Minnesota government shuts down after tax plan torpedoes budget

Minnesota’s government shut down early Friday morning after Gov. Mark Dayton (D) and the Republican-held legislature couldn’t agree on a budget deal, mirroring the battle over the federal budget deficit. 

With the state government facing a projected $5 billion shortfall, Dayton proposed a budget that would have raised taxes on Minnesotans earning north of $1 million per year. But Republicans rejected the plan, arguing that it would it hurt the state’s economy, the Minneapolis Star-Tribune reported.

{mosads}The budget battle in Minnesota contains parallels to the scuffle in Congress over a plan to raise the nation’s debt limit in order to avoid default. Both political parties want to pass a plan that reduces the $1.4 trillion budget deficit, but are far apart on the specifics.

Republicans have made it clear they won’t approve a plan that raises taxes, insisting that President Obama and the Democrats agree to deep spending cuts. But Democrats have said that raising revenue through removing tax credits and loopholes must be on the table.

Congress narrowly averted a government shutdown of its own in April, when Democrats and Republicans reached a last-minute deal to fund the government through the rest of the fiscal year.

In Minnesota, lawmakers engaged in political stunts evocative of the heated debate over a collective bargaining law in Wisconsin earlier this year. Minnesota Republicans staged a sit-in inside the legislative chamber when it became evident a deal would not be reached by Friday’s midnight deadline, according to the Star-Tribune.

Dayton chastised Republicans for wanting to “protect the richest handful of Minnesotans at the expense of everyone else.”

{mosads}The shutdown battle could also loom over the Republican presidential primary. Two candidates, Tim Pawlenty and Rep. Michele Bachmann, hail from Minnesota — the former presided over a shutdown in 2005 as the state’s governor.

Pawlenty made a surprise stop in his home state Thursday night to weigh in on the shutdown. He blamed Democrats for both the ’05 shutdown and the one that just began.

“The equivalence is this both in ’05 and now — you had Democrats demanding that we raise taxes and raise spending,” Pawlenty said, according to the Star-Tribune.

Democrats, meanwhile, blame Pawlenty for the shutdown, accusing him of using budget gimmicks during his tenure that left the state in fiscal disrepair.

“Thanks to the mess created by former Gov. Tim Pawlenty, the state government of Minnesota shut down at midnight last night,” said Democratic outside spending group American Bridge. “Gov. Pawlenty claims to be running on his record as governor. Perhaps it would be wiser if, like Mitt Romney, he ran from it instead.”

—This post was updated at 11:16 a.m.