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Minnesota lawmakers meet on budget hours before shutdown

MINNEAPOLIS (Reuters) - Minnesota's Democratic Governor Mark Dayton and Republican legislative leaders were set to continue budget talks on Thursday just hours before a possible state government shutdown at midnight.

If they cannot agree on a budget by midnight on Thursday, or on an extension, all but the most critical Minnesota services will shut down for the first time since 2005, including state parks for the July 4 weekend.

Dayton and legislative leaders are scheduled to meet at 10 a.m. local time in the governor's office. The two sides met four times on Wednesday before breaking for separate meetings.

A shutdown would force the furlough of about 23,000 of the state's 36,000 employees with the new fiscal year on July 1, cutting off numerous state departments along with them.

Dayton and the Republican-led legislature have been far apart in their public positions over a two-year budget plan to close a $5 billion deficit. Only the agricultural budget was approved during the legislative session that ended in May.

Dayton's first budget proposal included an income tax increase on the wealthiest state residents and an expansion in overall spending. Republican leaders first sought some tax cutbacks in aiming to halt spending increases.

"If a balanced compromise is not reached, this government shutdown is going to be difficult," David Lillehaug, the governor's special counsel, told reporters on Wednesday.

Prison staffing, state police patrols and staffing at nursing and veterans homes were among services found critical by Ramsey County Chief Judge Kathleen Gearin on Wednesday, and would continue through the shutdown

Another judge separately ordered the courts to stay open.

Other critical functions included the executive and legislative branches of state government, payments to schools and local governments, and programs such as food stamps, Medicaid and temporary assistance to needy families.

State spending on road and bridge programs would have to halt with the shutdown, with funding permitted only on projects to prevent an imminent bridge collapse or in response to a road emergency, Gearin ruled.

The Minnesota Zoo would also close to the public with spending permitted only to feed and care for the animals.

(Reporting by David Bailey, Editing by Cynthia Johnston)

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