Budget talks in U.S. State of Minnesota continue, parties remain at odds

08:29, July 08, 2011      

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by Xinhua Writer Du Jing

The resumed budget talks between Minnesota Democratic governor and Republican lawmakers have yet to find a solution to end the already six-day-old state government shutdown.

Due to disagreement on how to fill a 5-billion-dollar budget gap over a two-year period, a wide range of government agencies, except those considered critical, in the midwestern state were closed since Friday.

After a cooling-off period during the Independence Day holiday weekend, Governor Mark Dayton and Republicans who control both chambers of the state legislature on Tuesday resumed their talks to break the stalemate. But after the two-day negotiations, both parties seemed still holding onto their positions and no compromise has been reached.

Analysts said the ongoing impasse might last longer than the previous one in 2005, when government services were idled for eight days before the two sides reached compromise.

THIRD OPTION SNUBBED

Walter Mondale, a Democrat who worked as former President Jimmy Carter's deputy, and former Minnesota Governor Arne Carlson, a Republican, on Tuesday launched a bipartisan committee to help come up with a budget plan to end the partial closure of the state government.

Members of the panel include former state lawmakers, business leaders and Governor Dayton' budget commissioner, James Schowalter. Mondale and Carlson will not serve on the panel, which is tasked with providing a budget plan by the end of this week.

Carlson said he hoped the panel could present "a third option" besides the plans presented by Republican lawmakers and Dayton.

However, Republican leadership responded coolly to this idea. Republican Senate Majority Leader Amy Koch said in a statement that she, House Republican Speaker Kurt Zellers and Dayton were " elected to be the principal negotiators" on solving the budget problem.

NEW OFFER REJECTED

The budget fight between the first-term governor and the legislature has been going on since the beginning of this year. Republican lawmakers proposed a roughly 34-billion-dollar budget plan for the two-year period starting July 1 and they insisted on balancing the budget solely by spending cuts.

Dayton, on the other side, preferred a "balanced" approach which includes both spending cuts and tax increases. He proposed to raise income taxes for those who earn more than one million dollars a year and argued this would only impact a small portion of the Minnesotans -- the wealthiest. He stressed additional revenue is needed to balance the budget without squeezing out spending on critical government services and endangering the fragile economic recovery.

Facing Republican lawmakers who are adamant on their "no new tax stance," Dayton appeared to be backing off getting an income tax increase, a key part of his gubernatorial campaign last year.

On Wednesday, he offered the choice of hiking the state cigarette tax by one dollar a pack or rasing income taxes on the richest, citing the precedent by former Republican Governor Tim Pawlenty who used a similar tactic to end the government shutdown in 2005.

But the new offer was swiftly rejected by Republicans, with House Speaker Zellers calling it "a disappointing step backward."

"We've made it clear we do not need a tax increase to balance our budget," he said. "I would say a tax increase in general is non-starter."

COSTS HARD TO CALCULATE

The economic costs of the shutdown could be enormous but won't be known until after the shutdown ends.

Due to the suspension of government services, roughly 23,000 of 36,000 state employees were furloughed, which burdens the state with rising expenditure on unemployment and health insurance benefits.

The shutdown also resulted in unpaid state parks fees and reduced revenue from the tolled highway express lanes. The suspension of lottery sales, horse-race tracks and some construction projects will also erode the state revenue.

Further, state parks closed at night since the shutdown have reported numerous incidents of vandalism, according to local media.

The political impact of the shutdown is hard to tell, too. Minnesotans are divided on which party to blame for the impasse, according to the latest polls.

The budget fight in Minnesota may have implications beyond state borders. The fight is in many ways similar to that in Washington, where the White House and Congress are struggling to reach a debt deal.

The deal has to be reached before early August when the federal debt is expected to reach its legitimate cap or the government may default on its obligations. Republicans said that raising the debt ceiling is only possible if Democrats agree on significant spending cuts without raising taxes.

The case in Minnesota may serve as a test to voters' attitude toward the two parties' approaches in addressing budget issues. It may help politicians in Washington recalculate political impacts of the budget fight and make adjustment of their positions and policies accordingly.

Source: Xinhua
 
 
     
 
 
 
     
 
 
 
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