About 40,000 state employees got layoff warnings on Friday as Minnesota's agency heads huddled behind closed doors to hash out plans for a possible government shutdown next month.

As the state warned employees they may be unemployed come July, the Department of Transportation (MnDOT) alerted local governments that the road construction money spigot might dry up in a shutdown. The state also told agencies to freeze all hiring "effective immediately."

"It is not business as usual," said Jim Schowalter, Minnesota Management and Budget commissioner, who led a cabinet meeting Friday focused on the budget and the possible shutdown.

The alerts were just a few parts of the massive puzzle being pieced together in homes, cities, agencies and offices as officials calculate what a shutdown could mean. It would start on July 1 if lawmakers and the governor do not agree to a two-year budget by the end of the month.

Although leaders of the Republican-controlled Legislature and DFL Gov. Mark Dayton have repeatedly negotiated over the state's budget, they appear no closer to agreement than they were months ago. If there's no deal by the end of the month, employees will be forced out of work, road projects could stop and parks could be shuttered because the state will have no power to spend.

While state officials will ask the courts for authority to continue essential services, it is unclear exactly what would remain open and which employees would have a job if it comes to shutdown.

Dayton said the layoff notices were "a grim reminder of a deadline that is just 20 days away, and the reality of what a lack of compromise and agreement will mean not only for those thousands of hard-working state employees, their families and their communities, but also for the important services they provide to Minnesotans in every corner of our state."

He also used the opportunity to bash Republicans.

"I know I stand on the side of Minnesotans. I continue to hope that the Legislature will join me in compromising, in finding a balanced solution to our budget, and in standing up for Minnesotans," Dayton said.

Republican lawmakers hit right back.

"Gov. Dayton promised voters he would not shut down government, yet state workers were sent layoff notices today," said Senate Majority Leader Amy Koch, R-Buffalo. "I ask the governor to consider our compromise offer [and] join us in prioritizing the people instead of raising taxes. If not, the decision to shut down the government will be on Gov. Dayton."

MnDOT issues warning

Local officials Friday started to see some of what a shutdown would entail.

"In the absence of legislative authorized appropriation as of July 1, we must advise all holders of federal aid construction contracts to suspend all work activity," MnDOT state aid division director Julie Skallman said in a memo to local governments. The state sent a similar notice to the Metropolitan Council, which is in charge of the Central Corridor light-rail project now under construction.

The Transportation Department also warned county, city, federal and district transportation officials that even if some construction projects could continue in a shutdown, state transportation officials might not be around to offer some support services.

It is not yet clear whether construction projects would be suspended. In a brief 2005 shutdown, courts decided to allow projects to continue but stopped road maintenance. MnDOT spokesman Kevin Gutknecht said it's too early to say what a shutdown would look like.

"We don't decide that," Gutknecht said. "The courts are eventually going to decide that, sometime."

Rachel E. Stassen-Berger Twitter: @rachelsb