Minnesota State Government Shuts Down as Budget Talks Fail

By Martiga Lohn and Patrick Condon, Associated Press

01 July 11

innesota state government has shut down for the second time in six years after political leaders couldn't agree on how to solve a $5 billion budget deficit.

Talks between Democratic Gov. Mark Dayton and top Republicans fell apart well before a midnight deadline. Dayton demanded tax increases on top earners, but the GOP refused.

The effects of the shutdown were being felt even before the final failure, as the state padlocked parks and rest areas. The full impact will hit Friday, with thousands of state employees laid off and a wide array of services suspended.

Critical functions like state troopers, prison guards, the courts and disaster responses will continue.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Minnesota marched toward its second government shutdown in six years on Thursday, with a partisan divide over taxes and spending to close a $5 billion deficit becoming only more bitter as a midnight deadline approached and negotiations foundered.

Any hope of a last-minute budget deal between Democratic Gov. Mark Dayton and Republican legislative leaders evaporated around 10 p.m., when Dayton appeared to say he and Republicans were still fundamentally divided over how much the state should spend the next two years and that he saw no chance of avoiding a shutdown.

"It's significant that this shutdown will begin on the Fourth of July weekend," Dayton said. "On that date we celebrate our independence. It also reminds us there are causes and struggles worth fighting for."

Republicans appeared again minutes later, and tried to hang blame for the shutdown around the governor's neck. They said the two sides were closer than he admitted, and they criticized his refusal to call a special session so lawmakers could pass a "lights on" budget bill to keep government running. Dayton refused, saying he's been clear for months that he would only agree to a total budget approach.

"I think the governor's insistence that we pass a full budget is not going to be of much comfort to Minnesotans who are going to see delays on the highways because construction projects stop," said Senate Majority Leader Amy Koch, R-Buffalo. "It's not going to comfort people who can't use our state parks, or who can't get a driver's license."

A shutdown would force thousands of layoffs, bring road projects to a standstill and close state parks just ahead of the Fourth of July weekend. The effects were already being felt hours ahead of the deadline, as people rushed Thursday to get driver's and fishing licenses, and park officials began warning campers to pack their gear and leave.

Though nearly all states are having severe budget problems this year, Minnesota stood alone on the brink of a shutdown, thanks to Dayton's determination to raise taxes on high-earners to close a $5 billion deficit and the Republican Legislature's insistance that the gap should be closed by cutting spending.

Negotiations between Dayton and legislative leaders were fitful Thursday, starting and stopping with no outward signs of progress. After talks broke down for the last time, Dayton and GOP leaders gave conflicting accounts of the last few rounds of offers.

Republican Sen. Michelle Benson said earlier in the day she wasn't budging, a position that Republican leaders held to even after it became clear the shutdown was coming.

"If we don't start taking a different approach to how we manage our government, we're going to swing from one bad economic circumstance to another," Benson said. "We can't just keep throwing more money at government and hoping that makes things better."

The showdown was something of a small-stage version of the drama taking shape in Washington between President Barack Obama and the Republicans over taxes and the nation's debt ceiling.

Though many states are having budget difficulties this year, those where political power is concentrated in a single party easily passed budgets. Some of those with divided government had healthy reserves, including Alaska, Iowa and Montana; Minnesota's rainy-day accounts are drained. Others such as Louisiana and Nevada used one-time money or federal dollars to patch things together. Nevada and Missouri renewed taxes.

In New Jersey, Republican Gov. Chris Christie used the line-item veto Thursday to pare a budget from the Democratic-controlled Legislature before signing it into law, preventing a shutdown.

Only four other states - Michigan, New Jersey, Pennsylvania and Tennessee - have had shutdowns in the past decade, some lasting mere hours.

A stoppage in Minnesota would halt non-emergency road construction, shut the state zoo and Capitol, and stop child-care assistance for the poor. More than 40 state boards and agencies would go dark. Critical services, including the State Patrol, prisons, disaster response and federally funded health, welfare and food stamp programs, would not be affected.

State park officials told campers to strike their tents well before the deadline, even though there was still a chance of a deal. They said it would be too difficult to herd campers out in the middle of the night if talks failed.

In Afton State Park, near St. Paul, Rick Miller of Elko-New Market pushed up a camping trip with his 7-year-old son, Jack, to beat the shutdown. Miller originally hoped they could spend Thursday and Friday nights in the park on the picturesque St. Croix River, but he booked a campsite for Wednesday night.

"With the shutdown we decided we better come and get it in," he said. "We don't know how long it will be before we can get back into a state park." He added: "It's too bad they can't just get the job done."

A small group of protesters paraded before reporters clustered outside Dayton's office on Thursday afternoon, chanting and waving signs to support the governor's position. "You say cut back, we say fight back!" they yelled. One woman carried a handmade sign that read: "GOV DAYTON DON'T BACK DOWN!"

Dayton is Minnesota's first Democratic governor in 20 years, and Republicans are running the entire Legislature for the first time in 38 years.

Dayton has proposed raising taxes on couples earning more than $300,000 and individuals making more than $180,000. Republicans have opposed any new taxes or new revenue sources, arguing instead that the state should rely on spending cuts, including deeper reductions in health and welfare spending than Dayton is willing to accept.

Some GOP moderates have talked of breaking the impasse with other means of raising revenue, such as eliminating tax breaks or authorizing a casino. Dayton has said he is open to such ideas.

Rank-and-file Republicans gathered at the Capitol on Thursday, more than a month after their regular session ended. Members of the large Republican freshman class, whose election victories in November helped the party take control of the Legislature for the first time in decades, held tight to their message that a total two-year state budget of $34 billion is big enough.

"I personally think the Republicans will probably be more damaged than the governor" by a shutdown, said freshman Rep. Mike LeMieur, R-Little Falls, who toppled an incumbent Democrat in November. "The fact is that we're all up for re-election again next year, and he's not up for three years."

Associated Press reporters Amy Forliti and Patrick Condon contributed to this report. Forliti reported from Afton, Minnesota.