Gov. Mark Dayton met separately Tuesday with the Legislature's two top leaders, starting to plot out a special session that threatens to resurrect most of their major political disputes of recent months.

The DFL governor and GOP House Speaker Kurt Daudt met privately for about an hour Tuesday. They emerged afterward to announce that, while they made no progress in their dispute over education funding and several dozen other spending and policy measures, they did agree on a physical location for the so-far-unscheduled overtime session.

With the Capitol itself about to close entirely for repairs, 201 lawmakers will cram into several hearing rooms in the uncreatively named State Office Building. Directly adjacent to the Capitol, it holds offices for all 134 House members, the 28 members of the Senate Republican caucus, some House and Senate employees and a series of House committee rooms. Several of the larger hearing rooms will stand in for House and Senate floor sessions.

"This is going to be a historic event," said Matt Massman, commissioner of the state Department of Administration. "The best we can tell, this will be the first time, outside of maybe a fire in the late 1800s, that the Legislature will meet outside the Capitol building."

The decision on the State Office Building — commonly referred to as "the SOB" around the state government campus — was the only agreement in sight Tuesday. Dayton and House Republicans are mired in a dispute over a $17 billion school funding bill that the governor vetoed because he considered its spending increases insufficient, particularly when it came to spending on his top priority, increased access to early-learning opportunities.

Over the weekend, Dayton added more to the special session agenda by vetoing two additional budget bills that together fund the state departments of Natural Resources, Agriculture, Commerce, Employment and Economic Development along with a dozen smaller state boards and commissions.

Dayton priority list grows

On Tuesday, after the Dayton-Daudt meeting, Dayton's office released a new, lengthy list of the governor's special session priorities. He now wants a $650 million education spending increase, after vetoing the education bill with a $400 million increase and more than a dozen spending and policy adjustments in the other two vetoed budget bills.

The governor also is seeking:

• A bonding bill to pay for state construction projects.

• Passage of the bill to distribute constitutionally dedicated "Legacy" funds for arts, outdoors and clean water projects, which lawmakers failed to pass on the last night of session.

• A bill to restore voting rights for felons.

• Repeal of a provision approved by lawmakers last week that strips much of the authority of the state's elected state auditor.

"I think what we'll do is probably focus on the bills that we have already passed and make the adjusted changes to those that would be required by the governor to get his signature," said Daudt, R-Crown, after the meeting. He and Dayton plan to meet again Wednesday.

Senate Majority Leader Tom Bakk, the third principal in the negotiations, met separately with Dayton later in the afternoon. Before the meeting, Bakk said he could see the scope of the special session quickly ballooning.

"It's getting a lot more complicated," said Bakk, DFL-Cook. Over the weekend, Dayton offered to go along with some tax cuts sought by House Republicans in exchange for a bigger school spending boost. That in turn could also revive efforts to achieve a major transportation spending boost, which emerged late in the regular session as Bakk's top priority.

"Opening it up as much as it is now potentially opens it up to taxes and transportation discussions, too," Bakk said. Daudt said he hadn't yet decided whether he'd be willing to back more education spending in exchange for tax cuts.

Layoff notices going out soon

Meanwhile, the time pressure is growing. Next week, about 10,000 state government employees will get layoff notices in the absence of replacement budget bills for the three that Dayton vetoed. Failure to approve new budgets by July 1 would mean a shutdown of the agencies in question. The result would be smaller in scope than the 2011 shutdown, but still likely to force the closure of state parks and the Minnesota Zoo, among other high-profile consequences.

Minnesota Management and Budget Commissioner Myron Frans said contingency planning is underway. He said if it becomes necessary, officials would rely on a court ruling dating to the 2011 shutdown to determine which state services would be considered critical. If no budget agreement is in sight by mid-June, state officials would form so-called incident teams to coordinate state office closures as needed.

"Unfortunately we know how to do it," Frans said.

Patrick Condon • 651-925-5049

Ricardo Lopez • 651-925-5044