has one term to do what he thinks is the right thing to do, and he's going to do it."

The political ideology underpinning Dayton's actions isn't limited to his experiences as a personally wealthy man. In Friday's interview, he described his years after graduating from college at Yale, which included a short time teaching in an inner-city school in New York City.

"All these kids in my classroom were just as wonderful creations as I, and through no choice of our own, I was born into this great good fortune and they were born into this abject poverty," Dayton said. "The injustice really seared my conscience."

Dayton said his political views are more sophisticated now, but protecting the downtrodden has remained a constant. He decried the spending cuts that would likely be necessary without more tax money in Minnesota: "We're going to cut home health care attendants for seniors? We're going to deny elderly widows the at-home services they rely on? All so that millionaires do not have to pay another dollar in taxes?" he asked.

After his stint on the East Coast, Dayton returned to Minnesota and drifted into politics, first in appointed positions under a Democratic governor and then as a perennial candidate. He ran for U.S. Senate and lost in 1982, served a single term as elected state auditor from 1991 to 1995, ran for governor and lost in 1998, then in 2000 ran and won a U.S. Senate seat by knocking out a conservative Republican incumbent.

Dayton served a single, mostly undistinguished term marked mainly by his decision in 2004 to close his Senate office due to an unspecified terrorist threat. He was the only senator to do so, and the incident came back to haunt him two years later when a national magazine named him one of the country's five worst senators.

By that time, Dayton had already announced he wouldn't run again, saying he didn't want his legacy to be that he brought Democrats "to defeat or debacle" in the race.

To the surprise of many political observers, Dayton quickly jumped back into politics. Initially ridiculed when he announced in early 2009 that he'd run for governor, Dayton was sworn in this year as the state's first Democratic chief executive in two full decades. He just barely beat a conservative, tea party-beloved Republican in a race that also featured a moderate ex-Republican running as an independent.

Dayton has never made being a politician look easy. Quiet and intense, he speaks in a halting manner, sometimes garbles his sentences and lacks a smooth personal touch. Twice divorced, he is close to two adult sons and lives in the governor's mansion with two German shepherds — one named for a southern Minnesota town, the other for a northern part of the state.

He has talked openly of struggling with drinking and depression, and early in his last campaign revealed that he suffered a relapse late in his Senate term and sought treatment when he left Washington. Being governor is difficult, Dayton said, but added that the job's demands have been good for his mental health. "I feel very good. I sleep well. I get good rest and I'm ready for whatever comes," he said.

Last week, President Barack Obama echoed Dayton when he called for upper-bracket income tax increases as a means of shrinking the country's debt. Obama even used a term Dayton has repeated like a mantra: A "balanced approach" to describe a mix of tax increases and spending cuts they both have said is the surest way to restore stability to government budgeting.

"I do think Democrats around the country are looking for models of courage, and strong leaders they can use as a model," said Jeff Blodgett, a longtime friend who was an adviser to one of Dayton's closest allies, the late Sen. Paul Wellstone. "He isn't afraid to be honest and direct about his principles."

Dayton stands now as the heir to Minnesota's long line of successful liberal Democrats, a tree that includes Wellstone and former vice presidents Hubert Humphrey and Walter Mondale. Mondale, who was mocked in the 1984 presidential campaign against President Ronald Reagan for saying he would raise taxes, is a political patron of Dayton's.

Mondale lost badly, and Reagan went on to raise taxes. On the first day of Minnesota's shutdown, Mondale recalled his 40-year friendship with Dayton and said he hoped to see him win his tax fight.

"He was green at first. I think he was insecure at first," Mondale said. "It took him a while to get his feet under him, and it seems like it's all come together in the governor's seat. It seems like he was made for it and he's going to do it."

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Associated Press reporter Martiga Lohn contributed to this report.

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Patrick Condon can be reached at http://twitter.com/pcondonap

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Minnesota government shutdown begins after talks fail (Reuters)

MINNEAPOLIS (Reuters) – Minnesota's state government began a broad shut down on Friday going into the July 4 holiday after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal.

Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year.

The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed and state parks and campgrounds closed ahead of what is usually their busiest stretch of the year for the July 4 holiday.

Dayton and Democratic legislative leaders Senator Tom Bakk and Representative Paul Thissen met for more than a week with Republican leaders including House Speaker Kurt Zellers and Senate Majority Leader Amy Koch. The leaders met several times on Thursday in the governor's office.

Neither Dayton nor the Republican leaders gave any indication when they would meet next to discuss the budget.

"I deeply regret that the last week of intense negotiations between the Republican legislative leaders and Senator Bakk, Representative Thissen and myself have failed to bridge the divide between us," Dayton said in a speech.

He said his last proposed two-year general fund budget was $35.7 billion, but the differences between his approach and the Republican leaders had not changed since January. The gap between the two sides stood at $1.4 billion, he said.

Republican leaders had asked Dayton to call a special session to approve a temporary extension of funding for 10 days while the budget negotiations were completed, saying that they believed they were close to a budget deal.

Dayton dismissed the offer as "a publicity stunt."

"They have known for two months, I have said consistently, that I would not agree to anything until I agree to everything," Dayton said.

All but the most critical state functions will be suspended while the spending impasse continues into the new fiscal two-year period that starts on Friday, which would make the 2011 shutdown much broader in scope than one in 2005.

Dayton and the Republican-led legislature have been far apart in their public positions over a two-year budget plan to close a $5 billion deficit. Only the agricultural budget was approved during the legislative session that ended in May.

Dayton's first budget proposal included an income tax increase on the wealthiest state residents and an expansion in overall spending. Republican leaders first sought some tax cutbacks in aiming to halt spending increases.

In the latest negotiations, Republicans had offered to raise $1 billion of revenue by shifting schools payments and issuing bonds for tobacco settlement money and Dayton offered to limit his proposed income tax increase to residents earning more than $1 million per year. None of the offers stuck.

"Tax revenues are still in my view the fairest way to resolve this, but we have offered an awful lot of different possibilities and they have too," Dayton said.

Republican leaders had said they believed the sides were close to agreement, but Thursday afternoon Koch told reporters that after a temporary funding extension they could "work for the next week or so and get everything wrapped up."

Prison staffing, state police patrols and staffing at nursing and veterans homes were among services found critical and allowed to continue by a Ramsey County judge. Staffing at numerous other departments will be cut to the bare bones.

Other critical functions included the executive and legislative branches of state government and the courts.

Payments to schools and local governments, and programs such as food stamps, Medicaid and temporary assistance to needy families also will continue during the shutdown.

However, numerous other programs were not considered critical and will be closed including the state lottery, the gambling control board and the racing commission.

About 100 road and bridge programs not considered critical to prevent an imminent bridge collapse or in response to a road emergency also were to be suspended after Thursday.

The Minnesota Zoo would also close to the public with spending permitted only to feed and care for the animals.

And among popular northern Minnesota spots, vacationers may stay at the privately run villa and lodge operations at Giants Ridge golf resort during the shutdown, but its lauded golf courses will be closed.

(Reporting by David Bailey; Editing by Greg McCune and Jerry Norton)

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Minnesota shutdown prompts political blame game (AP)

By MARTIGA LOHN and PATRICK CONDON, Associated Press Martiga Lohn And Patrick Condon, Associated Press – Fri?Jul?1, 9:30?am?ET

ST. PAUL, Minn. – With Minnesota's state government closed for business, the focus shifted Friday to who's to blame.

The shutdown started at 12:01 a.m. Friday, the product of an ongoing dispute over taxes and spending between Democratic Gov. Mark Dayton and Republican legislative majorities. Talks fell apart well before the deadline, leaving state parks closed on the brink of the Fourth of July weekend, putting road projects at a standstill and forcing thousands of state worker layoffs.

The heads of the state's Republican and Democratic parties each say the other side is responsible.

Minnesota GOP Chairman Tony Sutton called Dayton a "piece of work" and accused him of inflicting "maximum pain" for political reasons.

Democratic-Farmer-Labor Party Chairman Ken Martin laid the blame on Republicans, saying they drove the state to a shutdown to protect millionaires from tax increases sought by Dayton.

"Shame on you for putting the interests of your rich campaign donors ahead of the well-being of the constituents you are supposed to represent," Martin said.

The Alliance for a Better Minnesota, a left-leaning group supportive of Dayton, plans to run weekend radio ads in three popular vacation areas blaming Republicans for the impact of the shutdown, including closed state parks. The group also debuted a "shutdown shame" website.

Though nearly all states are having severe budget problems this year, Minnesota stands as the only government to have shut down, thanks to Dayton's determination to raise taxes on high-earners to close a $5 billion deficit and the Republican Legislature's refusal to go along. The shutdown would be Minnesota's second in six years as the partisan divide deepens.

Here, as in 21 other states, there's no way to keep government operating past the end of a budget period without legislative action, according to the National Conference of State Legislatures. Even so, only four other states — Michigan, New Jersey, Pennsylvania and Tennessee — have had shutdowns in the past decade, some lasting mere hours.

There was no word early Friday of any plan to continue budget negotiations.

Even before the final failure, officials padlocked highway rest areas and state parks, herding campers out. The full impact will hit Friday morning as thousands of laid-off state employees stay home until further notice and a wide array of services are suspended.

Critical functions such as state troopers, prison guards, the courts and disaster responses will continue. On Friday morning, former Supreme Court Chief Justice Kathleen Blatz will begin the court-appointed job of sifting through appeals from groups arguing in favor of continued government funding for particular programs.

Dayton addressed the looming shutdown at about 10 p.m. Thursday, emerging after a day of fitful negotiations with legislative Republicans to say the two sides were still fundamentally divided over how much the state should spend the next two years and that the shutdown was inevitable.

"This is a night of deep sorrow for me," Dayton said.

Republican lawmakers had gathered at the Capitol for hours, demanding that Dayton do what he had said for months he would not do: Call a special session so they could pass a "lights on" budget bill to keep the government running. The governor insisted he would not give up that leverage without a total budget solution that incorporated the many facets of state spending. The governor has sole power to call a special session, but once one starts, it's lawmakers who will decide when to adjourn.

"I think the governor's insistence that we pass a full budget is not going to be of much comfort to Minnesotans who are going to see delays on the highways because construction projects stop," said Senate Majority Leader Amy Koch, R-Buffalo. "It's not going to comfort people who can't use our state parks, or who can't get a driver's license."

Officials in state parks had already started herding out campers Thursday, saying it would have been too difficult in the dead of night. Also Thursday, people rushed to get driver's and fishing licenses at offices and service centers that would be locked up by morning.

A stoppage in Minnesota also halts non-emergency road construction, shuts the state zoo and Capitol, and stops child-care assistance for the poor. More than 40 state boards and agencies expected to go dark.

The shutdown in retrospect was something of a slow-motion disaster, with a new Democratic governor and new Republican legislative majorities at odds for months over how to eliminate a $5 billion state budget deficit. Dayton has been determined to raise taxes on high-earners to close the deficit, while Republicans insisted that it be closed only by cuts to state spending.

Even after the shutdown looked like a certainty, Dayton and Republicans did not soften their conflicting principles. Dayton said he campaigned and was elected on a promise not to make spending cuts to a level he called "draconian." He said he has been more flexible than Republicans in trying to compromise in order to acknowledge their principles.

"I've gone halfway, and I'm not going to go further," Dayton said.

Republicans have been equally firm. Republican Sen. Michelle Benson said earlier in the day she wouldn't budge on raising taxes or new revenue in any form.

"If we don't start taking a different approach to how we manage our government, we're going to swing from one bad economic circumstance to another," Benson said. "We can't just keep throwing more money at government and hoping that makes things better."

Dayton has proposed raising taxes on couples earning more than $300,000 and individuals making more than $180,000. He said Thursday night that he had offered to target the tax increase to even higher earners, those making more than $1 million a year.

Republicans have opposed any new taxes or new revenue sources, arguing instead that the state should rely on spending cuts, including deeper reductions in health and welfare spending than Dayton is willing to accept.

Some GOP moderates have talked of breaking the impasse with other means of raising revenue, such as eliminating tax breaks or authorizing a casino. Dayton has said he is open to such ideas.

Lawmakers now face the prospect of spending the holiday weekend at parades and events in their districts, facing a public who can point to an oversized symbol of gridlock at the state Capitol. Some admitted that Dayton might have the upper hand politically.

"I personally think the Republicans will probably be more damaged than the governor" by the shutdown, said freshman Rep. Mike LeMieur, R-Little Falls, who toppled an incumbent Democrat in November. "The fact is that we're all up for re-election again next year, and he's not up for three years."

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