Minnesota shutdown longest in recent history, no new talks

Erik Meade protests in front of the closed Minnesota State Capital in Saint Paul, Minnesota, Friday July 1, 2011.

MINNEAPOLIS (Reuters) - The Minnesota state government shutdown, now the longest in recent memory in the United States, reached its eleventh day on Monday with no new talks planned between the political leaders.

The state's new fiscal year began on July 1 without a budget in place to close a projected $5 billion two-year deficit or a temporary spending plan, leading to the second Minnesota state government shutdown in six years.

The issues driving the impasse in Minnesota are similar to differences raised in Washington during negotiations over the debt ceiling and over budgets in other states. Still, Minnesota is the only state where the government has shut down.

Minnesota's Democratic Governor Mark Dayton, Republican House Speaker Kurt Zellers and Senate Majority Leader Amy Koch have not met face-to-face since Thursday. There was little change in their respective positions on Monday.

On Monday, Dayton said he would tour the state to meet with residents about the impasse and again offered to meet with Republican leaders over his proposals to eliminate a $1.4 billion gap between his budget proposals and theirs.

"I am willing to compromise," Dayton told reporters. "I am willing to consider other possibilities. I am willing to consider any reasonable proposal that would get this matter resolved as quickly as possible."

Koch said Dayton's offers, included in a letter offering to meet Republican leaders, were disappointing.

"The governor continues to believe that the discussion needs to be about where the revenue comes from and how much," Koch told reporters. "There is no compromise in the area that we are concerned about, and that's about reining in spending and reforming the way we are spending."

The toll on Minnesota's economy was unclear, but economists expect it the economic drag to increase as the shutdown goes along, starting with reduced spending by more than 22,000 furloughed state workers.

Thousands of other workers have lost business after 100 state funded construction projects were suspended and state workers overseeing gaming were laid off, forcing cancellation of racing at two horse tracks.

Sujit CanagaRetna, senior fiscal analyst for the nonpartisan Council of State Governments, said on Monday that the political impasse eventually would have an impact on the state's economy at a time when the recovery remains fragile.

"The fact that it has gone on for so long and that state government is paralyzed means that this recovery that is so essential is going to be stalled," he said.

Todd Haggerty, a fiscal affairs analyst for the bipartisan National Conference of State Legislatures, said the shutdown already is the longest since the group began to gather such data in 2002, but is also the longest in at least two decades.

Many states have gone months into the next fiscal year without budgets before, Haggerty said. New York and California last year took about four extra months to complete budgets.

A state court judge has ordered Minnesota to maintain only critical core state government functions during the shutdown, including state police patrols and staffing of prisons and nursing and veterans homes.

Other functions have been scaled back with many departments that issue permits or oversee programs cut to bare bones, leaving a steady stream of groups and companies heading to court for relief from the shutdown.

(Reporting by David Bailey and Greg McCune)