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Tim Pugmire and Tom Scheck

Budget talks break through; Minn. government shutdown unlikely

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Updated 5:15 p.m. | Posted 3:28 p.m.

Gov. Mark Dayton and House Republican leaders on Monday tentatively agreed to a two-year school spending budget, making it less likely state government will shut down on July 1.

Dayton said this afternoon he would agree to the latest House GOP education spending offer, although policy differences remain on other outstanding issues.

Dayton added that the sides were near agreement on environment and agriculture spending.

The governor had vetoed education and other budget bills as the session closed in May, raising the specter of a protracted budget battle. Officials had already sent layoff notices to more than 9,400 state employees warning of July 1 layoffs if there was no budget deal.

"We are getting very close" on assuring state employees they won't be laid off on July 1, Dayton told reporters Monday.

One of the major sticking points had been Dayton's push for spending on universal pre-kindergarten. Dayton conceded that demand but said he'll still push for universal pre-K in the future.

He said he would agree to a Republican proposal to increase overall school spending by $525 million over the next two years instead of the $550 million he wanted.

Although negotiations have been largely behind closed doors for the past few weeks, it was a public offer from Republican House Speaker Kurt Daudt that Dayton ultimately accepted.

Daudt's offer eliminates Republican proposals to change teacher tenure and their push to upend a Minnesota State High School League policy that allows transgender athletes to play on the team of their choice.

The deal will add 2 percent to to the per pupil funding formula for each of the next two years.

Dayton said he was considering the impact of a state government shut down when agreeing to the school funding deal.

On the other bills that he vetoed at the end of the session, the governor said he wants changes to clean water language and he wants lawmakers to allow the state auditor to have exclusive oversight of county financial records.

Dayton said he won't call a special session to finish the Legislature's work until he and the four legislative leaders agree on everything, adding that he hopes to make the call by the end of this week or early next.

State officials, he added, won't stop preparing for a government shutdown until the outstanding budget bills are passed into law.