Governor Tim Pawlenty plans to announce on Friday the spending cuts needed to address a more than $426 million short-term budget deficit.
The Republican governor met with House and Senate leaders Wednesday to discuss the short-term financial problem and possible solutions.
Senate Democrats favor across-the-board cuts in all spending areas. But House Democrats want to protect priority areas, including education and state funding for cities and counties.
DFL House Speaker Margaret Anderson Kelliher said she is concerned that Local Government Aid will still end up getting cut.
"The concern is a public safety concern. That's the ultimate concern with local governments is that they're the major provider of public safety services for the people of Minnesota. And that's always our number one concern here is keeping people and their streets safe," Kelliher said.
Pawlenty spokesman Brian McClung said cities and counties will take a hit on state aid.
"If a city is not able to handle what are likely to be modest cuts without impacting police and firefighters, they're making bad decisions and they're picking the wrong priorities. State government has had to prioritize and decide what's most important, what do we need to do. And cities will have to do some of the same thing," McClung said.
He said the governor will protect three priority areas: military and veterans programs, public safety and K-12 education.