ST. PAUL  (AP) - Gov. Mark Dayton says he is willing to meet the Republican Legislature halfway with a smaller income tax increase as end-of-session budget talks begin.

The Democratic governor outlined a new proposal Monday, raising the level for a new top-tier income tax bracket and dropping a property tax on homes worth more than $1 million.

Dayton says he won't go beyond the offer and it's up to lawmakers to make the next move.

House Speaker Kurt Zellers and Senate Majority Leader Amy Koch say they firmly rejected the idea of any tax increases during a 40-minute meeting with Dayton.

The talks come with one week left before the Legislature is constitutionally required to adjourn.

Lack of a budget deal would lead to a special session and potential state government shutdown.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)