- Associated Press - Friday, May 20, 2016

ST. PAUL, Minn. (AP) - Legislative leaders cleared a major hurdle Friday evening in their quest to divvy up a $900 million budget surplus only to find another obstacle, as Gov. Mark Dayton vowed he won’t sign a compromise package of more than $250 million in tax cuts unless it’s paired with extra funding for a preschool program and other spending he deems critical.

Less than three days are left to finalize plans or go home empty-handed, and leaders from the Democratic-led Senate and Republican-controlled House have reported little progress through hours of on-and-off private meetings on other issues. But with a tax bill out of the way, leaders began to turn their attention to supplemental budget spending, such as the emergency funds needed at the state’s mental health facilities and a deal on a major road and bridge repair package that came to a stalemate in negotiations earlier this week.

Dayton put the onus on lawmakers to gain his approval for the tax cuts for farmers, businesses, college graduates and parents with child care costs. He’s seeking $100 million to build out broadband Internet infrastructure, urgent funding at state prisons and mental health facilities and a $25 million appropriation for a preschool program - a priority he called “non-negotiable.”

“They can spin it however they want, but I put them on notice: They’re responsible if they’re not willing to meet my requirements,” the Democratic governor told reporters late Friday.

The compromise tax package finally broke a logjam in surplus spending negotiations as the Legislature careened toward adjournment on Monday.

The tax deal includes a property tax exemption for the first $100,000 in value on commercial and industrial land - a potential windfall for both businesses and farmers. A new program would offer tax credits to college graduates paying off student loan debt, though the mechanics of how that system would work weren’t clear. And one of the governor’s own proposals made the cut: expanding a child care tax credit to more Minnesota families.

“There are a fair amount of really good things for Minnesota families,” said Sen. Rod Skoe, the Democratic chairman of the Senate’s Tax Committee.

But some smaller items in the deal may raise questions. Extending an event tax exemption for the upcoming Super Bowl in Minneapolis would cost the state nearly $1 million, and removing the state’s sales tax on stadium suites would run an even higher tab. A handful of reductions on tobacco taxes - including removing the automatic, annual tax hikes to cigarettes and other products that lawmakers approved as part of a major tax increase in 2013 - immediately triggered concern among some Democrats.

Dayton said the tax bill wasn’t far off the mark but repeatedly said it was insufficient without other spending.

Earlier Friday, Senate Majority Leader Tom Bakk said he and Republican Speaker Kurt Daudt were closing in on supplemental budget plans that would come close to meeting the governor’s demands.

“It’s a bend of giving him everything he wanted in some areas and a haircut in a few other areas,” the Cook Democrat said.

The prospects of reaching a compromise to fund billions of dollars in road and bridge repairs were still at question Friday. Negotiations between top Democrats and Republicans got hung up this week on a partisan divide over mass transit projects in the Twin Cities metro - Republicans oppose them while Democrats say they’re critical - prompting legislative leaders to put it off to the side. The size and scope of a list of public construction projects funded through borrowing was also still in the works.

Dayton held out hope that everything would come together.

“They have 48 hours to get their work done. They’ve had 11 weeks,” he said.


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