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Gov. Mark Dayton and legislative leaders failed Friday to break an impasse over Minnesota's two-year budget, elevating the likelihood that the legislative session will end with major work unfinished.

A new round of private talks aimed at settling the standoff were held late Thursday and early Friday, but by the afternoon leaders of the Republican-controlled House and Senate said without final agreement they would resume sending major spending bills to Dayton, even though he has not signed off on their contents.

If Republicans go through with that plan this weekend, Dayton will have to decide whether to sign or veto billions of spending in bills that could also include numerous GOP policy priorities the DFL governor has called objectionable.

"I don't know what's in the bills. We haven't seen them," Dayton said Friday night, calling the situation at the Capitol "clear as mud." Asked about the prospects for finishing before a Monday deadline, Dayton replied: "Not promising."

Republicans also said Friday that they planned to add perhaps the most controversial policy proposal of the session, a ban on local governments setting their own wage and workplace standards, to the broader budget debate by attaching it to one of their spending bills. Dayton opposes the measure.

"For the second time this year, we are going to get our job done on time, do what Minnesotans sent us here to do, and encourage the governor to sign these bills," said Senate Majority Leader Paul Gazelka, R-Nisswa.

Republican lawmakers already passed a full set of 10 budget bills this month. Dayton vetoed all of them. The state's next two-year budget is expected to come in at about $46 billion.

The latest deadlock underscores the challenges of divided state government, in which voters have twice elected a DFL governor but also sent Republican majorities to St. Paul after the 2016 election.

Dayton wants more money for education and health and human services, while Republican leaders want to see a bigger tax cut and boost state spending on roads and bridges out of existing resources rather than a transportation-linked tax increase. The two sides are quarreling over a projected surplus of about $1.65 billion. Republicans want to dedicate just short of $1 billion to tax cuts and transportation, which Dayton said Friday is too much.

Beyond the disagreements over money, the GOP is also pushing law changes that Dayton opposes. In addition to the local control measure, Republicans have sought through the budget-setting process to limit Dayton's high-profile water quality initiative; toughen legal consequences for protesters who block interstate freeways; reduce seniority as a factor in teacher layoffs at public schools, and eliminate the MNsure state health insurance exchange, among other measures.

Some GOP movement

Separate from their divides with Dayton, it will be a crunch for lawmakers to pass a new set of budget bills in both chambers before Monday night's mandatory adjournment. Failure to pass all the bills — or subsequent vetoes by Dayton — would necessitate a special legislative session. Without a settled budget, state government would not be able to deliver some services after June 30.

Republicans said with their new round of budget bills, they are attempting to move closer to at least some of Dayton's positions. After previously approving a $1.1 billion tax cut that Dayton vetoed, Republicans scaled that back to $660 million in tax relief. They reduced their transportation proposal from $372 million to $300 million. And they have agreed to spend more on education, health and human services, and other areas.

"We're going to keep fighting for transportation and tax relief and watching spending, and the governor will have his priorities, and we'll figure out how we finish it," Gazelka said.

The weekend promises to bring a crush of legislative activity as committee chairs from the House and Senate meet and rework budget bills. Legislative staffs will have to work overtime to get bills drafted, reviewed and printed. Once the bills reach the floor of each chamber, members of the DFL minorities will try to scrutinize the new proposals and subject them to debate and procedural hurdles.

Even as they start repassing budget bills, Republican leaders said they would continue talking to Dayton through the weekend in hopes of reaching broad agreement; Dayton also said he was ready to keep talking. Negotiations were scheduled to resume at 10 a.m. Saturday.

Staff writer Jennifer Brooks contributed to this report.

J. Patrick Coolican • 651-925-5042


What Dayton wants

More spending for public schools, especially prekindergarten; additional dollars for social service programs.

What REPUBLICANS want

A major tax-cut package; big boost in state spending on road and bridge projects from existing state resources.