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Published May 16, 2011, 02:33 PM

Dayton Proposes Smaller Tax Hike; GOP Not Interested

Gov. Mark Dayton opened budget talks Monday by shrinking his proposal for new taxes, an offer that top Republican lawmakers immediately rejected.

By: Martiga Lohn, Associated Press

ST. PAUL, Minn. (AP) — Gov. Mark Dayton opened budget talks Monday by shrinking his proposal for new taxes, an offer that top Republican lawmakers immediately rejected.

With a week left in the session, Dayton said he won't consider signing budget bills until he has a deal for $1.8 billion in new revenue.

The latest moves showed the deep differences between the first-term Democratic governor and a Legislature newly under GOP control, where majorities adamantly oppose tax increases. The standoff over taxes raises the chances of a special session and potential state government shutdown starting in July.

Republicans have vowed to erase a $5 billion budget shortfall solely by reducing spending.

"I'm not going to agree to that," Dayton said at a news conference. "I've offered to meet them halfway and I'm not going to do any more than that. It's their responsibility to meet me halfway."

In his latest offer, Dayton dropped a proposed new property tax on $1 million-plus homes and raised the threshold for a new top income tax tier to more than $300,000 for couples and about $180,000 for individuals. With both sides planning to continue a $1.4 billion payment delay for public schools, the governor said his tax plan would cover half the remaining deficit. The rest would come from spending cuts he wants to negotiate with legislators.

Dayton also agreed to a Senate plan to increase K-12 school funding by $50 per pupil for each of the next two years. He said that would require an additional $128 million in spending cuts from other areas of the budget.

House Speaker Kurt Zellers and Senate Majority Leader Amy Koch emerged from a 40-minute meeting with Dayton looking somber.

"There is a not a majority vote in the House of Representatives for a tax increase, a tax increase to feed government spending," said Zellers, R-Maple Grove.

He added: "It's not about us. It's not about the governor. It's about what kind of economy we're going to have for our future, for our kids."

The legislative leaders are eager for Dayton to weigh in on a slate of budget bills they have been finalizing since last week. Koch held out hope that the governor could agree to pieces of the budget, possibly the K-12 package.

But Dayton rejected that idea, saying he won't support any budget bills until there's an overall agreement.

The governor said the new income taxes would affect less than 2 percent of Minnesota residents and could get votes from Democratic legislative minorities. He said taxing the wealthy is better than the GOP's "draconian all-cuts budget," which he said would throw people off subsidized health care and disability services and strain the state's public colleges and universities.

"I just don't think Minnesotans want to do that to their fellow citizens, and good for Minnesotans. We're better than that," Dayton said.

Meanwhile, action at the Capitol on Monday focused on anything but the budget. The Senate approved two bills with new abortion restrictions even though both face near-certain vetoes from the governor, who supports abortion rights.

Hundreds of protesters opposed to a statewide vote banning gay marriage milled outside the House chamber, the next front for a constitutional amendment that cleared the Senate last week.

Dayton also planned to discuss a proposal to build a new Vikings stadium in Arden Hills with Ramsey County commissioners spearheading the plan.


Associated Press writer Patrick Condon contributed to this report.