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Dayton declares budget talks at impasse

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Minnesota's budget talks are at an impasse and two weeks before a potential state government shutdown Gov. Mark Dayton said he does not know how the problem can be resolved.

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Republican legislative leaders Thursday gave Dayton a proposal that removed $200 million in tax cuts from bills they passed during the regular legislative session and offered to spend the funds in other areas. House Speaker Kurt Zellers, R-Maple Grove, said the offer was a sincere effort to move along budget talks.

Democrat Dayton, however, was not happy.

"The non-proposal is extremely, extremely disappointing," Dayton said. "Probably the most disappointing moment of this entire legislative session for me."

If state lawmakers and Dayton cannot agree to a budget by July 1, when the next two-year spending cycle begins, state government could partially shut down. The state has no authority to spend money until a budget passes.

Dayton and Attorney General Lori Swanson have asked the courts to allow spending in cases such as where health or public safety is an issue. That request is expected to be challenged by a lawsuit, perhaps as early as today, by people who do not think courts have the power to determine spending.

Legislative leaders and Dayton say their top priority is finishing a budget, which failed by the May 23 legislative adjournment date, but both sides are working on shutdown plans.

Thursday's GOP offer would increase spending for local government aids, higher education, public safety, schools and other areas. It included $9 million for flood and tornado relief.

Zellers and Senate Majority Leader Amy Koch, R-Buffalo, said their offer could be groundwork for an overall budget deal.

"This is far preferable to what the governor proposed yesterday," Koch said, referring to Dayton's plan for how to deal with a possible shutdown.

Zellers said the offer was the biggest compromise of the budget discussions because Republicans hold tax cuts dear. Eliminating the variety of tax cuts the Republican-controlled Legislature passed showed sincere movement toward a compromise, he said.

Republicans propose a $34 billion two-year budget and say they will not increase that spending target. Dayton proposes spending $35.8 billion, including $1.8 billion in new taxes on the highest-earning Minnesotans. Last month he dropped another $1.8 billion in spending he had wanted.

Waving a finger in air, Dayton complained that Republicans "are not willing to budge $1."

He said moving money within their earlier budget amounted to "rearranging chairs on the Titanic."

"It is so irresponsible," he added.

The next step in budget talks should be up to Republican leaders, the governor said, with some form of revenue to meet his higher spending target. Republicans have ruled out raising taxes, but usually dodge questions about raising other forms of revenue, such as gambling.

"We will certainly continue discussions," Dayton said, later adding: "I don't know why it is even necessary to meet."

Dayton also rejected a proposal by GOP transportation leaders for a special legislative session to pass a transportation-funding bill that would keep summer highway construction going. He said that he would not accept one part of the budget before agreeing to an overall package.

Legislative transportation chairmen Sen. Joe Gimse of Willmar and Rep. Michael Beard of Shakopee said that passing a transportation bill, funded by transportation-related taxes that cannot be spent for other programs, could keep up to 10,000 construction and state workers on the job.

Without a special session, they said, a government shutdown would suspend work on roads across the state and cost millions of dollars to mothball projects and later restart once a budget passes.

Gimse and Beard plan to a statewide tour next week to promote their request.

"There is no logical reason to shut down construction," Gimse said.

The chairmen have written a new transportation funding bill that would spend $4.6 billion.

Gimse said that road funding is especially important this year because of "extreme" damage winter weather caused to state roads. With a short construction season, he said, any work suspension would end up leaving some roads unfixed.

Also on Thursday, the Senate Rules Committee voted to get involved in the shutdown court case, with Republicans in favor and Democrats opposed.

"The Senate should have a seat at the table," Koch said.

However, Koch added, she is not interested in filing a lawsuit over the shutdown.

Senate Minority Leader Tom Bakk, DFL-Cook, said he was uncomfortable with the resolution because it left decisions up to Koch about what position the Senate might take.

Zellers said he expects the House also to get involved in the court action.

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