Who's the Man? Okay, quiz time. Who is that witty, devilishly handsome lobbyist/political analyst and bon vivant who has been predicting for months that Governor Tim Pawlenty would not seek re-election? I guess if you drop witty, devilishly handsome, and bon vivant from the question, it gives it away. Yes, it's me. I've been predicting that. But, of course, I went to the Howard Cosell school of prognostication. I predict a ton of things and I remind everyone of when I am right, which is what I am doing right at this moment. You won't hear about the other 99 predictions.

The only thing that really surprises me here is the timing of the announcement, but I believe the timing indicates a couple of things that are going to have a pronounced effect on business in and around the Capitol for the next 19 months.

He danced around the question of "What's next?" at the press conference, but I think we are going to at least see an exploratory run for President. How does what is going to happen in the remainder of the Governor's term promote a Presidential run?

The Governor's decision to un-allot as opposed to calling a special session is likely to be extremely controversial in Minnesota, but it could make him look like a conservative Hercules nationally by promoting himself as the guy who can say "Here is how you deal with a Democratic Legislature (read: Congress). Who cares what happens in 2011? Governor Pawlenty has not only a bully pulpit, but a bully "scythe." For the next seven-plus months, he can make all kinds of executive decisions reducing spending and, in the process, re-directing priorities. And every one of those decisions is going to be accompanied by a press release. The state is going to be a Petri dish of sorts, with all types of experiments (let's hope none actually grow mold) taking place.

I'm not going to call the Governor out here. He's the Governor. He was elected. I was not. That certainly gives him a lot more latitude than I am afforded as someone on the sidelines. I firmly believe, especially after the Governor pledged to sign all the spending bills while vetoing any type of revenue increase through general taxation, that the Governor showed his hand. It was his intention to force a confrontation with the DFL-led Legislature at the end of the session and either prevail by having them knuckle under to his "bond for cash" idea of bring things to an untractable position where he would pull out the "un-allotment" card. And that's where we're at.

There are obviously political differences (think so, Sherlock?) between the Legislature and the Governor, but I view this more as a mega-political battle over a launch strategy for the Governor than a battle over policy per se. Everyone watching closely knew that the Legislature and the Governor were on a collision course. Mix in some personal animosity and political ambitions, and "soup's on."

Another thing to remember is that a poll was released late in the session showing (at least on that particular set of days) that most Minnesotans did not want Governor Pawlenty to seek a third term. The best way to kill Presidential aspirations is to lose your previous race.

In summation, no surprise here for me. My advice to all comes from Bette Davis' line in the character of Margo Channing in All About Eve, "Fasten your seatbelts, it's going to be a bumpy night."

Some things to look for in the days/weeks/months ahead.

• The Franken/Coleman race will be over when the Governor says it's over, regardless of how the Supreme Court rules. As in the case of the un-allotment process, this may be unpopular in Minnesota, but I expect the Governor to try and earn some points playing "Horatio at the bridge."
• Lots of new program ideas, including some in education, that streamline the system and don't cost (and purport to save) money.
• About 300 people putting together exploratory efforts for a possible run for Governor (Okay, I jest and exaggerate. It will probably cap out at 100.
• Look for the Governor on all types of national media, although I doubt he will host the next MTV Movie Awards or do a guest shot on "The Hills."

Here are the media links for the Governor's press conference:

MPR: http://minnesota.publicradio.org/display/web/2009/06/02/pawlenty_announcement

StarTribune: http://www.startribune.com/politics/state/46726117.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aU1yDEmP:QMDCinchO7DU

Pioneer Press: http://www.twincities.com/ci_12501848?nclick_check=1

Session Wrap-Up and Analysis. Buckle up, folks. This might be a long one. It's less than 24 hours after the curtain came down on the 2009 Legislative regular (note that) session and I've had time to reflect and read through some of the other session analyses, so I am ready to go.

As I've said and written before, I often find myself thinking about legislative sessions the same way I think about baseball seasons. In baseball, I remember the season Pete Rose had a 44-game hitting streak, or the year the Twins went from worst to first, or the year my all-time baseball hero Hank Aaron hit his 715th HR (against the Dodgers' Al Downing for those of you hungry for another useless tidbit of information). In legislative terms, I think of 1981 and all of its special sessions. I think of the billion dollar tax cut of 1985. I think of 2001 and the Ventura administration's "big plan (which we still regret)."

So how does the 2009 Legislative Session stack up in baseball terms? After thinking about it, I think the apt comparison would be the 1994 baseball season, when the players went on strike on August 12 and as a result the World Series was cancelled. I'm not going to go as far as to say which governmental branch (Legislature or Executive) went on "strike," but like the baseball situation in 1994, neither side in the intellectual fray could find a way to bridge the gap and, as a result, there was no pay-off.

It's not that big a stretch to say this session was, if not doomed, certainly on the precipice of complication since its beginning. First, there was the unprecedented $4.6 (then $6.4) billion deficit. Second, there was the fallout from the 2008 election, which, as it energized the national Democratic forces and ideas, similarly emboldened the majority caucuses in both the House and Senate. Third, there was the residual effect of the election as most moderate Republicans, both nationally and in Minnesota (although the trend started in 2006), lost their elections to Democrats while Republicans in safely Republican districts returned, making the Republican caucuses (again both in Minnesota and nationally) more conservative. Add to this framework the federal stimulus package and all the confusion caused for state level policy makers in trying to make this welcome, but unwieldy, infusion of revenue and you could see why there were complications aplenty.

Much is going to be made of the personalities in the process in the next coming days, especially Senator Pogemiller (who was vilified and held responsible for the break-down by a couple of Republican Senators right after the session) and Governor Pawlenty (who, if he is not running for President is certainly making it look that way). Personalities are part of the system and always have been. The Governor has a right to run for President and Senator Pogemiller, as leader of his caucus, has a right to lead his caucus and stand for both his, and his caucus' principles. I guess what I'm trying to say is that different personalities and different viewpoints have always been part of the process. What made this year different is that so many factors came together that they created a (oh, I hate this hackneyed term) "perfect storm" in which the personality variables made things just that much more difficult.

I am going to finish off this chapter of my analysis with a factor that probably had more to do with the clumsy ending than anything else and that was the inability of the legislative majorities to work across their respective bodies to assemble a cohesive and singular message with which to combat the Governor. The Senate came out early with their package of huge cuts, tax increases, and no shifts or use of one-time money. This was a very noble gesture, but it was too extreme to be politically palatable. Once the Governor suggested the shift of education payments, the possibility of it became very likely. It's not good policy, but it is better than a base cut and it provides the state with a big chunk of money with which to solve the deficit.

The House actually went further than the Governor in terms of the shift, not so much to avoid cuts, but to retain the integrity of the one-time money in the health care access fund and to avoid the bonding-for-cash proposal put forward by the Governor. It was pointed out a lot during the session that both the Senate and the House cut more in terms of state spending than the Governor did in his budget proposal. The Governor did have a considerable portion of revenue expended with several tax-cutting proposals, raided the health care access fund, and, as stated above, proposed that the state bond against the revenue in the state coffers that emanated from the tobacco settlement. He actually put close to an additional $200 million in education spending, with most of his cuts coming to health and human services.

The verbal serve-and-volley that took place over the past month centered on what the Republicans called "misplaced priorities" and accused the DFLers of continuing to fund a bloated health and human services system at the expense of education. There is more to this than meets the eye. I believe it's important to recall the federal debate on S-CHIP (the federal health plan that provides coverage to children in lower and lower-middle class families) and how that relates to the larger picture when it comes to the design and delivery of health and human services programs.

One point of contention in the federal debate is that Republicans believe that if programs like S-CHIP begin to reach into the middle class, it will create a client base for the federal program and that will erode, at least in theory, the private sector role in health care. It's the same argument that plays into the Social Security debate. I believe Social Security benefits should be means-tested, but I also acknowledge that if the benefits are means-tested, some segments of the middle class who no longer qualify for the same benefit level my withdraw their support for the program. I've rambled, but this is a battle for the middle class, and (I'm riffing here) conservatives believe that once a government program finds its way into the middle class, it is extremely dfficult to eliminate, making overall government spending difficult to cut, making the delivery of tax cuts more challenging.

At any rate, it wasn't until the last couple of weeks that the Senate and House majorities began to work with each other in earnest. The Senate simply could not maintain its cut-intensive position, which left them, to some extent, on the outside looking in when it came to determine the actual content of the spending bills. In other words, what the Senate did was a useful exercise (I would say a very useful exercise), but the implausibility of it actually becoming law put a real dent in the Senate's ability to help dictate the final content on a number of bills. The big exception to this pattern was in the tax bill, where the Senate was a full partner in the construction of each of the tax bills that went to the Governor.

It's getting late, so I will sign off for now, but I plan on composing another entry tomorrow to talk about some other observations about the session.

We Are Now Adjourned. It was a rough last 47 minutes. The Senate and House got the last tax proposal to the Governor. It wasn't without a lot of verbal wrestling and parliamentary wrangling, but the bill prevailed. It's on its way to the Governor where it will meet an almost certain (I've got a better chance of being the next commencement speaker at Notre Dame than that bill has a chance of being signed) veto.

The mandatory teacher health insurance conference committee did not come up. Look for Education Minnesota to lobby the Governor all summer and fall to sign that bill. I don't know if it will make any difference or not.

So, unless there's a special session, I won't be haunting these halls on a daily basis until Thursday, February 4, 2010.

One More Try. The Tax Conference Committee has decided to send one more bill to the Governor with their position on how to remedy the $2.7 billion budget gap between projected revenue and projected budget commitments. The provisions of the latest iteration look a lot like has been sent to the Governor in the past

• 73%/27% E-12 Payment Shift.
• Early Recognition of Education Property Tax
• New Tax Rate on High Income Minnesotans
• Increased Excise Tax on Beer, Wine, and Spirits
• Tax on Excess Interest

As a sweetener to the Governor, the conference committee included the sales tax exemption on new capital equipment purposes.

Some are wondering why the Tax Conference Committee is bothering, but I suppose there is nothing wrong-headed about sending up one more proposal, although it is likely to meet with the same fate as the tax bill that was sent to the Governor ten days ago.

I'll report on what happens in 47 minutes.

Update. The conference committee on the pension bill, SF 191, just passed the House on a vote of 125-9.

About the only thing I'm waiting on now is to see whether or not the mandatory teacher health care pool will come up yet tonight.

No Deal Yet. With a mere 5 hours left in the 2009 legislative session, we are still without a global deal on the budget. It appears that the Legislature is, if not satisfied with the absence of a deal, resigned to the fact that the Governor is not going to support the permanent revenue increases they are proposing and if that's the case, they are willing to let the Governor use his statutory and constitutional authority to correct the budget gap.

A few other bills are coming through the process and there's no shortage of energy as we head toward the witching hour. SF 191, the school bullying/harrassment prevention bill, passed the Senate 46-8 including amendments approved in the House. Because the Senate accepted the House amendments, the bill will now go directly to the Governor.

SF 191, the omnibus pensions bill conference committee (now without any pension provisions relating to education) passed the Senate 54-8. Because this is a conference committee report, it will also have to be approved by the House. With only two-and-a-half hours left before adjournment, things may get pretty tight. The House is discussing the cultural and outdoor resources dedicated funding bill (distributing the revenue generated from the 3/8 dedicated sales tax approved my Minnesota voters last election) and that may take a little time.

There still doesn't appear to be any type of deal brewing. Speaker Anderson-Keliher is chairng the House floor session, so she's not negotiating with the Governor. Senator Pogemiller is in caucus with his DFL members, so he's not with the Governor negotiating. And I haven't seen the Governor.

Back later with a wrap-up.

We Are Coming to the End. No deal has been struck yet and there doesn't appear to be one if the offing. In other words, this is the end of the legislative session but not the end of the effects of the legislative session. Things have reached loggerheads as the intellecutal--on principles and/or schools of thought and not mental candle power--gap on the approaches to raise revenue as part of the final solution are simply too far apart to be bridged at this juncture. It has boiled down to the Governor's bonding-for-cash versus the Legislature's tax increase package and a reluctance on both sides to reach across that divide.

Both sides have their ammo at the ready, so it's time to play Marvin Gaye's "Let's Get it On" and see where the chips fall with the public. In the absence of an agreement, this is going to be played out in dribs and drabs with the occasional activity spike throughout the summer.

The effects for the E-12 system are pretty clear and although not as dire as a cut to the education funding base, the almost certain action by the Governor to delay payments and employ the early recognition of property taxes will take $1.8 billion, if not totally out of the system, out of school districts' cash flow and force both fund balance reductions and short-term borrowing. I came into the session expecting a shift, but I thought that 80%/20% was probably the limit. The likely effects of the Governor's delaying of payments will go beyond that. But, it is too early to tell. At any rate, it is going to be a harrowing summer for school business managers throughout the state as discerning cash-on-hand issues will be a moving target.

Teacher Health Insurance Pool Conference Committee is Through. The conference committee on SF 915--the annual mandatory teacher health insurance pool legislation--is finished and the contents are as were reported yesterday. School districts who are currently self-insured (or will be self-insured by July 1, 2009) can opt out the pool by agreement between the local employees' bargaining units and the school board. Everyone else is in the pool. The conference committee report will be hitting the floor of the Senate later this afternoon.

Changes in Pension Bill. The portion of the pension bill--SF 191--that both remedied the deficit in the Teachers Retirement Fund and provided enhanced benefits for teachers was struck from the bill by the House Rules Committee last night (or this morning depending on if you believe morning starts at midnight or when the sun comes up). This is a good news/bad news situation (depending on who you are, of course) as deficiencies in the fund will be left uncorrected, but school district contributions will not go up in the short term, which would have been difficult given the tight budgets that exist throughout the state.

Negotiations Continue. Senator Pogemiller announced just prior to the Senate recess that legislative leadership and the Governor are continuing to meet in hopes of striking a deal. We are less than 13 hours away from adjournment, but I've seen more done in less time around here. That being said, I believe both sides are willing to bear the risks of unallotment.

I'll be back later with more to report.

Things are Getting a Little Hot. The House of Representatives is going to attempt to override the Governor's $381 million line-item veto of the General Assistance Medical Care program. Both sides are giving speeches right now and it may be awhile before we get to the vote. I have to say that the speeches--on both sides of the issue--have been fairly impressive and, dare I say, moving.

Debate has wound down and the final vote was 87-47, three votes short of the number necessary to override the Governor's line-item veto.

It looks like override attempt day as the House has now decided to try and attempt HF 885, the vetoed tax bill that raised $1 billion in taxes instead of agreeing to the Governor's bonding for cash arrangment. So here we sit in the midst of the showdown we all pretty much knew was coming.

With this upcoming vote and the previous vote on the failed override of the line-item veto of the General Assistance Medical Care appropriation, the DFL is attempting to stake out its philosophical and political territory against what is certain to be an attack by the Administration and the House and Senate Republican minorities in the Legislature. It is going to be interesting to see how this turns out down the road, but these actions, taken with just a day left before the consitutionally-mandated adjournment at 11:59:59 tomorrow evening, make a deal look unlikely.

Update: After two-plus hours of really good debate--and I mean really good debate with both sides making their key points and differentiating themselves from their opposition--the House voted 85-49 on overriding Governor Pawlenty's veto of the tax bill--which raised taxes on high-income Minnesotans, beer and alcohol taxes, and fees on credit card companies--which is 5 votes short of the 90 votes needed to successfully override a Governor's veto.

Look forward to some big-time sparring tomorrow. Unless there is a breakthrough, it's going to be a real snark-fest with both sides taking pot shots and setting up the post-session blame-a-thon.

So Much for Separation of Church and State. It was church at 9:00 and state at 11:30 as I am back at the Capitol watching the teacher mandatory health insurance pool conference committee. The conference committee is working out the differences that exist between the bills.

Going in, there aren't a lot of big differences between the bill., The largest difference comes from a combination of amendments offered by Representative Phyllis Kahn (DFL-Minneapolis) in the House State Government Finance Division and Representative Kathy Brynaert (DFL-Mankato) on the House floor that would together allow districts who were either independently self-insured or part of a self-insurance pool by January 20, 2010, to opt out of the program by joint decision of the board and the teachers' local union I was a bit confused about the effects of the Brynaert amendment the other night in thinking that it allowed districts that were fully insured to opt out. That is not the case.

Teacher unions in districts that are self-insured as individual districts by July 1, 2009, can opt out of the program as the bill is part of the Senate bill.

The compromise that appears to have taken place is that districts that are individually self-insured will be able to opt out by joint decision between school boards and local unions. The deadline to be self-insured is July 1, 2009.

The final compromise has been informally agreed to and the conference committee is now breaking. They intend to come back later to look at the revised language in a bit and most likely will approve it. Here's hoping this thing is heading for a its annual veto.

In Other News. The Governor signed the E-12 funding bill, "reluctantly" in his words, without any line-item vetoes. His signing message was short and expressed disappointment that the conference committee did not include the $198 million in funding for QComp and Pay for Progress that he proposed in his budget and did not any of his reform initiatives, particularly the Teaching Transformation Act. His only other comment was directed toward the five-year exemption from requiring students to pass the 11th grade GRADS test in mathematics in order to receive a diploma.

Offers Circulating. Negotiations continue between the Legislature and the Governor, but if I were a betting man (and I am not), I'd say we leave here tomorrow night without an agreement. The Legislature has offered to cut more than they already have, but the sticking point remains the $1 billion in revenue generation that is keeping the sides apart. The Governor has clung to his plan to bond for cash while the Legislature wants a tax increase (either permanent or temporary) to bridge the gap.

As I stated yesterday, the stakes are high on both sides as the DFL-controlled Legislature is going to look as though it was unable to seal the deal, but the Governor is going to have to make some very painful cuts and he is going to own those decisions. We can rest assured that if there is no agreement, finger-pointing will replace hockey as the official state sport this summer.

Governor's Latest Offer. The Governor has come forth with an offer to close the remaining $2.78 billion gap between projected revenues and expenditures. The offer to the Legislative Commission on Planning and Fiscal Policy is as follows:

• Accept the House K-12 Shift of 73%/27%.--$1.75 Billion
• Reduce LGA and related items--$450 Million
• Other Items --$100 Million (Reduce Renters Credit, Taconite Aid, Political Contribution and other items)
• Further Health and Human Services Cuts--$250 Million
• Higher Education Cuts--$190 Million

While not being embraced wildly, there does appear to be some progress here. Note that there are no direct revenue increases in the Governor's offer, as he has replaced his approximately $1 billion in bonding-for-cash with cuts to services.

There are myriad issues with the proposal, many of which relate to how these proposed cuts would work with the federal stimulus package and whether or not the cuts to higher education would create a cut to E-12. University of Minnesota President Dr. Robert Bruiniks is now testifying on how the proposed $190 million in cuts could have an extremely adverse effect on the University's operations.

Dr. Bruiniks was followed by Dr. James McCormick, Chancellor of the Minnesota State Colleges & Universities system. His testimony echoed much of what Dr. Bruiniks said in that reserves are limited (and only one-time) and going back to the fiscal 2006 level of funding (the amount necessary to be maintained to not endanger eligibility for stabilization funds in the federal stimulus package) would cause massive additional layoffs (as a large number of layoffs has already taken place) and may push tuition higher. Not a pretty picture.

The commission's focus then returned to the health and human services cuts, both the line-item veto of $381 million in general assistance medical care and the additional cuts of $250 million in the Governor's latest offer. I have to say that Health and Human Services Commissioner Cal Ludeman did a great job being extremely straightforward what some of the effects of the proposed cuts would be. Not a single dodge during a series of tough questions.

Saturday Afternoon's (and Maybe Night's) All Right for Fighting. Nobody even remotely resembling Elton John is hanging around the Capitol today. I know that because I am here.

Both houses of the Legislature are clearing bills and conference committee reports off the docket and negotiations continue between the Legislature and the Governor in an effort to create a budget resolution package that has a bit (insert sarcam emoticon here) more clarity than simply surrendering to the unallotment process that would provide the Governor with wide discretion in matching available revenue to areas of expense.

As I touched on yesterday, unallotment is an extremely risky strategy for both sides. The Governor may initially get a popularity bump for looking like the responsible party. If the process can be made responsible and the Governor makes an honest effort to accept input, he may be able to maintain that popularity bump. But his popularity may well fall when people see what that responsibility means when the decisions are made. If the results of the Governor's decisions are unpopular, the Legislature gets a big advantage as they can depict the Governor as being heavy-handed during the negotiations in the regular session and intent on making decisions without accepting input.

At any rate, it's a process best avoided and we'll see if an agreement can be reached in the next 48 hours.

Update on Teacher Health Insurance Bill. SF 915 was returned to the Senate this morning and the Senate chose not to concur with the amendments placed on the bill in the House. As I reported last evening, Representative Kathy Brynaert (DFL-Mankato) placed an amendment on the bill that would allow districts where the board and teachers union agreed not to participate in the statewide pool to opt out of it. Education Minnesota opposes this amendment and would like to have it removed from the bill. That will be the goal of the Senate conferees if a conference committee is convened. There is talk that a conference committee will not be convened as given all the attention being paid to budget issues, it may stand a better chance of being approved if it lands on the Governor's desk first thing next year instead of the waning days of the 2009 session.

So, that's where we're at.

Statewide Teacher Health Insurance on the House Floor (or Zombie Alert!). Everybody's favorite bill, SF 915 (the mandatory statewide teacher health insurance bill) is now being discussed on the House floor. I need to apologize to the Shared Services initiative, which I described the other day as being akin to a series of zombie movies. Shared Services only looks like a zombie compared to this bill, which has risen after being defeated and/or vetoed again and again and again and again. All we need is Michael Jackson, complete with his white glove, the song "Thriller" playing in the background, and a pack of dancing zombies to make it official.


But here we are again, listening to the same arguments Representative Kathy Brynaert (DFL-Mankato) has an amendment on the floor right now making the program optional if the school board and bargaining unit agree to opt out of the mandatory pool, which would be greatly preferred to the mandatory plan. Debate is, as usual, quite spirited. The Brynaert amendment passed on a vote of 74-53, making the proposal optional at this point. The bill still has to go to the Senate, where attempts will be made to remove the Brynaert amendment, but at least at this point, the bill is less bad.


Representative Diane Loeffler (DFL-Minneapolis) now has offered an amendment that would lower the thresholds of the high deductible plans in the bill. That amendment failed on a voice vote.


Representative Phyllis Kahn (DFL-Minneapolis) has offered an amendment that would allow self-insured districts with more than seven bargaining units to opt out of the plan. The Kahn amendment failed on a vote of 43-85.


It's Representative Kurt Zellars' (R-Maple Grove) turn to offer an amendment. His amendment would require an actuarial study before the plan could take effect. After extended debate, the roll is being taken and the amendment failed on a vote of 51-77.


Representative Joe Hoppe (R-Chaska) offered an amendment which he withdrew after a point of order was raised by Representative Larry Hosch (DFL-St. Joseph), the chief author of SF 915.


Representative Steve Gottwalt (R-St. Cloud) is offering an amendment that requires that long-term care insurance be offered as part of the coverage package offered under the mandatory statewide insurance pool. In an odd set of arguments made during the debate, opponents of the amendment claimed that forcing long-term insurance to be part of the health care package was an infringement on the local bargaining process. Say what?!? Isn't this whole mandatory health care pool an infringement on the local bargaining process. At any rate, the amendment failed on a vote of 18-100. So much for logic.


Representative Hoppe offered two amendments, one, that would limit increases to no more than 25% over a two-year period, that was adopted on a voice vote and another, that would have added three state department commissioners as ex-officio members of the board that oversees the plan that was defeated.


Representative Tim Kelly (R-Red Wing) offered an unsuccessful amendment that would have made employers not liable for the obligations of the statewide health care plan.


Representative Connie Doepke (R-Wayzata), a former Wayzata school board member, is now offering an amendment that would truly make the plan optional by changing "must" to "may." In effect, this takes the Brynaert amendment one step further, as a school board could opt out of the program without approval of the local teacher union. This amendment failed on a vote of 51-79.


There are no more amendments, so here we are at third reading and the final vote on the 80-48. The bill now heads back to the Senate where the Senate will have to concur with the amendments placed on the bill in the House or move to send the bill to conference committee. The presence of the Brynaert amendment makes it likely that the bill will end up in conference committee.

Friday Afternoon Report. Not a whole lot new on the overall budget front. The Governor seems intent on allowing the Legislature to adjourn without an agreement on the revenue end of the budget equation. Instead of an agreement, the Governor appears to be comfortable taking the task on himself and balancing the budget through payment delays and unallotments. There may (or may not) be negotiations taking place as I write, but as was just pointed out to me, we've got a whole 72 hours left, so why hurry (Not trying to be a smarty-pants with that comment. I've seen more done in less time in this place, so neither side is panicking yet.)?

Pension Bill in Senate. The pension bill is up on the Senate floor right now and Senator Claire Robling (R-Jordan) just successfully had an amendment attached a bill that would eliminate the enhancement in teacher retirement benefits through both employer and employee contributions. The increase in employer contributions would go to fund the deficiency currently existing in the teacher pension funds and the employee contribution would go to enhancing benefits. Under the Robling amendment, the contribution rate for both employees and employers would be cut from 2% to 1% to fully fund the plan without benefit increases. It passed on a vote of 29-27 (on a "standing division," basically the same thing as a show of hands although those voting for one side or the other stand at their desks).

Now, in the monkey wrench department, a group of Senators who were in a conference committee and not informed of the floor vote on the amendment are pressing for a re-vote on the matter. Sounds simple, but the complaint was raised after the bill was given its 3rd reading, the procedural step that puts the bill on the docket for final passage. Usually, bills cannot be brought back before the body for purposes of amendment after third reading.

The legal eagles and rule interpreters are now debating whether or not the bill can be brought back before the body. Senator Pogemiller has moved to bring the bill back before the body, the Chair (currently Senator Dan Skogen) ruled that motion in order, and a roll call appealing the ruling of the chair moved by Senator David Senjem is now taking place. The ruling of the chair has been upheld on a vote of 43-20 and now a roll call is being taken on the Pogemiller motion. That motion has passed on a vote of 41-22. Senator Mary Olson (DFL-Bemidji) is now moving to reconsider the Robling amendment out of courtesy for those who were on unable to vote. That motion has passed on a 45-20 vote and the amendment is back before the body.

Debate on the Robling amendment is now proceeding and things are getting spicy. And now, the roll call. . . . . .and the amendment fails on a roll call vote of 31-34, meaning the higher contribution rates and enhanced benefits back into the bill.

Senator Rosen has now moved to strike the entire Article relating to teacher pensions, which would leave employer and employee contribution rates at the same level and leaving the teacher retirement plan underfunded in the process. The roll is being taken on the Rosen amendment and it is defeated on a vote of 23-38.

The bill has passed on a vote of 43-22. Make no mistake, the increase in the employer's share is going to take money out of classrooms.

That's all for now. I'll be back later if and when the Teacher Health Care bill hits the House floor.

Friday Morning Report. I am sitting here waiting for the meeting of the Legislative Commission; on Planning and Fiscal Policy to begin. This joint committee has been the venue of a lot of interesting discussion throughout the past few weeks, as it has been the place where spats between the legislative and executive branches over revenue options have taken place.

The subject this morning is the Governor's decision to move forward in the event that an agreement on revenue cannot be reached before Monday's constitutional deadline for the Legislature to adjourn. As reported yesterday, the Governor has decided to balance the budget using his line-item veto authority, the budget unallotment process (more on that below), and a delay in state payments (mostly in the E-12 area). There is question as to whether or not the Governor can implement the early recognition of property tax payments as proposed in his budget. Commissioner Tom Hanson of Minnesota Management & Budget contends he has the authority, but Senator Tarryl Clark (DFL-St. Cloud) has requested that the Commissioner show the citation that justifies that position.

Right now, the discussion is centering on the effects of the Governor's possibly delaying payments to school districts--as high as 64%/36% from the current 90%/10%--and how that would cause a ton of short-term borrowing for school districts. The other issue is how shifting payments this much would effect the federal stimulus package as maintenance-of-effort must be maintained in order to receive the stabilization funds from the stimulus package. Commissioner Seagren has just testified that the maintenance-of-effort is based on entitlement and not cash-on-hand, meaning that these shifts do not endanger our receiving federal stabilization funds.

Representative Lyndon Carlson (DFL-Crystal) has now brought up the subject of school district fund balances and how districts with little or no fund balance would slide dangerously close to statutory operating debt if a delay in payments were employed to the full extent being discussed. The answer appears to be that there is funding available for the Governor to direct to districts in this predicament, but that has now been disputed as given the fact that the E-12 conference committee does not contain a shift, no money was set-aside to protect districts from the adverse cash-flow effects emanating from a shift. Fifteen districts and eight charter schools are in this situation.

Republican legislators are now quizzing the DFLers as to why they are questioning the Governor's decision given their previous stance--particularly in the House--that advocated a significant shift (73%/27%) and the accompanying effects on school districts. Speaker Keliher has responded that regardless of what was previously proposed and what is being discussed now. Given the E-12 bill that went to the Governor had no shifts, revenue to assist districts either in or on the precipice of statutory operating debt was not included in the bill. This is why the question of what the Governor can do to mitigate this is relevant.

Senator David Senjem (R-Rochester), the Senate Minority Leader, has just queried whether the Legislative Commission on Planning and Fiscal Policy will the the venue where a mutual agreement between the Governor and the Legislature will be achieved. Senator Senjem is putting forward hopes for an agreement and is not particular whether or not this is achieved in public or amongst leadership behind closed doors in the Governor's office. The DFLers seem to be resistant to that.

Reresentative Marty Seifert (R-Marshall) is now suggesting that a bill be passed that would contain the House's 73%/27% shift accompanied by protections for districts with low or negative fund balances instead of leaving this all to the Governor. Representative Seifert makes a good point that leaving this in the Governor's lap restricts flexibility on both ends. Speaker Keliher's response is that this is a series of building blocks and Representative Seifert's suggestion may be part of the solution, but also pointed out that the Legislature has cut more than the Governor already and that the Legislature is not "spending wildly." She pointed out that the gap between projected revenues and expenditures has been addressed aggressively on the spending side by the Legislature.

Well, we are off education and onto discussion of the Governor's line-item veto of $381 million in General Assistance Medical Care in the second year of the biennium (FY 11) as part of his approval of the remainder of the Health and Human Services budget bill. This will affect approximately 31,000 Minnesotans who are generally older than the average Minnesotan participating in Minnesota Care (age 36), make less than $7,800 per year and have significant health problems, often mental illness. Commissioner Cal Ludeman believes it's difficult to draw any concrete conclusions, as the range of individuals receiving these benefits is quite broad. He did note, however, that approximately 40% of the medical payments under this program go for mental health services. Commissioner Ludeman believes that some of the problems resulting from the line-item veto can be addressed through Minnesota Care, a program for which most of the people affected by the cut should be eligible. Senator Linda Berglin (DFL-Minneapolis) has just pointed out that there is a difference between eligibility and actual enrollment and that the process of acceptance into a program may take too long to provide needed assistance to Minnesotans who need more immediate services. This is a point of contention between Senator Berglin and Commissioner Ludeman, as Commissioner Ludeman, in response to a later question from Representative Tom Emmer (R-Delano), contends that a great number of the individuals on General Assistance Medical Care can successfully transition to Minnesota Care.

Senator Pogemiller has made a request to Commissioner Ludeman to ascertain how many of these affected individuals are military veterans, chemically dependment, and mentally ill. He mentioned another category or two, but my fingers aren't as fast as my brain and my brain isn't as fast as my ears, but I think you get the gist of the question. Senator Pogemiller believes that this line-item veto will be of great hurt to some extremely vulnerable populations.

Sparks just flew as Representative Tom Huntley (DFL-Duluth), the chair of the House Health and Human Services Budget Division, contended that Republicans have had as a goal to eliminate middle-class people from Minnesota Care by flooding the Minnesota Care program with those who are poor and/or have considerable medical issues and by effect crowding out those with higher incomes (not high income in the traditional sense of how it's understood, but higher than those currently receiving General Assistance Medical Care. This is a similar argument used by national Democrats during the S-Chip debate nationally. Needless to say, Representative Huntley's assertion was objected to vehemently by Representative Emmer.

Now, it's onto property taxes. Representative Ann Lenczewski (D-Bloomington), Chair of the House Tax Committee, has distributed a memorandum prepared by House Research showing the effects--property tax increases--of an expected unallotment of the state's local government aid and market value credit programs. Representative Lenczewski has pointed out that the Governor did reduce local government aid last December to balance the FY 09 budget.

The Governor did propose significant cuts to these aid and credit programs in his biennial budget and given the gap between revenue and expenditures under the current state of affairs (budget bills approved at currently agreed levels without agreement on revenue) and it is trying to be determined in this discussion what the size of the unallotment would be given where we are at. Representative Lenczewski contends that the Governor will likely have to go further than he originally proposed (about $250 million) in February.

What legislative leadership is trying to get from Commissioner Hanson is a more firm idea of what the Governor's unallotment process would look like when implemented. Representative Paul Marquart (DFL-Dilworth) has just pointed out how property taxes are now the largest single source of revenue in the state and how this growth is beginning to reach critical levels. With greater cuts to local aids and credits, these increases will become even more steep.

Commissioner Hanson again stressed that property tax increases well beyond current projections can be avoided if there is a global agreement between the Governor and the Legislature.

(I haven't seen such a riveting serve-and-volley game since the days of Bjorn Borg.)

Unallotment Process. Time for your daily civics lesson on Minnesota government. What can the Governor constitutionally do with the unallotment tool? Good question and thanks to Joel Michael and Mark Shepard of House Reserach, we have answers. Michael and Shepard have put together an extensive memorandum regarding the unallotment process. I have provided a link below to the memorandum.

Link to House Research Report on Unallotment: http://www.house.leg.state.mn.us/hrd/pubs/unallot.pdf

Here is the Latest. The Tax conference committee is still kicking around trying to come to a revenue solution to fund the spending bills that will pretty much be passed by the end of today. The Governor has stated that he is inclined to sign all of the spending bills and using executive authority to balance expenditures (currently approximately $3 billion above the amount of revenue available in the absence of a tax bill, shifts, or the bonding-for-cash provision proposed by the Governor).

$3 billion isn't exactly the kind of money you can find by looking under the couch cushions, so the Governor would have to exercise the line-item veto in a machete like manner, un-allot large portions of state revenue, and (I didn't realize he could do this without legislative approval) change the aid payment shift for school districts.

At any rate, these last few days of the legislative session are going to be interesting. We will know by tomorrow morning how much of this will unfold as the Governor has until midnight to either sign or veto the omnibus health and human services appropriations bill. If he vetoes that bill, things are probably going to be very hectic all weekend long. Whether or not that means he will veto the E-12 bill in the event of a veto of the health and human services bill remains to be seen.

One mitigating factor would be that the whole subject of the New Minnesota Miracle has cropped up again. This is only "whispers in the back of the church" stuff, but rumor has it that the Governor has expressed some interest in using the New Minnesota Miracle as a vessel for some of his proposed reforms, which would be entirely appropriate. Those of us involved with PS Minnesota invited the executive branch over a year ago to investigate how some of their priorities would fit into the PS Minnesota framework, but, for whatever reason, there was little interest on the part of the Governor.

It is heartening, if these reports are true, that the Governor is taking an interest in the PS Minnesota/New Minnesota Miracle effort. I certainly welcome him to the effort. While I don't agree with everything he has proposed in the past few years, he has shown a great interest in many aspects of education policy and funding and if he, along with the Minnesota Department of Education, join in the combined effort, good things are likely to happen. They may happen slowly, but certainly the Administration's presence at the funding reform table would be welcome and telling.

Check out this editorial from the StarTribune today, extolling the New Minnesota Miracle. Whether or not we get further down the road in the next few days or the next few months, it is difficult to stress how important this initiative is and what it means to the future of education in Minnesota.

Link: http://www.startribune.com/opinion/editorials/44932682.html?elr=KArksc8P:Pc:UthPacyPE7iUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr