Minnesota government shutdown begins after talks fail

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http://www.reuters.com/article/2011/07/01/minnesota-budget-idUSN1E76016D20110701

UPDATE 2-Minnesota government shutdown begins after talks fail

Fri Jul 1, 2011 4:18pm EDT

(Reuters) - Minnesota's state government began a broad shutdown on Friday going

into the July 4 holiday weekend after the Democratic governor and Republican

legislative leaders failed to agree on a budget.

The impasse means around 23,000 of roughly 36,000 state employees will be

furloughed, and all but the most critical state functions suspended. Parts of

the government had already begun to shut down on Thursday ahead of the midnight

deadline.

State parks and campgrounds have closed ahead of what is usually their busiest

stretch of the year for the July 4 holiday, and dozens of highway rest stops

were shut down for one of the biggest travel days of the year.

As with tensions across state governments from Wisconsin to Ohio, the shutdown

had its origins in elections last November, when Minnesota voters elected the

state's first Democratic governor in 20 years and Republican majorities in the

House and Senate that were not big enough to override his vetoes.

" This is a night of deep sorrow for me because I don't want to see this shutdown

occur, " Governor Mark Dayton told reporters on Thursday night.

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. Only the

agricultural budget was approved during the legislative session that ended in

May.

Dayton vetoed the other spending proposals. He also vetoed Republican-backed

bills to restrict abortions after 20 weeks of pregnancy and require voters to

present photo identification at the polls similar to Republican efforts across

the country.

Dayton said his last proposed two-year general fund budget was $35.7 billion,

but the differences between his approach and the Republican leaders had not

changed since January. The gap between the two sides stood at $1.4 billion, he

said.

Republican leaders had asked Dayton to call a special session to approve a

10-day funding extension, saying they believed they were close to a budget deal.

Dayton dismissed the offer as " a publicity stunt. "

Senate Majority Leader Amy Koch said in a statement she was troubled by Dayton's

rejection of the temporary funding bill.

" We will continue working on a solution to the state budget deficit when the

time is appropriate, " she said.

POLICE PATROLS SPARED, ZOO CLOSED

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 increases.

In the latest talks, Republicans offered to raise $1 billion by shifting

payments to schools and issuing bonds for tobacco settlement money. Dayton

offered to limit his tax hike to those earning over $1 million a year. Neither

offer stuck.

" Tax revenues are still, in my view, the fairest way to resolve this, but we

have offered an awful lot of different possibilities, and they have, too, "

Dayton said.

All but the most critical state functions will be suspended while the impasse

continues into the new fiscal two-year period that started on Friday, making the

2011 shutdown much broader in scope than one in 2005.

Neither Dayton nor the Republican leaders gave any indication when they would

meet next to discuss the budget.

Prison staffing, state police patrols and staffing at nursing and veterans homes

were among services found critical and allowed to continue by a Ramsey County

judge. Staffing at numerous other departments will be cut to the bare bones.

Other functions deemed critical include the executive and legislative branches

of state government and the courts.

Payments to schools and local governments, and programs such as food stamps,

Medicaid and temporary assistance to needy families will also continue during

the shutdown.

However, numerous other programs not considered critical will be closed,

including the state lottery, the gambling control board and the racing

commission.

Standard & Poor's Ratings Services said on Friday the shutdown would have no

immediate impact on Minnesota's triple-A bond rating, noting that a court order

that expires on July 31 continued funding for debt service payments.

" If the shutdown persists and there is an inability to reach consensus on the

fiscal 2012 budget and progress toward structural budget balance is threatened,

there could be credit implications, " S & P said.

The shutdown forced Canterbury Park horse racing track to suspend gaming

operations and begin laying off " substantially all " of its 1,100 full- and

part-time workers, it said on Friday. The park will lose more than $1 million of

gaming and concession revenue each week during the shutdown, it said.

Driver's licenses, and fishing and hunting licenses, will not be issued, but

residents may be able to renew car license plate tabs at non-state operations.

The Minnesota Zoo would also close to the public with spending permitted only to

feed and care for the animals.

Among popular Minnesota spots, vacationers may stay at the privately run villa

and lodge operations at Giants Ridge golf resort, but its lauded golf courses

will be closed. (Additional reporting by Pierog in Chicago; Editing by

Greg McCune, Jerry Norton, ston and Jan Paschal)