July 1 (Bloomberg) -- Minnesota's government shut down all except essential services for the first time after Governor Tim Pawlenty and lawmakers failed to agree on a new state budget for some $30 billion in spending.

Budget negotiations ended before midnight Central time Thursday when Senate Majority Leader Dean Johnson, a Democrat, adjourned the senate, ending talks over a budget gap of some $200 million with Pawlenty, a Republican, said Faye Duren, a spokeswoman for Pawlenty.

Under Minnesota law, government agencies without appropriations when the fiscal year begins July 1 must stop operating. The state, under a court order, will continue to provide state patrol troopers, care for mentally ill patients, agriculture inspections and other essential services. Other services, including highway rest areas and libraries, will close and some 9,000 state workers won't have to report to work.

Minnesota's House of Representatives is controlled by Republicans and the Senate by Democrats. Duren said the governor and House leadership planned to resume discussions today.

Minnesota joins five other states -- North Carolina, California, Pennsylvania, New Jersey, and Delaware û- that are late completing budgets for the fiscal year that starts today. As state revenues have improved, spending pressures for programs such as Medicaid, the health insurance for the poor, have risen, said Arturo Perez, fiscal analyst for the National Conference of State Legislatures based in Denver, in a phone interview.

``In the last two to three years we've had an abnormal number of states'' that didn't complete budgets, said Perez. ``All of this points back to the difficult time states have had over the last few years.''

Tax Increases

Pawlenty and lawmakers have been working on a state budget since the legislature convened in January. Lawmakers have disagreed on spending lottery proceeds, the need for tax increases, gambling and health-care spending.

Minnesota has about $410 million of debt-service payments due in the year that starts July 1, including the largest payment of $206 million in August. State law provides a standing appropriation for interest and principal payments on $3.4 billion of state debt that insures payments.

To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net.

Last Updated: July 1, 2005 02:03 EDT