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Five months of legislating collapsed in a heap of vetoes Tuesday as DFL Gov. Mark Dayton rejected the Republican budget and blamed "right-wing" legislators for a government shutdown he now calls "a strong likelihood."
Minnesota could face the largest and most wide-ranging government shutdown in state history if Dayton and GOP legislators fail to reach a budget deal by July 1.
"The Republicans' all-cuts budget is extremely harsh and unfair to thousands of Minnesotans, and it's not Minnesota," Dayton said during a news conference after vetoing nine bills. "The Republicans remain intransigent. They won't budge $1 from the position they've held all through the session."
Republicans have rejected that characterization of their budget, saying they are simply holding to the amount of money the state is projected to collect over the next two years -- an amount, they note, that spends more than the previous two-year budget.
"We are disappointed that Governor Dayton is threatening to shut down state government for more spending and higher taxes," said Deputy Senate Majority Leader Geoff Michel, R-Edina. "Gas prices are climbing and home values continue to decline. To ask individuals, families and job providers to hand over more money to government in the form of higher taxes is the wrong route to find job growth and economic recovery."
Dayton did sign 32 bills into law, all with broad bipartisan support.
Among the more notable changes are new penalties for the sale or purchase of synthetic marijuana, a disability license plate for motorcycles and an end to restrictions keeping pawn shops at least 10 miles away from any casino.
In an indication of just how difficult upcoming negotiations will be, Dayton's veto letters show his objections go far beyond the overall amount of spending. Dayton expressed grave concerns about the particulars of the bills themselves. The education bill, he said, threatened to pit student against student and district against district through its funding changes. The cuts to local government aid in the tax bill, he said, would trigger soaring property taxes and reduce renter rebates to some of the lowest-income Minnesotans in the state.
"Your tax proposal would require most Minnesota property owners and renters to pay higher property taxes," he wrote.
The extended budget showdown throws the state into weeks, and potentially months, of uncertainty.
It's unclear when Dayton will call legislators back for a special session, but he said he probably will not do so until the framework of a budget deal is worked out and there is an ironclad agreement on the scope of the session. Along with the budget, likely issues to be finished up include flood-control projects, tornado relief and, possibly, a new stadium for the Minnesota Vikings.
"I don't want it to be open-ended," Dayton said.
With no budget in place, money for schools, state parks and low-income health care -- and nearly every other corner of state government -- runs out at the end of June.
A murky path
Preparations for a shutdown will start long before then. State employees could start getting layoff notices as early as Wednesday, Minnesota Management and Budget Commissioner Jim Schowalter said.
The path from there gets increasingly murky.
"I don't know what's going to happen," said Schowalter, who has a long career in government finance.
Of the state's entire massive structure, only the agriculture budget remains intact. That was signed earlier this year, which means funding for those programs will continue. Everything else could shut down, unless there is a court order. Spending necessary for the health and safety of the state would likely be continued.
The state last shut down in 2005, but DFL legislative leaders and Republican Gov. Tim Pawlenty had already cut deals on all but the four largest budget bills. That kept money flowing for everything but taxes, transportation, education and health and human services.
This shutdown would be, Scholwalter said, "much, much more extensive."
Dayton and Republican leaders are deeply divided over the best way to eliminate the state's protected $5 billion shortfall.
Republicans who control the Legislature presented a $34 billion budget that wiped out the deficit solely through cuts. Dayton wants to mitigate budget cuts by raising taxes on Minnesota's highest earners.
Dayton called the GOP budget "so wrong and so un-Minnesotan, and that's why I believe in my soul that Minnesotans are going to speak out now overwhelmingly and say 'Enough of this.'"
GOP legislators have said they will never agree to a tax increase and blame the logjam on a governor trying to force them to turn their backs on a bedrock party principle.
Dayton highlighted a philosophical rift that emerged during the session among GOP legislators. Many in the freshman class, who helped Republicans gain control of the Legislature for the first time in decades, grew increasingly resolute that a final budget deal not only exclude new taxes, but also additional revenue, such as increased fees, surcharges or an expansion of gambling. But as the session wore on, some veteran GOP legislators backed proposals to expand gambling.
The "extreme right-wing caucus members ... understand little about government and care even less," Dayton said. "And, unfortunately, the leadership seems to be held captive to their extremism and whipped up by the Republican Party, and if that continues, the best interests of all Minnesotans is not going to be served."
Assistant Senate Majority Leader Dave Thompson, R-Lakeville, said he does not consider a budget that limits itself to projected revenue extreme.
"I don't believe most Minnesotans think that's extreme," Thompson said.
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