Dayton, GOP leaders talk briefly this afternoon

DFL Gov. Mark Dayton and GOP legislative leaders met for another round of budget negotiations this afternoon, the fifth day of a state government shutdown. They met for a little more than an hour at the governor's office, and no progress was reported after the meeting ended. The parties will get together again Wednesday afternoon.

The shutdown began Friday after the two sides failed to come up with an agreement on how to resolve a $5 billion budget deficit projected over the next two years. About 22,000 state government employees have been laid off, and the shutdown is having an impact on the private sector as well.

"This is a terrible situation," Dayton told MPR's Morning Edition. He added that he hopes moderates from both parties will come out and "force everyone to a resolution."

Dayton said he's had some conversations with moderates in recent days. But during the Morning Edition interview, he didn't give many hints about how the situation would be resolved.

Republican leaders have rejected Dayton's proposal to raise income tax rates for the 7,700 Minnesota residents earning more than $1 million, saying tax hikes are the wrong strategy. Dayton has refused to sign on to the Republican budget plan, saying it cuts too much and would hurt the state's most vulnerable residents.

"I've said all along that I'm willing to look for other sources of revenue; the reality is that they're against any source of tax revenue," Dayton said.

As a result, leaders are looking at increasing a payment delay for K-12 schools, which would reduce the size of the deficit. A smaller school payment delay had already been part of a budget solution. Dayton had promised voters to limit the size of the delay, but he said a bigger payment shift — coupled with an increase in per-pupil aid for schools — might have to be part of the solution.

Another revenue-raising option is borrowing against future tobacco payments the state receives from a legal settlement with tobacco companies. Dayton told Morning Edition there are questions over whether the state can use that money. He's also pointed out that neither delayed school payments nor borrowing from future tobacco payments are sources of permanent revenue.

As for the shutdown, Dayton said a temporary one will still hurt less than accepting the GOP budget plan. At this point, Dayton hopes the shutdown will bring progress.

"I hope that the pressure of the problems caused by the shutdown will put pressure on all of us to be more accommodating and find that solution," he said.

When budget talks resume, Dayton said he wants GOP lawmakers to drop a policy agenda they presented in 11th-hour budget talks.

That includes restrictions on abortion, a ban on stem cell research and controlling redistricting, Dayton said.

"So if they're willing to set those aside and say, 'let's look at those again next session, our job right now is to work out a budget so that the state can operate again,' then I think we can put that aside and work on the fiscal side of things," he said.

(MPR's Cathy Wurzer and Tim Nelson contributed to this report.)

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