ST. PAUL — The pressure to reach a $52 billion state budget agreement ramped up this week as the reality of a government shutdown and state worker layoffs became more tangible at the Capitol.

Over the Memorial Day weekend, nearly 38,000 state employees received letters from the governor notifying them that they could be laid off if the Legislature fails to pass a two-year state budget by June 30. The move to notify employees about a possible layoff or furlough is a formality but it makes real the possibility of a government shutdown if lawmakers can't strike a compromise in time.

Minnesota lawmakers closed out the 2021 legislative session on May 17 with a tentative framework between top legislative leaders and the governor that set budget totals for 14 areas of state government. But it came with few specifics and additional budget and policy divisions remained after more than two weeks of closed-door talks.

With 28 days to strike a deal, longstanding disagreements remained in the divided Statehouse. Top Republican leaders publicly called on Gov. Tim Walz to drop the state's peacetime emergency on Wednesday, June 2, and they said they'd keep up pushes to delay "clean cars" vehicle emissions rules and to put in place voter ID requirements.

Democrats, who control the House of Representatives and the governor's office, meanwhile, had opposed the policies and prioritized policing law re-writes, and at times, threatened to stall out a budget unless the proposals passed. And the Walz administration on Wednesday said the proposed ramp-down of the state's peacetime emergency had "a number of holes and issues."

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Amid the ongoing disagreements, legislative leaders said they held out hope for a deal that would come in time to prevent a government shutdown and potential layoffs.

“This past year has been unbelievably challenging, and I’m sorry that the budget situation at the Legislature causes additional stress and uncertainty,” Walz said in a Tuesday, June 1, follow-up letter to state employees. “I will continue to do everything I can to reach a balanced budget agreement in time to avert a shutdown.”

Republicans, who control the Minnesota Senate, on Wednesday said they were also optimistic about an agreement coming together before the June 30 deadline.

"I’m hopeful. We’ve been through a lot this past year with the riots, the COVID shutdowns and all the different things that just really put people on edge, but I want them to know that we’re going to figure it out," Senate Majority Leader Paul Gazelka, R-East Gull Lake, said. "We solved it two years ago with divided government, we will solve it again.”

In addition to tens of thousands of jobs, $52 billion worth of funding decisions for schools, roads and bridges, health care programs and other areas of state government remain in the balance as legislative working groups take up their plans in secret.

Gazelka and House Speaker Melissa Hortman, D-Brooklyn Park, said some of the groups had already struck deals and would have legislation in place for a June 14 special session. But none of those outlines had been made public as of Wednesday, and because just two working groups had held public hearings, it wasn't immediately clear how big the divides were between others.

Around the Capitol complex, there were no signs that working groups were meeting in-person and most legislative offices and conference rooms sat empty.

With no public documentation that private talks were getting the state closer to an agreement, state workers' union representatives said they were doubtful about a deal coming together in time to prevent a shutdown.

“After a holiday weekend, it was quite frustrating to receive these notices after our 15,000 members have been dedicating their just about every waking moment to getting the state through the pandemic for the last 15 months,” Minnesota Association of Professional Employees President Megan Dayton said.

The union represents state employees that work as epidemiologists, Department of Employment and Economic Development officials, inspectors at the Department of Labor and Industry and zoologists. And those members would not be eligible for furlough pay during any period of layoff, Dayton said.

"We're trying to give them a hopeful message but also being realistic that a shutdown is definitely a potential," she said. "There was a lot of hopeful in messaging in 2011 and then they shut down anyway, so folks are skeptical."

Gazelka said lawmakers were preparing to meet in special session June 14, when the governor is expected to call them in to consider another 30-day extension of the state's peacetime emergency and noted that there might be work left unresolved at that point.

"We will be back and we will stay back until we're done. We're not going to just be in for a day, we are going to make sure that we get it done," Gazelka told reporters. “It’s my intention to stay until we finish."

Follow Dana Ferguson on Twitter @bydanaferguson, call 651-290-0707 or email