Bracing for a lawsuit from the Republican Legislature over a funding dispute, Gov. Mark Dayton on Friday singled out new tax breaks for cigarettes and premium cigars as "terrible public policy" that GOP leaders should agree to remove.

Bracing for a lawsuit from the Republican Legislature over a funding dispute, Gov. Mark Dayton on Friday singled out new tax breaks for cigarettes and premium cigars as "terrible public policy" that GOP leaders should agree to remove.

Dayton signed those tax breaks into law after lawmakers wrapped up an overtime session settled and sent a new, $46 billion state budget to his desk. The measures slash taxes on premium cigars from $3.50 to just 50 cents each and remove automatic increases for cigarette taxes, freezing those taxes at roughly $3 a pack.

But the Democratic governor has accused Republicans of forcing his signature on the tax bill, and he vetoed funding for the Legislature itself to push them to rework tax provisions and other policies. Surrounded by youngsters in bright yellow "Smoke-Free Generation" T-shirts and armed with a state report showing smoking rates have decreased since the Legislature imposed higher taxes on cigarettes in 2013, Dayton blasted the tobacco tax breaks as reckless for their impact on the state's financial stability and harmful for public health.

"I think that the health of all of these young people ... is a lot more important than appeasing big tobacco," Dayton said.

But Republicans have shown little interest in reworking what they believed was a finished deal to assemble the budget. They took initial steps last week to sue Dayton over the line-item veto, calling it an unconstitutional breech of the separations of power. It was unclear when that lawsuit may be filed.

Dayton has tried to shift the focus away from legal questions about his action and how a case may proceed and onto what he says would be the dire impacts of several provisions of the budget. While dangling legislative funding, he's also said lawmakers should limit tax breaks for wealthy estate owners and commercial properties, remove a duplicative rulemaking ban on expanding driver's license access to immigrants living in the state illegally, and retool changes to how teachers are licensed.

But he focused on the tobacco tax changes Friday and pointed to a new state report showing smoking among Minnesota 11th graders had dropped by more than a third since the tax hike. State budget officials estimate that freezing the cigarette taxes alone would cost the state more than $300 million in the next decade.

"The consequences for Minnesota's fiscal stability over the next decade and beyond are extremely serious," he said.

Tobacco industry expense filings with Dayton's administration — required by a landmark 1998 settlement — show intense interest in tobacco policy. Tobacco giant Phillip Norris reportedly spent more than $250,000 on lobbyists and political organizations in the six-month period ending in March, including more than $100,000 to GOP-leaning political organizations.