Supreme Court upholds Gov. Dayton's line-item veto of Legislature's funding

- The Minnesota Supreme Court on Thursday upheld Gov. Mark Dayton's line-item veto of the Legislature's operating budget, declining to referee a political dispute between two co-equal branches of government that it said could resolve the issue themselves.

The 5-1 decision handed Dayton a major legal victory as he seeks to rework costly tax breaks and other measures that he signed into law this spring as part of a new state budget. And it left the Legislature on uncertain financial footing.

The ruling overturned a lower court decision that deemed Dayton's action unconstitutional. But the high court said the state constitution does not allow the courts to order funding for the Legislature without an appropriation. And it said the Legislature has the authority to tap enough money to continue operating -- at least $26 million and up to $40 million -- until it reconvenes Feb. 20. It rejected the argument that Dayton violated the constitution by effectively abolishing the Legislature.

The Legislature took initial steps earlier Thursday to free up enough money to continue paying its members and staff. But top lawmakers said they may still run out of funds in early 2018. Both the House and Senate had halted out-of-state travel, member per-diem payments and other expenses to stretch out their funding.

Writing for the majority, Chief Justice Lorie Skjerven Gildea said this was the first time the court has had to resolve a lawsuit brought by the legislative branch against the executive branch.

"We conclude in these unprecedented circumstances that proper respect for our coordinate branches counsels judicial restraint," she wrote.

Associate Justice G. Barry Anderson dissented, writing "this is not the occasion for judicial restraint." He said he believed Dayton's line-item vetoes were unconstitutional violations of the separation of powers between the two branches of government, and that failing to act "permanently tilts the balance of power in favor of the Executive."

Associate Justice David Stras did not participate.

The ruling puts to rest a nearly six-month legal battle that poisoned relationships between the Democratic governor and top Republican leaders -- while leaving the state's new budget that Dayton sought to rework untouched.

And taxpayers will pay heavily for the fruitless legal battle, fought by high-powered lawyers billing more than $300 hourly. As of Oct. 13, Dayton's legal fees totaled nearly $330,000. But the Legislature's legal fees are a massive question mark. The lawmakers' legal team will soon collect a lump-sum payment for the entire lawsuit. 

Dayton zeroed out the Legislature's $130 million operating budget while signing the rest of a roughly $46 billion, two-year budget in late May -- a last-ditch bid to force lawmakers to scale back several expensive tax breaks like a cut for wealthy estates and freezing the state's cigarette taxes. Dayton also wanted Republican leaders to retool changes to how teachers are licensed and remove a duplicative rulemaking ban on issuing driver's licenses to immigrant living in Minnesota illegally.

But top Republicans were steadfast in keeping the state's new budget unchanged, and sued Dayton instead. Dayton accused them of grandstanding for political purposes, saying the Legislature could easily access additional money.

Dayton and lawmakers were expected to comment on the ruling later Thursday.

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