Minnesota braces for government shutdown over taxes

ST. PAUL — In an echo of the debate unfolding in Washington, Minnesota hurtled toward a midnight government shutdown Thursday in a dispute over taxes and spending that could force thousands of layoffs, bring road projects to a standstill and close state parks just ahead of the Fourth of July weekend.

As the deadline drew ever closer without a resolution, people rushed to get driver's and fishing licenses, and park officials began warning campers to pack their gear and leave.

Though nearly all states are having severe budget problems this year, Minnesota stood alone on the brink of a shutdown, thanks to Democratic Gov. Mark Dayton's determination to raise taxes on high-earners to close a $5 billion deficit and the Republican Legislature's refusal to go along.

AP Photo/Star Tribune, Jeff Wheeler

Richard Aviles of Northfield, Minn., leads the chanting of demonstrators opposed to a state shutdown on the steps of the state Capitol in St. Paul, Minn., Thursday morning June 30, 2011. A wide-ranging state government shutdown bore down on Minnesota on Thursday, threatening to shutter state parks on the brink of a holiday weekend and furlough thousands of workers if a budget deal wasn't struck by midnight.

Negotiations between Dayton and legislative leaders were fitful, starting and stopping with no outward signs of progress, and details were scant, since the two sides agreed to what they jokingly called "the cone of silence."

The showdown was something of a small-stage version of the drama taking shape in Washington between President Barack Obama and the Republicans over taxes and the debt ceiling.

Only four other states — Michigan, New Jersey, Pennsylvania and Tennessee — have had shutdowns in the past decade, some lasting mere hours.

A stoppage in Minnesota would halt non-emergency road construction, shut the state zoo and Capitol, and stop child-care assistance for the poor. More than 40 state boards and agencies would go dark. Critical services, including the State Patrol, prisons, disaster response and federally funded health, welfare and food stamp programs, would not be affected.

State park officials told campers to strike their tents well before the deadline, even though there was still a chance of a deal. They said it would be too difficult to herd campers out in the middle of the night if talks failed.

In Afton State Park, near St. Paul, Rick Miller of Elko-New Market pushed up a camping trip with his 7-year-old son, Jack, to beat the shutdown. Miller originally hoped they could spend Thursday and Friday nights in the park on the picturesque St. Croix River, but he booked a campsite for Wednesday night.

"With the shutdown we decided we better come and get it in," he said. "We don't know how long it will be before we can get back into a state park." He added: "It's too bad they can't just get the job done."

Dayton is Minnesota's first Democratic governor in 20 years, and Republicans are running the entire Legislature for the first time in 38 years.

The governor has proposed raising taxes on couples earning more than $300,000 and individuals making more than $180,000. In an echo of the debate in Washington, Republicans have opposed any new taxes, arguing instead that the state should rely on spending cuts, including deeper reductions in health and welfare than Dayton is willing to accept.

Some GOP moderates have talked of breaking the impasse with other means of raising revenue, such as eliminating tax breaks or authorizing a casino. Dayton has said he is open to such ideas.

Republican leaders demanded the governor avert a shutdown by calling a special session to enact a "lights on" budget bill that would keep the state running while talks continued. But top Democrats said Dayton would not take such a step.

Some rank-and-file Republican lawmakers said they were starting to feel the pressure.

First-term Rep. Mike LeMieu said his constituents were about evenly split between the Republican line on spending and Dayton's tax push. He said the fallout could come in next year's legislative elections.

"I personally think the Republicans will probably be more damaged than the governor," he said. "The fact is that we're all up for re-election again next year, and he's not up for three years."

Though many states are having budget difficulties this year, those where political power is concentrated in a single party easily passed budgets. And some of those with divided government had healthy reserves, including Alaska, Iowa and Montana.

(Associated Press reporters Amy Forliti and Patrick Condon contributed to this report. Forliti reported from Afton, Minn.)