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Budget talks focus on taxes

ST. PAUL - Legislative leaders and Gov. Tim Pawlenty are studying how property tax changes would affect communities across the state, a complicated and time-consuming effort that appears likely to push any legislative session-ending deal into Thursday.

The good news is they were back at the negotiating table Wednesday, after budget-balancing talks broke off late Tuesday.

As it has in recent days, property taxes have been center stage in the talks. The governor wants a strict limit on how much local governments can raise property taxes.

However, Assistant Senate Majority Leader Tarryl Clark, DFL-St. Cloud, said that communities from one end of Minnesota to the other would be hurt by that plan.

Democrats propose a looser property tax cap than Republican Pawlenty wants.

With five days remaining to pass bills in the 2008 Legislature, Pawlenty and top lawmakers resumed discussions over how to end the session with a plan to erase a $935 million state budget deficit (in a $34 billion budget) and provide Minnesotans property tax relief.

Closed-door talks recessed at about noon, began again early in the afternoon and recessed again at 4:15 p.m. However, talks were expected to continue much of the night.

Those inside the talks said the tone was serious and cooperative.

The Legislature must adjourn by Monday.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said there still is plenty of time to reach agreement with the governor and complete the Legislature's main priority.

"We're back at work," Kelliher said after leaving the governor's office to review property tax documents. "We're hoping for a lot of progress today."

Democrats said they have agreed with Pawlenty on the amount of state reserve funds to use to fix the budget as well as a plan to close loopholes used by multi-national corporations to avoid paying Minnesota taxes.

Lawmakers said they and Pawlenty agree on just over $300 million in state program spending cuts, but must find another $50 million to cut.

The Legislature late Tuesday approved a one-time boost of $51 per student in state payments to schools, a plan Pawlenty opposes. However, Democratic legislative leaders have said if Pawlenty rejects the bill they may try to overturn the veto in the session's final days.