Nearly a week into Minnesota's government shutdown, budget talks blew up Wednesday, with DFL Gov. Mark Dayton accusing Republicans of untruths and Republicans visibly upset that Dayton still insists on raising taxes.

"No more 'cones of silence.' No more private meetings," Dayton said after the last meeting. "I'm tired of having this stuff come out very differently from how it's transpired."

GOP House Speaker Kurt Zellers called the latest discussions "disappointing." He added: "Things went backwards today." The latest row offers little hope that the shutdown, now in its sixth day, will be resolved any time soon. Republicans and the governor have been at loggerheads over taxes since Minnesotans elected an anti-tax legislative majority and a "tax the rich" chief executive last November.

Dayton made two new budget offers on Wednesday. One would temporarily increase income taxes on Minnesotans earning more than $1 million a year, while the second would raise cigarette taxes by $1 per pack. Both offers included an additional delay to K-12 school aid payments.

"A tax increase in general is a non-starter with our caucus," said Zellers, R-Maple Grove, who added that Republicans were "absolutely interested" in other non-tax aspects of Dayton's proposal.

Dayton also offered to trim his proposed spending from $35.8 billion over two years to somewhere between $35.3 billion and $35.5 billion.

Either would be substantially less than the $39 billion that state economists say the state needs to maintain current services or the $37 billion Dayton initially recommended in February. But the totals also are well above the $34.2 billion the GOP has said is its limit.

"If this was a step backward ... then they took the step backward," Dayton said. "I took a step forward to try to resolve this."

Dayton grew frustrated that Republicans criticized his latest offer, saying they had appeared "noncommittal" in their meeting. He said the GOP must make the next offer.

Senate Majority Leader Amy Koch, R-Buffalo, said she and Zellers would take Dayton's plan to their caucuses. "We'll go over the numbers again, see if there's something in there," Koch said.

Each of Dayton's proposals would drive down the state's projected $5 billion budget deficit by delaying either $490 million or $700 million in school aid payments.

That would take the total K-12 shift to somewhere around $2 billion. The proposals also would increase health care surcharges by $300 million and wring another $100 million from tax reforms.

More cuts

In the first detailed plan for cuts that either side has shared in weeks, Dayton proposed deeper reductions and shifts than he has outlined publicly before. He said claims that he had not shared the specific cuts with the Republican leaders previously were "absolutely untrue."

Dayton said he proposed deeper health and human services cuts and further trims to transportation and state government.

Asked about possible alterative revenue options Wednesday, Zellers mentioned several gambling proposals that emerged during the session.

But he said Republicans are divided on the issue and need the governor to say he will sign any proposal before they bring it back to the caucus.

Dayton says he is open to gambling proposals and has made that clear to Republican leaders. He said caucus leaders told him that a gambling proposal may lack the votes to pass and that a likely legal challenge could make the revenue difficult to book.

'Eat the Rich'

On the steps of the Capitol, state workers gathered in the hot sun to keep pressure on Republicans.

Wednesday's rally took up a familiar theme: taxing the state's wealthiest residents to help solve the deficit. One man held a sign that took his frustration a step further -- he had changed it from "Tax the Rich" to "Eat the Rich."

Organizers also went after specific GOP legislators, reminding Minnesotans of what they think the state will look like if the Republicans succeed with their budget cuts. One sign read "Gazelka Gulch," a reference to Sen. Paul Gazelka, R-Brainerd. Another read "Hann Circle," a reference to David Hann, R-Eden Prairie, who chairs the Senate Health and Human Services Committee.

"We stand at a point in this state's history of either standing strong for the common good or allowing extreme special interests with a radical social agenda to destroy our middle class," Jim Monroe, executive director of the Minnesota Association of Professional Employees, told the crowd.

Negotiations will continue Thursday, when leaders meet to discuss the K-12 education budget.

Eric Roper • 651-222-1210 Twitter: @StribRoper

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