There were handshakes and smiles all around the Capital yesterday, as the 2008 session of the Minnesota Legislature concluded with a budget agreement that closes a 935 million dollar deficit for the fiscal year. In order to do so, legislative leaders and Governor Pawlenty agreed to use mostly one-time money to close this gap, with a couple of tax law changes and a few budget cuts thrown in.

In a way, this outcome was inevitable, given the decision-making structure at the Capitol and the relevant actors. And while this outcome was far better than the alternative of allowing Pawlenty to dictate deeper cuts through unallotment, the problem with the structural deficit that will confront the next Legislature remains. Unfortunately, it appears that once again it will be the next election that will really determine how the state budget will be addressed. Luckily, the situation is far more rosy for the DFL this time.

In 2002, the Legislature was split between Republican and DFL control, and the leaders of each chamber were running for the Governor slot being vacated by Jesse Ventura. Despite the knowledge that a structural deficit loomed, Moe and Pawlenty basically agreed to a very similar short-term fix. The unspoken part of the deal was that the 2002 elections would determine the eventual long-term fix. And as we know, in 2002 Pawlenty won the gubernatorial race, and the GOP maintained control of the Minnesota Senate. The resultant "fix" meant deep cuts in higher education, social services, health care, and K-12 education. In that case, to the victors went the ability to dictate how the budget would be addressed. The GOP chose draconian cuts, and the legacy of these cuts is still felt.

By agreeing to this deal, the DFL legislative leadership is making a calculated gamble that may well pay off, depending on the results of the Fall elections. This time, control of the Senate is assured, as well as a veto-proof two-thirds supermajority, since the Senate does not stand for election. It will be very important for the DFL to gain the seats it needs in the House to create a veto-proof supermajority to place them on equal footing with the Governor. One cannot deny that Pawlenty has proven his mettle in dealing with a hostile legislature, suffering only one veto override in his tenure, even though that override created the most important piece of legislation to advance this session. One thing that was learned in this session was that Pawlenty will indeed use his "veto pen" to its maximum effect, and that only the credible threat of an override (or being held personally responsible for cuts through unallotment) will move controversial legislation forward. As the 10-11 budget deficit looms, it will take a veto-proof supermajority to ensure that revenue enhancement is the primary way to deal with this deficit. Otherwise, even with solid majorities in both chambers, the DFL legislative leaders will find themselves in a similar position to 2003.

Many events could intercede between now and the 2009 session of the Minnesota Legislature that can change this calculus. Perhaps Governor Pawlenty will be asked to be the VP candidate for John McCain, and we will see Carol Molnau steering the "yacht of state." But with more GOP legislators retiring than DFL'rs, a successful legislative session, and lots of energy created by the Presidential campaign at their backs, hopefully it will be a strengthened DFL caucus at the Legislature that will be able force the hand of a weakening Governor to the benefit of Minnesotans.