Last night, in time for the 6 o’clock news, Governor Dayton once again demonstrated the political shrewdness of his legislative operation along with his disdain for the Minnesota Legislature. Facing both a Constitutional and self-imposed deadline to sign or veto the budget bills passed in both the Regular and Special Session, the Governor held a press conference to announce his decision on the Budget Bills and an outstanding policy issue.
While much of yesterday’s news from the Governor dealt with the budget, the Governor also announced his decision to veto the Uniform State Labor Standards Act or pre-emption. The legislation was a GOP and business community legislative priority. Supporters of the legislation were hoping the decision to combine the proposal with several Dayton Administration legislative priorities would convince the Governor to sign the bill. The legislative package included the Governor’s proposals for paid parental leave for state employees, the ratification of an outstanding contract, a version of the Governor’s wage theft proposal and much needed reforms to Minnesota’s public employee pension system. The Governor’s veto of the legislation demonstrates the influence Minnesota’s labor unions have over the Dayton Administration.
The veto also means the Minneapolis and St. Paul Paid Sick Leave Ordinances will go into effect on July 1, 2017. Those ordinances will create numerous challenges to Minnesota employers. The fact that the two cities were unable to pass identical ordinances means employers with employees in both cities will need to create and manage separate benefit programs.
If other Minnesota cities move ahead with their own ordinances, Minnesota will become a patchwork of local labor laws. Minnesota employers continue to hold out hope the courts will throw out the Minneapolis ordinance. Legal arguments in the Minneapolis case are scheduled for later this summer. In the meantime, last week the Minneapolis City Council directed their staff to prepare an ordinance to create a $15/hour minimum wage for businesses with employees working in the city.
Adding more fuel to constitutional questions regarding the Governor’s actions, the Dayton Administration is also arguing the legislature approved the contract and benefit provisions included with the pre-emption proposal. The administration is suggesting the mere fact they were included in legislation adopted by both the House and Senate is enough, regardless of whether the Governor signed or vetoed the bill with the provisions. This decision by the Governor will also likely face a constitutional challenge in the courts. The decision could create a situation where future labor agreements could be passed by the legislature when opposed by an administration. The decision could eliminate the role the administration plays in negotiating future labor agreements. While the decision by the Dayton Administration clearly benefits labor this time, future contracts could be at risk if they were dealt with in a comparable manner.
The Governor’s decision, he would sign the budget bills totaling more than $46 billion for the next biennium. While many of his progressive allies were urging him to veto the entire budget and start over again in negotiations with the GOP Legislature. The Governor wisely realized the deal he had in hand was likely better than anything he could possibly accomplish in yet another Special Session. The Governor also recalled the 20-day government shut down in 2011, when he was unable to reach a budget agreement with the GOP controlled legislature. In 2011, the Governor ended the stalemate by caving to the GOP demands to not raise taxes to address a $5 billion deficit. This year should have been much easier for compromise with a $1.6 billion surplus.
The Governor also announced he would allow the GOP Omnibus Tax Bill to become law without his signature. The tax bill provides nearly $650 million in tax cuts. The bill provides tax cuts to seniors and students, also among other reforms eliminates the automatic escalator on tobacco and commercial industrial property taxes. The Governor so outraged by the tax cuts for corporations, special interests and wealthy estates was unwilling to put his signature on the bill. The Governor wanted to veto the legislation. However, Legislative Leaders who felt burned by the Governor’s veto of the tax bill in 2016, inserted a provision in the Omnibus State Government Finance bill voiding funding for the Department of Revenue if the tax bill failed to become law.
Just before midnight last night, following additional advice from the Minnesota Attorney General the Governor announced he would be signing the Omnibus Tax Bill. While the Governor is provided the option of allowing a bill to become law without his signature during the first year of a two-year session, bills passed in a Special Session which adjourn “Sine Die” are not provided the same options. The Governor’s legal team originally suggested because the bill passed within three days of adjournment of the Regular Session the Special Session rules did not apply.
In response to the legislative “poison-pill”, the Governor line-item vetoed the budget for the Minnesota Legislature. The Governor in his nearly the three-page letter, Governor's Letter to Leaders, read at his press event, suggested he would call the legislature back for another “special session” to restore their funding. However, he would only do so once they agreed to remove items, he according to legislative leaders agreed to during the final budget negotiations. Those demands included the removal of the repeal of the automatic inflators on tobacco and proper taxes, reforms to the Estate Tax and the adjustment of the tax on premium cigars. The Governor also demanded changes to language he had agreed to regarding teacher licensing and limiting access to driver’s licenses for illegal immigrants.
As of this morning, Legislative Leaders have suggested they have no intention in re-starting any budget negotiations with the Dayton Administration. They have indicated they plan to raise a legal objection to the Governor’s decision to line-item their budget for the next two years. Legal experts are suggesting the Legislature likely has a convincing argument the Governor has violated the separation of powers between the legislative and administrative branch when he virtually eliminated their existence with his veto.
The House and Senate have roughly $10 million in budget reserves which would allow them to continue operations until mid-august. The veto not only cancels legislative pay, but also cancels pay for all employees of the legislature, partisan and non-partisan staff, legislative councils and the Legislative Auditor. In 2011, during the 20-day government shut the court appointed Special Master ruled the legislature was an essential service and ordered their operations be funded even without the existence of a state budget. Many legal experts believe at a minimum, the courts would come to a similar conclusion if the stalemate with the Dayton Administration cannot be overcome.
The outcome of the Governor’s actions has clearly created a constitutional crisis which will not likely be resolved without the intervention of the Minnesota Supreme Court. The legislature will continue to be funded through June 30th, 2017 from the budget adopted in 2015. It is likely lay-off notices will be sent to all legislative employees in the coming days.