Gov. Mark Dayton sent a very serious budget proposal to Republican leadership this morning. Dayton said he would agree to the Republican's June 30 offer, which closed the $1.4 billion budget gap by delaying school shift payments and borrowing against the state's tobacco settlement fund through a bonding mechanism. He also said that his offer was contingent on three conditions, including dropping all controversial policy positions, such as a ban on cloning and taxpayer funded abortion, eliminating the Republican's push to cut 15% of the state's government work force and agreement on a bonding bill that bonds for at least $500 million in projects.

In his letter, the Governor stated he would be willing to call a special session in the next three days if Republicans agree to his offer. Senate Majority Leader Amy Koch and House Speaker Kurt Zellers said they are considering the compromise.

Despite Dayton's own reservations about the plan, this is perhaps his most serious offer as it contains no tax increases of any kind. In his letter, Dayton stated that he has, "concluded that continuing the state government shutdown would be even more destructive for too many Minnesotans. Therefore I am willing to agree to something I do not agree with—your proposal—in order to spare our citizens and our state from further damage."

Immediately after his press conference and the release of his letter, both DFL and Republican legislators began expressing their opposition. Many Democrats simply cannot support delaying the school payments at a cost of an additional $700 million. And while the shift helps balance the budget in the short term, it would likely force school districts to borrow more money in order to meet cash needs.

Republicans are uncomfortable passing a bill that doesn't contain structural tax and government reform, a campaign promise many championed. There are also a number of Republicans who cannot support a $500 million bonding bill, as it is seen as additional spending. In order to pass a bonding bill, 81 votes are needed in the House and 41 are needed in the Senate. At this point, it is not clear if the votes on either side will be enough. The next 24-48 hours will be busy, as both caucuses try to gauge where their members are at and whether legislative leaders can garner support for their positions.

Finally, Gov. Dayton offered no specifics on whether there is any agreement on specific budget bills and what cuts he could agree to. Dayton vetoed all of the Republican's budget and tax bills as the 2011 legislative session came to a conclusion in late May. Republican leadership and the Governor were scheduled to meet today at 2 p.m. to discuss this latest offer.

Read the Governor's letter to the Republican leadership.

Listen to the Governor's press conference from this morning.