Senate Republicans have dropped demands that the Walz administration stop the new clean cars emissions standards. (Renee Jones Schneider, Star Tribune/The Minnesota Star Tribune)

After a prolonged standoff that threatened to shut down Minnesota's parks before a holiday weekend, Senate Republicans have dropped demands that the Walz administration stop the new clean cars emissions standards.

The deal announced Monday still needs to pass a divided House and Senate, but it removes a major roadblock in negotiations on a key budget bill. The environment bill funds the Minnesota Pollution Control Agency, the Department of Natural Resources and the Minnesota Zoo, among other areas. It also approves grant spending by the Environment and Natural Resources Trust Fund, whose funding from lottery proceeds is constitutionally dedicated.

Senate Majority Leader Paul Gazelka told reporters Monday that he doesn't like the clean cars rule, which requires automakers to provide more electric vehicles for sale in Minnesota.

"But we recognize that we have to close this deal up," said Gazelka, R-East Gull Lake. "The environment bill will be moving forward."

"We did get clarity that [the standards] will not be implemented until January of 2024 which means this becomes an election issue," Gazelka said.

The near-final bill is expected to be presented to the Ways and Means Committee Tuesday morning.

Minnesota Pollution Control Agency spokesman Darin Broton said the agency was "cautiously optimistic" about the bill.

But Steve Morse, executive director of the Minnesota Environmental Partnership, said while he was glad Republicans dropped their opposition to clean car standards, he is very concerned about other provisions.

"We have handfuls of rollbacks that are on the table, and so we don't know if this bill is good or not," Morse said. "It goes beyond clean cars."

Morse called Minnesota's clean cars rule "a modest step forward in terms of our climate efforts."

"I never understood why Republicans were talking about dying on their sword to kill it," Morse said.

The legislation is one of more than a dozen budget bills legislators are working to wrap up and pass in special session before July 1 to avoid shutting down parts of state government. The legislature sent final budget bills to Walz's desk on Monday to fund higher education and projects through the state's Legacy Amendment, but lawmakers have yet to pass bills funding major budget areas like education and health and human services.

"The goal is to have balance between getting Republican wins and Democratic wins because we have divided government," said House Speaker Melissa Hortman, DFL-Brooklyn Park.

The biggest remaining sticking points involve measures to reform policing in Minnesota after George Floyd's killing in police custody last year, but Walz and leaders in both legislative chambers said Monday they're confident they will finish their work before their deadline.

"Some of those most divisive things are not going to get done, or we'll have to get to another day," Walz said. "While we should have been done in May, there's certainly no reason we shouldn't finish now."