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As shutdown looms, state leaders keep talking
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The governor's residence in St. Paul was chosen as the site for budget negotiations between Gov. Pawlenty and legislative leaders. (Photo courtesy of state of Minnesota)
State officials continue to plan for a partial government shutdown on Friday as legislative leaders continue budget negotiations. Gov. Pawlenty and legislative leaders met late into the night at the governor's residence in St. Paul with the hopes that they could hammer out a budget deal. But the two sides still remain far apart on several key budget items.

St. Paul, Minn. — Legislative leaders and Gov. Pawlenty spent a large part of Monday debating over when and where negotiations should be held. Pawlenty wanted to hold negotiations at Camp Ripley and prepared the state plane to fly the four caucus leaders to the National Guard facility on a moment's notice.

But DFL Senate Majority Leader Dean Johnson nixed the idea and said he preferred to continue negotiations in St. Paul. In the end, the group met at the governor's residence in St. Paul and accomplished little.

They exchanged budget offers well into the night, but said they're still at least $800 million apart on an overall budget deal. Johnson says his latest proposal would no longer link an income tax increase on the state's wealthiest citizens to pay for increases in health care and education. Instead, the income tax hike would be used to pay for middle class tax cuts.

"We believe this is a very serious offer. It's a serious move toward the governor and the House. We are more than hopeful that the governor and the House will accept this proposal," said Johnson.

Gov. Pawlenty and Republican House Speaker Steve Sviggum were cool to the idea. They say any measure that increases income taxes is off the table since it would harm job creation.

Sviggum supports a measure that would allow a state sponsored casino at Canterbury Park. Pawlenty has proposed cuts to state subsidized insurance and a 75-cent-per-pack cigarette tax increase to pay for funding increases for education.

As Pawlenty, Sviggum and Johnson continue negotiations, the clock ticks closer to Friday's partial government shutdown. In fact, Sviggum says it's nearly impossible for lawmakers and staff to process the mountains of paperwork by midnight Thursday, even if a deal were reached.

What kind of dysfunctional people are we? We're four days away from getting something done, if somebody would get at a table and try and work it out.
- Sen. Dick Day, R-Owatonna

"There is no way that we can give targets to the various committees, get them to agree and get the bills processed by Thursday evening. There is no way. The time for the last day of agreement was yesterday," said Sviggum.

As the shutdown prospects loom closer, Senate Democrats prepared legislation that would keep state parks open and state agencies running past July 1. The "lights-on" bill would keep government running at current budget levels until an overall budget deal was reached.

Pawlenty spokesman Brian McClung said the governor is reluctant to support those efforts.

"What we see from the Senate Democrats are continued delays and stall tactics, and on a day when we should be working out the details of the budget, instead they're having a floor session, a caucus, rules committee and working on a lights-on proposal, which is just an irresponsible way to govern in the state of Minnesota," McClung said.

The partial shutdown would include layoffs of up to 16,000 state workers and the closure of state parks and rest areas. New drivers wouldn't get their licenses and new MinnesotaCare applications wouldn't be processed.

With budget talks on hold, Senate Minority Leader Dick Day said Minnesota is about to become the most dysfunctional state government in the country. The Owatonna Republican blamed Senate DFL leaders for the situation.

"What kind of dysfunctional people are we? Oh, we're going to have a lights-on bill now so we can do that. That doesn't even make sense. We're four days away from getting something done, if somebody would get at a table and try and work it out," Day said.

The chaotic situation at the Capitol is angering many lawmakers who aren't privvy to the leadership talks. DFL Rep. Alice Hausman of St. Paul says the Camp Ripley proposal was the final straw. Hausman says trying to finish the deal with five men locked in a military facility indicates that rank-and-file lawmakers are practically irrelevant in the negotiations process.

"It's a way of telling everyone, 'Legislators have no role in this, they have no power.' Now, if we have no role and no power, all of those constituents that we represent don't either," Hausman said.

As the impasse continues, state officials continue to prepare for a shutdown. A judge last week ordered the state to continue to fund core services even if there's no budget deal. The judge appointed retired justice Edward Stringer as special master to hear disputes over what are essential services.

Stringer has already started holding hearings for nonprofit agencies and other groups worried about what will happen on July 1.

"This is a historic moment," he said as the first request came before him.

Child abuse prevention advocates sought assurances their programs would be spared and their aid checks would go out on time. A backer of the organization that serves unemployed people said the Dislocated Worker Program should be protected. An advocate for mental health programs told Stringer that outpatient therapy programs are vital as well.

Ron Brand, executive director of the Minnesota Association of Community Mental Health Programs, had similar worries.

"There is a lot of ambiguity in the field as to what will and won't be paid in the shutdown," Brand said.

Stringer promised quick responses to the petitions - he'll make recommendations to a Ramsey County judge - but he made no guarantees every service would be saved.

"They're worried," Stringer said of the people coming before him. "If I was in their shoes, I'd be concerned, too."

Most of the talk Monday was about social programs, but there are no spending plans in place for K-12 education, transportation, natural resources and agriculture programs either. Stringer planned to reconvene his hearings at 9 a.m. Tuesday.

While Stringer did his work, planning intensified at the state agencies that would be affected by the shutdown. The Pawlenty administration convened agency managers and personnel directors, with one official telling them that a partial shutdown looked probable.

Cal Ludeman, the Department of Employee Relations commissioner, said agencies can't afford to hedge their bets.

Officials at the meeting did give some new details:

-The state Capitol building will remain open, and public tours will continue.

-State agencies that lease space in privately owned buildings will have an additional month of breathing time, since the state pays building rents at the end of each month.

-A series of events over the 4th of July weekend celebrating the Capitol's 100th anniversary will continue, as they are being paid for with private funds.

-State workers who use vehicles that are part of the state fleet don't have to turn them in, but will be instructed to secure them at their homes and not use them.

-State credit cards will be suspended and only able to be used in emergencies and with specific authorization.

Ludeman said that the threat of shutdown is already having an effect on many state workers.

"Obviously productivity is not at its peak level, just because of the idea alone," Ludeman said. "That's just the way it's going to be for a few days."

(The Associated Press contributed to this report)

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