REGIONAL- With just weeks left to avoid a state government shutdown, Minnesota lawmakers are still trying to wrap up work on a new two-year budget that was supposed to be done weeks ago. The regular session ended May 19 without passing most of the state’s $66 billion spending plan, and despite repeated assurances from legislative leaders, key bills remain in limbo.
Gov. Tim Walz has said he’ll call a one-day special session once all the bills are finalized and ready for a vote. But that hasn’t happened yet, and time is growing short.
Not there yet
Working groups have agreed in principle to most major budget areas. Final spreadsheets have been posted, giving a broad look at spending levels and policy priorities. But agreeing to numbers on paper isn’t the same as having a bill in hand, and much of the actual language still hasn’t been drafted by the nonpartisan revisors’ office.
Some bills are close to the finish line. Others are still stuck behind closed doors.
Here’s where things stand:
Transportation – A completed agreement is in place. The bill trims about $115 million over the next two years and includes a new surcharge for electric vehicle owners based on car value and age – $150 for fully electric vehicles and $75 for plug-in hybrids. The goal, backers say, is to fill the gap in gas tax contributions. Rep. Erin Koegel, DFL–Spring Lake Park, who co-chaired the working group, said the final product reflects tough compromises after weeks of tense negotiations.
Education – A framework has been agreed to and spreadsheets have been posted, but the bill language hasn’t been finalized. The proposal increases per-student funding, boosts literacy efforts, and creates a task force to examine ways to slow the rise in special education costs. It also includes a new mandate for schools to develop cardiac emergency response plans by 2026. Still, some lawmakers have criticized how the deal was struck behind closed doors and say the lack of transparency has made it harder to fully assess the package.
Health and Human Services – The largest remaining hurdle, the HHS budget accounts for nearly 28 percent of state spending, and while a general agreement exists, one particular issue is threatening to blow it open: MinnesotaCare coverage for undocumented immigrants. Legislative leaders and the governor agreed to end coverage for undocumented adults while maintaining it for children, a concession to Republicans that sparked strong pushback from progressive Democrats.
Senate Majority Leader Erin Murphy, DFL–St. Paul, has said she supports passing the rollback as a separate bill to help preserve votes for the larger HHS package. House Speaker Lisa Demuth, R–Cold Spring, disagrees, saying that option was never part of the original plan. With no consensus on how to proceed, the HHS bill remains unfinished, and without it, no special session can be called.
The stakes
If lawmakers don’t act by June 30, the state will begin a partial shutdown on July 1 – the first since 2011. Under union contracts, the state is required to provide advance notice of potential layoffs. Nurses received the first of those notices last week. Broader layoff warnings will go out to state workers on June 9 if a budget deal isn’t reached.
Walz and legislative leaders have tried to reassure workers that progress is being made.
“We are working to make sure that as they are receiving those (layoff) notices,” said DFL House Speaker Emeritus Melissa Hortman, “they can point to a date on the calendar when the special session will happen and point to bills that have been posted that will fund all these agencies.”
But that date remains elusive.
Aside from the MinnesotaCare disagreement, another source of delay is the sheer logistics of bill writing. Even after budget spreadsheets are approved, revisors need time to convert them into legal language. The HHS bill, in particular, is a heavy lift – often running hundreds of pages.
Legislative leaders had aimed for a special session this week, specifically, Wednesday. But that timeline has quietly slipped, and Capitol activity has slowed. A leadership meeting scheduled for Tuesday was postponed, then apparently canceled. Instead, Walz held a round of private conversations with unnamed stakeholders. There’s been no formal update from leaders since last Thursday.
Political math isn’t making things any easier. The Minnesota House is split evenly at 67-67 between Democrats and Republicans, meaning every single vote matters. In the Senate, Democrats hold a narrow 34-33 edge.
That dynamic leaves little room for disagreement. And it’s added pressure on leaders to make sure the final bills can actually pass once the special session is called.
“It was a very hard process,” Koegel said of the negotiations. “It was uncomfortable and it was tense. And I’m hoping that maybe some lessons were learned this year, and we can go forward in a little bit more of a civil manner.”
Fading hopes
Aside from the budget, two significant measures appear likely to be left behind: a tax bill and an infrastructure bonding package.
Unlike the budget bill, neither requires passage to avoid a government shutdown. But their absence means stalled funding for local development projects, tax credits, and major infrastructure improvements.
A pared-down, 12-page tax bill drew immediate criticism from both sides of the aisle. The proposal included just a few agreed-upon items – raising the cannabis sales tax from 10 percent to 15 percent, and ending a tax break for electricity used by large data centers.
“I rejected it right off the bat,” said Senate Taxes Chair Ann Rest, DFL–New Hope. “As soon as I saw it, I told them I couldn’t vote for that and neither could half a dozen other Senate Democrats.”
Republicans shared her view.
“We put five months of thought into something they put five minutes of thought into,” said Rep. Greg Davids, R–Preston. “I don’t think it would pass (the) House or the Senate.”
Meanwhile, hopes for a bonding bill – used to fund infrastructure with borrowed dollars – have also dimmed.
Gov. Tim Walz proposed an $800 million bonding package for projects such as university building repairs, a new State Patrol headquarters, and Rapidan Dam improvements. But as with last year, negotiations stalled before the May 19 adjournment.
“It appears my Republican colleagues are not interested in bonding at all,” said Murphy.
Hortman accused Senate Minority Leader Mark Johnson of making unreasonable demands.
“I think Senator Mark Johnson has a price that includes lots and lots of things far outside the bonding bill,” she said. “I think he’s going to overplay his hand exactly as he did in 2024.”
Johnson fired back: “Democrats are the only ones unwilling to work together to pass a bonding bill and are playing political blame games to appease their activist base.”
Demuth said House Republicans remain open to passing a $700 million bonding bill and “are quite interested.”
For now, both bills remain stuck – leaving infrastructure, tax credits, and economic development initiatives in limbo for another year.
MPR News contributed to this article.