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Budget deal seems close as talks keep going
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Republican House Speaker Steve Sviggum, left, and Senate Democratic Leader Dean Johnson met with Gov. Pawlenty well into Friday morning, trying to hash out a budget agreement. Talks resumed several hours later. (MPR file photo)

St. Paul, Minn. — State leaders said Friday they were on the brink of ending Minnesota's unprecedented partial government shutdown, as a marathon negotiating session between Gov. Tim Pawlenty and top lawmakers stretched on.

Both sides said an agreement to end the six-week-old special session was tantalizingly close, but they were still hashing out last-minute disputes over funding and policy reforms for public schools.

"Hopefully we can get this thing wrapped up and get these 9,000 employees back to work and get the state functioning," the Republican governor said on his weekly radio show, before resuming the talks. "We'll give it another run this morning."

Talks started midmorning Friday, giving the negotiators just a few hours off after a Thursday session that didn't break up until 3:45 a.m.

As expectations mounted, a growing number of reporters and lobbyists gathered in the corridor outside the governor's office, sitting in folding chairs, waiting for news of a deal.

"We're going to keep hammering until we get it done," said House Speaker Steve Sviggum, the Legislature's top Republican.

Sen. Dean Johnson, majority leader of the Democrat-led Senate, said, "There is definitely light at the end of the tunnel."

We were certainly hoping for a more positive outcome. At the same time I can't say I'm terribly surprised.
- Randy Sampson, president of Canterbury Park race track

The final disagreements centered on public schools, said both Johnson and a spokesman for Pawlenty. But while Johnson said it had to do with per-pupil funding formulas, Pawlenty spokesman Brian McClung said it was related to proposed policy reforms.

Schools were likely to get a smaller financial boost - about 4 percent per pupil in each of the next two years - than Pawlenty's proposal for 4.5 percent increases or the Democrats' 5 percent plan, Johnson said. That would free up more money for other items.

Aid to cities and counties - and the revenue to pay for it - was also being discussed, he said. Democrats dropped a proposal to tighten tax rules for corporations with foreign operations.

Details of the proposal have been circulating at the Capitol, leading to complaints from some DFL leaders. They are expressing concern about inadequate funding for state health care programs, and that education spending increases would rely too heavily on higher property taxes as a revenue source.

Republicans abandoned a quest to make gambling profits part of the budget deal. Pawlenty and key allies had pushed to authorize a casino at Canterbury Park racetrack that would have generated profit for the state.

"It looks like it's going to have to be set aside for another day," Pawlenty said on his show.

The president of Canterbury Park race track confirms that the racino plan is not included in the budget deal. Randy Sampson says he's disappointed, but that the track has a bright future even without a casino.

"This has been a rollercoaster ride. As you know we were in the mix, and then out, and then back in and out -- so it's been a frustrating past couple of months," says Sampson. "It will be good to at least have some resolution to it one way or another. We were certainly hoping for a more positive outcome. At the same time I can't say I'm terribly surprised."

A deal could allow the House and Senate to pass a "lights on" bill that would reopen state agencies closed by the shutdown, and ensure that 8,900 furloughed state workers would return to work soon. Still unresolved was whether idled workers would get lost pay and vacation restored.

Eliot Seide, executive director of AFSCME Council 5, which represents many of the furloughed workers, said notifying and getting them all back to work would be "a cumbersome process." But the sooner the better, he said at a press conference outside Pawlenty's office.

Several workers at the Department of Health expressed concern that understaffed laboratories could result in a crisis if there is a public health emergency.

"We saw what happened in London," said Randy Graham, who's furloughed from a laboratory that handles preparedness for biological, chemical and radiological events.

Aside from worker layoffs, the shutdown's impact has been small because budgets for colleges, courts, prisons and state parks were already in place. Among the more noticeable effects: barricaded highway rest areas, no new driver's licenses and suspension of some services provided by nonprofits.

However, freeway traffic cameras, electronic road message boards and crews that assist stranded motorists were on the verge of being revived with a determination that they are essential state services.

Many states frequently miss deadlines for enacting new budgets. But Minnesota, unlike other states, has no law that would automatically extend spending past the end of its fiscal year if a new budget is not approved.

Lawmakers were supposed to finish the budget by May 23, but that deadline passed with only three major spending bills approved - for public safety, higher education and several smaller state agencies.

The special session started moments after the regular session ended.

(The Associated Press contributed to this report)