Minnesota leaders talk budget as state shutdown looms

MINNEAPOLIS Wed Jun 29, 2011 7:10pm EDT

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MINNEAPOLIS (Reuters) - Minnesota's Democratic governor and Republican legislative leaders were meeting on Wednesday in search of a budget deal but so far with no success with one day to go before a broad state government shutdown.

If they cannot agree on a budget by midnight on Thursday, or agree to some kind of extension, all but the most critical Minnesota services will shut down for the first time since 2005, including state parks for the July 4 weekend.

Governor Mark Dayton and the Republican-led legislature have been far apart in their public positions over a two-year budget plan to close a $5 billion deficit. Both sides have said they would prefer a deal to a shutdown.

Dayton's first budget proposal included an income tax increase on the wealthiest state residents and an expansion in overall spending. Republican leaders first sought some tax cutbacks in aiming to halt spending.

On Wednesday, a Ramsey County judge ruled that only the most critical services could be provided during the shutdown and appointed retired Minnesota Supreme Court Chief Justice Kathleen Blatz as a "special master" to manager any issues raised during a shutdown.

Barely 13,000 of Minnesota's 36,000 state employees would continue working into the new fiscal year on July 1 to provide essential services from prison staffing to state police patrols, nursing and veterans homes among other programs.

Ramsey County Judge Kathleen Gearin said state spending on road and bridge programs would have to halt with the shutdown, with funding permitted only on projects to prevent an imminent bridge collapse or in response to a road emergency.

The Minnesota Zoological Garden will be closed to the public but allowed staffing to feed and care for the animals.

Gearin also found that failure to properly fund "critical core functions" of the executive and legislative branches would violate the constitutional rights of state residents.

Other state and federally administered programs will operate including food stamps, Medicaid and temporary assistance to needy families.

In addition to state park access, the sale of fishing and boat licenses and other permits would be suspended and state trails and public water accesses will go unmaintained, the state Department of Natural Resources said.

Dayton and legislators have only agreed on an agriculture bill approved during the regular legislative session that ended in May.

(Reporting by David Bailey. Editing by Peter Bohan)

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