Minnesota's divided Legislature blew past a self-imposed deadline on Friday to agree to big picture numbers in the debate over the state's two-year budget, dimming prospects that they will finish their work on time.

Leaders had hoped to agree on spending targets in areas such as education, health and human services and public safety by Friday to guide the work of conference committees, which have been hashing out differences between House and Senate budget bills.

With COVID-19 staffing restrictions, failing to meet the Friday deadline makes things "very, very difficult," DFL House Speaker Melissa Hortman said. "Monday would present extreme logistical difficulties for the staff and beyond that it would probably start to approach impossible."

Huge divides remain between the Republican-controlled Senate and DFL House on topics from government spending, tax increases and police reform to the emergency powers Gov. Tim Walz has used to respond to the pandemic. They must adjourn the regular legislative session by May 17. If they haven't agreed to a roughly $52 billion state budget by then, they'll have to finish in an overtime special session or risk a government shutdown starting in July.

Leaders have been privately trading offers on the budget all week. Republican Senate Majority Leader Paul Gazelka listed "no tax increases" as the first item in an initial budget offer he sent to the House on Tuesday, which was by and large a list of GOP partisan priorities. Hortman described it as a "news release proposal."

Gazelka said Friday that tax increases proposed by House Democrats remained a major sticking point in negotiations. Republicans also want the governor to involve them in how to spend billions in federal stimulus money coming to the state for COVID-19 response, and they believe Walz should end a state of peacetime emergency and relinquish the powers he's used to respond to the pandemic.

Gov. Tim Walz

"I'm still optimistic that we can get done on time. We'll see how that all plays out in the next few days," Gazelka said. "But we are exchanging offers, and that's a good thing."

Walz's move Thursday to announce the rollback of all COVID-19 restrictions by May 28 and a mask mandate by July 1 did little to change Republicans' appetite for him to give up his emergency powers. The governor said he intends to extend those powers next week for another 30 days because he needs them to roll out vaccinations and marshal testing supplies and federal funds.

He acknowledged that the virtual nature of negotiations during the pandemic has been a challenge, noting that lawmakers used to meet in person and regularly have breakfast together to maintain relationships.

"We've got to get back to that, where we differ but you're not the enemy," Walz said Thursday.

Over the past decade, lawmakers have routinely gone into overtime sessions to finalize work on the state budget.

Legislators at the helm of conference committees spent the week talking over their differences and awaiting budget targets.

"Until we get global budget targets so we know that we're all looking at how we should spend the same amount of money, it's very difficult," said Senate Tax Committee Chairwoman Carla Nelson, R-Rochester.

"I know that Chair [Paul] Marquart and I can put together a great bill that will empower Minnesotans and encourage economic growth as we come out of this pandemic and the economic devastation that it has caused, along with the health casualties," Nelson said. "We can do it, we just got to get that global budget target."

Briana Bierschbach • 651-925-5042 Jessie Van Berkel • 651-925-5044