Dayton is likely to veto the bill, which would also shift state workers into higher-cost health insurance.
The state's public workforce would be reduced by 15 percent and salaries would be frozen under a bill that passed the Minnesota Senate on a 36 to 29 vote.
As part of a plan to cut state government costs in half over the next two years, the bill would also move government workers into a high-deductible health care program that would increase their out-of-pocket costs, but save the state millions of dollars.
The bill takes the unusual step of directing DFL Gov. Mark Dayton to trim $475 million from his administration, without saying exactly where to cut.
Republicans say the reductions are painful, but chock-full of innovations that will make Minnesota government more efficient and affordable for years to come.
"I don't want anyone to think for a minute this bill was easy," said Sen. Mike Parry, R-Waseca, chairman of the Government Innovation and Veterans Committee. "But we have changed state government culture to meet the demands of taxpayers."
The proposal appears destined for a veto by Dayton. The governor rejected the GOP's piecemeal approach earlier this week, saying he doesn't want to cut nearly as much from state government. A similar measure in the House, which is stuffed with other government reforms, has not yet come up for a final vote.
With about 50,000 state workers, the Republican plan requires about 7,500 employees to be trimmed from state rolls by 2015 through layoffs or early retirement.
Sen. David Tomassoni, DFL-Chisholm, said legislators should remember they could be creating the kind of mass layoffs they claim to be trying to prevent in private industry.
"People who lose their jobs will suffer just as much as someone who loses a job in the private sector," he said. "They both buy groceries, they both pay taxes."
Republicans also want to shift state workers -- and elected officials -- to a high deductible health care plan that would cost them thousands of dollars in additional health costs each year. Democrats questioned whether the state can tinker with benefits of union workers, who make up the bulk of the state workforce, without going back to the bargaining table.
In a sometimes tense four-hour debate, DFLers criticized the proposal for relying on budget numbers from private companies hoping to win state contracts rather than from the state's fiscal analysts.
Nearly half of the proposed cuts are not backed up by state fiscal reports on how much proposals would cost or save the state. Instead, Republicans relied on estimates drafted by private companies and from results of reform measures in other states.
State Sen. Scott Dibble called the budget "fiction" worthy of a book award.
"There's not a lot of truth to be found in here," said Dibble, DFL-Minneapolis.
The state's fiscal experts typically have drafted the financial statements that serve as the building blocks used by legislators and the governor to merge their differing budget plans. The estimates are hardly perfect, but they ensure both sides use similar numbers.
Sen. Dick Cohen, DFL-St. Paul, said Republicans turned to "make believe" numbers after state budget experts concluded their ideas would save far less than they thought. The numbers Republicans are using allow them to make it appear they balanced the budget and spare politically unpopular cuts, Cohen said.
"We can go down this road," he said, "but it won't balance the budget."
Sen. Sean Nienow, R-Cambridge, noted that the old way of doing things left the state facing a multibillion-dollar deficit.
He and other Republicans said the state analyses are good only at studying things that have been done before and then using that to guess at what will come next. If legislators embark on new solutions, state budget officials are less able to predict what will happen, he said. So Republicans relied on numbers from major companies such as IBM, and results of reform in other states.
Nienow compared it to previous innovations, such as giant ocean-going ships and airplanes.
"We need to take a look at our government and have a dream of innovation," he said. "How can we think differently? We need to look at something possible and make it happen. That's what America was founded on."
If the cuts don't produce the needed savings, however, Dayton could order legislators into a special session to make more reductions.
Despite two weeks of partisan rancor over budget bills, House lawmakers did find accord on the Republican plans for agriculture spending. That budget measure passed the House 104 to 20, with significant DFL support.
Staff writer Rachel E. Stassen-Berger contributed to this report.
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