The Minnesota state government shutdown at 12:01 a.m. CDT Friday July 1,2011, after talks between Democratic Gov. Mark Dayton and top Republicans fell apart. (Carlos Gonzalez/AP)

Gov. Mark Dayton (D) and the Republican-controlled legislature have been in a standoff since the beginning of the legislative session over how to close a projected $5 billion budget deficit.

In an echo of the national budget fight, Dayton wanted to raise taxes on the wealthiest 2 percent of Minnesotans. Republicans wanted to close the gap with spending cuts and accounting shifts.

“I cannot accept a Minnesota where people with disabilities lose part of the time they are cared for by personal care attendants so that millionaires don’t have to pay $1 more in taxes,” Dayton said at about 10 P.M. last night, when it became clear that a deal would not be reached.

It’s the second shutdown in six years in the state. The last one came in 2005, under former governor Tim Pawlenty — now a Republican presidential candidate. That shutdown lasted eight days, and about 9,000 workers were temporarily laid off.

Republicans say they are willing to meet over the holiday weekend for further negotiations, but they have not heard from the governor about doing so.

A judge ruled earlier this week that only core government functions will continue while the government is shuttered, which means public safety, welfare programs, care for residents in state facilities (including prisons), preservation of the government financial system and necessary administration functions (for example, payments and computer system maintenance).

That means state parks will close for the holiday weekend, the busiest of the year. The Department of Natural Resources has estimated tourism losses of $12 million for each week the government is closed.

“It’s awful,” said Lori Peterson, a visitor from Illinois. Her family is headed to Minnesota for an annual fishing trip — without the necessary (and now unobtainable) fishing licenses. “We’re talking about going to Canada next year.”

About twenty thousands state workers are officially laid off; most are eligible for unemployment insurance. Hundreds of state workers held a vigil at the steps of the state capitol Thursday night, chanting “We want to work for Minnesota!” and “Tax the rich!”

“The hardest part is the total uncertainty of how long it’s going to last,” said Lynn McElin, a contract worker with the Department of Administration who has been laid off. “I’m proceeding like I’m out of work and I need a new job.”

State universities are not shutting down, because the Minnesota State Colleges and Universities system was allowed to tap into their own reserves to keep running. “We really dodged a bullet,” said Lois Larson, director of financial aid at Metropolitan State University.

For days, the negotiations between Dayton and Republicans in the state legislature have been difficult to follow because both sides agreed to a “cone of silence.” Since the talks broke down, that cone has disappeared.

In recent days negotiatiors came close to an agreement, with Democrats proposing $35.8 billion in spending over the next two years and Republicans asking for $34 billion. But the budget for health and human services, which constitutes about a third of state spending, was a final sticking point.

Republicans offered a deal that included layoffs for some state workers and teachers along with some unrelated measures they have been unable to pass, including a voter ID law and abortion restrictions. The GOP also proposed delaying $700 million in payment to public schools, who are already owed about $1 billion by the state, and issuing tobacco bonds (from money sent regularly to the state by the tobacco industry) to cover the rest of the gap. Dayton rejected those offers, saying the tobacco bonds were not permanent revenues.

Republicans called on Dayton to convene a special session so that a stopgap measure could be passed and a shutdown avoided. Dayton refused.

“I am deeply disappointed in Gov. Dayton’s decision to allow the State of Minnesota’s government to shut down,” said state Senate President Amy Koch (R) in a statement Thursday night. “We have been working tirelessly to meet Gov. Dayton’s funding requests that in many cases, we matched 100 percent of the way. Unfortunately, Gov. Dayton has chosen to prioritize his rigid, tax-and-spend ideology, rather than prioritize the best interests of Minnesotans as we move into the holiday weekend.”

“I think both sides tend to lose here, but particularly the Republicans,” said Steven Schier, a political science professor at Carleton College. “What the Republicans did is hold out here for a bunch of social policy changes in addition to no new taxes, and by asking for that they’ve essentially gotten significant responsibility for a government shutdown.”

Dayton also isn’t for re-election until 2014; Republican legislators face voters next year. The Alliance for a Better Minnesota, a union-backed group that helped elect Dayton last year, is running radio ads over the weekend in Bemidji, Brainerd and Duluth blaming Republicans for the crisis. The group also launched a website called “Shutdown Shame.”

Both houses of the state legislature turned Republican last fall for the first time in 38 years, reversing the roles in a state that for past eight years had Pawlenty battling a Democratic-held legislature.

“The equivalence is this: both in ‘05 and now, you had Democrats demanding that we raise taxes and raise spending,” Pawlenty told the Minneapolis Star Tribune on a trip home Thursday.

Pawlenty also denied any responsibility for the $5 billion deficit, for which he has repeatedly blamed Democrats in the legislature. But this shutdown could lead to renewed focus on Pawlenty’s fiscal record.

Rep. Michele Bachmann (R-Minn.), who is running for president, weighed in a statement: “I applaud Minnesota Republican legislators for standing up to reckless spending and higher taxes.”

Only four other states (Michigan, New Jersey, Pennsylvania and Tennessee) have had shutdowns in the past decade. Minnesota is the only state to have two.

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