The Minnesota state government shut down early Friday after budget talks broke down Thursday between Gov. Mark Dayton and GOP legislative leaders.
The shutdown leaves more than 20,000 Minnesotans out of work and others without state services.
The sticking point to negotiations late Thursday night was the same as it was at the start of the legislative session: taxes.
Dayton and Republican leaders met three times Thursday. But as the clock ticked closer to the midnight shutdown, the meetings grew shorter and the rhetoric grew sharper. Talks broke off at 3:30 p.m. and it became clear a deal wasn't going to be reached. Dayton confirmed the break down at 10 p.m.
"Unfortunately, despite many hours of intense negotiations the Republican legislative caucuses remain adamantly opposed to any additional tax revenue," he said.
Dayton revised his income tax plan on top earners in an effort to convince Republicans to go along with it. He said his offer would have increased income taxes on people with annual income of $1 million a year or more. He said it would have hit fewer than 8,000 people and was better than a Republican budget plan that would cut spending for health care programs, higher education, transit programs and aid to cities and counties.
"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. "I cannot accept a Minnesota where young people cannot afford the rising tuition at the University of Minnesota or a MnSCU campus so that millionaires do not have to pay $1 more in taxes."
Dayton said it was a night of "deep sorrow" for him because the failure to reach a budget deal forced government to shut down.
Through the evening, Republicans publicly urged Dayton to call a special session so they could pass a stopgap bill and avert a shutdown. Republican leaders believe they were close to a deal because Dayton at first backed off his income tax hike, only to later put it back on the table.
Senate Majority Leader Amy Koch said her caucus isn't working to protect the wealthiest Minnesotans. Instead, she said Republicans are trying to get a handle on state spending.
"This state government budget grows at 6 percent," Koch said. "For a lot of folks behind me, that was too much money but they were willing to come forward and compromise. But it wasn't about that for the governor. It was about continued spending for him."
The two sides are at odds over how to best craft a two-year budget that erases a $5 billion budget deficit. They are still clashing over a difference of about $1.7 billion.
Both sides entered the legislative session with promises to focus on jobs — now they must justify a shutdown that forces layoffs in both the public and private sector. Republican Sen. Geoff Michel said Republicans are familiar with voter frustration. The party rode a wave of support into office last November.
"The Republican legislators that stand before you are very familiar with that. That's why there was such a huge change in the makeup of the Minnesota Legislature," Michel said. "You have a group of reformers, you have a group of people who want to create a 21st-century budget and what we have come up against is a 1970s tax and spender."
Not everyone agrees the blame will fall on the governor. Former Republican Senate Minority Leader Dick Day expects Republicans to feel the pain at the ballot box next year. He remembers being criticized by constituents at Independence Day parades during the 2005 shutdown.
"If there's a shutdown, the Republicans lose. They are the majority party," Day said.
"There's no doubt in my mind that if there's a shutdown, whoever is the majority and running the place is in trouble because they're going to say 'Let's throw them all out' and when they go to the election and when you're in the majority you're going to have a higher percentage of your people thrown out."
Republicans face voters again next year. Dayton isn't up for re-election until 2014. Assigning blame may also depend on how long the shutdown lasts and how it ends. The two sides have been at odds for six months, and there appears to be no clear path to a compromise.