The prospect of a timely finish to the legislative session dimmed Thursday as Gov. Mark Dayton's administration and Republican leaders of the House and Senate put budget talks on hold for a day of public sparring over dueling tax and spending plans.

Adding to the growing partisan tenor of the session's final days, Dayton on Thursday nixed a Republican policy priority by vetoing a bill that would have overhauled Minnesota's troubled teacher licensing system — infuriating lawmakers who worked on it for months.

"We've been blindsided by this veto," said Rep. Sondra Erickson, R-Princeton. "That's very disappointing after the thousand hours we spent working on this."

There was one big piece of bipartisan progress at the Capitol on Thursday: Dayton signed legislation that will bring Minnesota driver's licenses in line with upgraded federal security standards, which means residents will be able to board a plane with their driver's license in hand rather than a passport.

Minnesota was the last state in the nation to adopt the new Real ID standards. If the Legislature hadn't done so, airports would have stopped accepting Minnesota driver's licenses as valid identification next January.

But budget brinkmanship was the order of the day. As of Friday morning, the DFL governor and leaders of the Legislature's Republican majority have just four days to strike an agreement on the state's two-year, roughly $46 billion budget. They remain hundreds of millions of dollars apart on their proposals and have not yet delved into a long list of policy changes mixed up in the budget debate.

Talks stalled out Wednesday evening. Dayton touted a possible compromise: that he and Republicans split most of a $1.65 billion surplus in half, with the GOP using their portion for tax cuts and transportation projects while Dayton uses his half on spending priorities across state government. Republicans took issue with Dayton's math in arriving at the half-and-half arrangement.

By midafternoon Thursday, Dayton's top budget official, Minnesota Management and Budget Commissioner Myron Frans, reported that the two sides were at an impasse. "[The governor] really went to the 50-yard line and we're waiting for the Legislature to come to the 50-yard line," he said.

Rep. Jim Knoblach, R-St. Cloud, an architect of the GOP budget, saw things differently.

"It is the governor's turn to make an offer," he said. "We made an offer last night and now we're waiting for his."

The two parties reported progress on a few smaller budget bills, including agriculture, environment and higher education. But they continue to be deeply divided over the more substantial pieces of the budget.

Republicans want to use much of the state's surplus on targeted tax cuts and credits. Dayton wants to expand funding for education and prepare for growing demands in health and human services programs — a key target for GOP cuts.

The legislative session ends at midnight Monday. If lawmakers and Dayton haven't finalized a new budget by then, a special session will be necessary to keep state government operating after the current fiscal year ends June 30.

With his veto of the education licensing bill, Dayton said he would not sign off on reforms that would cost millions of dollars to implement unless the funding was included in the bill. Erickson said the intention was to include the money in the separate education budget bill, which is still wrapped up in the overall budget talks.

The measure was drafted with bipartisan input, including Dayton's education commissioner, and the Legislature approved it on Tuesday with a handful of DFL votes. But Dayton in his veto letter raised concerns about how the Legislature would pay for the new reforms. DFLers also raised questions about whether some of the newly licensed educators would be able to unionize, and the DFL-aligned teacher's union Education Minnesota opposed the proposal.

"I strongly believe any proposal with a fiscal impact must also include the requisite funding," Dayton wrote. He noted that it would cost an estimated $3.4 million to set up the new Professional Educator Licensing and Standards Board and new four-tiered licensing system that could cover everyone from the most highly educated and experienced teachers down to community experts who come into schools to teach specific skills.

Erin Golden • 612-673-4790