Over the next five months, lawmakers will try to solve a projected $4.8 billion deficit in the next two-year budget cycle.
Democrats and Republicans say deep spending cuts are required, as well as changes in the way state government operates.
But DFL House Speaker Margaret Anderson Kelliher says the hole can't be filled by just cuts and reforms.
Despite objections from Republican Gov. Tim Pawlenty, Kelliher says tax increases must also be considered as part of the the solution.
"This is really quite a mammoth hole that we have to fill. So I think a lot of credible thinkers on both sides of the aisle think that is a position of the governor's that might have to change," she said.
Pawlenty says state taxes are already too high, and he doesn't want to add to that burden during hard economic times.
"In a high taxed state that's in a geographic zone that is losing investment, job growth, capital formation, entrepreneurial activity, business expansion and we're already at or near the top of the chart on tax burdens, I think we should live within what we've got. Not add to it," Pawlenty said.