Governor Mark Dayton has laid down the gauntlet to Republican leaders in the Legislature over their proposed tax bill.

GOPers in the House and Senate agreed on a tax bill on Friday that would align Minnesota's tax codes with federal rules, and provide state tax cuts for Minnesotans as well as relief on corporate taxes.

But Dayton argues the GOP plan is nowhere near as generous to lower and middle income families as his own proposal, saying it instead provides further tax cuts to big businesses that have already seen their tax bills slashed at federal level.

He is determined that the state provide emergency funding to cover the $138 million budget shortfall affecting 59 school districts for the next school year – which is around the amount of revenue the state would give back in tax cuts under the Republican plan.

On Monday, Dayton said he wouldn't sign the bill aligning the state and federal tax codes unless the Republicans include the education funding.

That could lead to a very tricky impasse because if no tax deal is agreed by the end of the session, some 860,000 Minnesotans will see their taxes increase by hundreds of dollars because of the removal of certain deductions in the federal Tax Cuts and Jobs Act.

Republicans however had been reluctant to approve the education funding, arguing that the shortfall is the fault of the districts, who have agreed to large pay rises for teachers and also suffered from dwindling enrollment.

Speaking to KSTP, Senate Majority Leader Paul Gazelka said meeting Dayton's request would be "next to impossible" in the timeframe.