Hill Capitol Strategies
May 19, 2026
On Monday, the Minnesota Legislature reached the Constitutional Deadline establishing the end of the 94th Legislative Session. Monday’s completion of the session was preceded by the deadline they reached at midnight on Sunday when no further legislation could be adopted and sent to the Governor. The Senate adjourned Sine Die shortly after midnight. The House adjourned Sine Die on Monday afternoon, following the traditional retirement speeches from those members who we know will not be returning in 2027. The Senate unofficially met Monday to also allow retiring members the opportunity to address their colleagues one last time.
Last week, I provided an update on the global agreement reached between Legislative Leaders and the Walz Administration. Over the weekend, unofficial working groups and some conference committees worked to finalize the finer details necessary to implement the global agreement. Nearly all those negotiations took place behind closed doors and with little transparency or public involvement. The final bills covering much of the global deal were released late Sunday evening. In most instances just moments before the agreements were brought up for floor action and final passage.
The major points of the global agreement remained unchanged and were adopted over the weekend. Here are those highlights along with some additional highlights from legislation adopted in the final days of the 2026 Legislative Session.
A two-year retroactive extension of the Minnesota Pass-Through-Entity Tax (PTE) through the end of 2027. This tax change impacts nearly 60,000 Minnesota businesses and will save those businesses millions of dollars they would otherwise be sending to the federal government. The House DFL refused to make this change permanent, even though it has no fiscal impact on state revenue.
Legislation prohibiting certain types of prediction market transactions on sports and other global events.
Modifications to Minnesota’s PFAS regulations, requiring only those products produced after July 1, 2023, to be included in PFAS reporting.
Legislation which requires social media companies to use their software to determine the age of a person signing up for their platform. If the new user is fifteen or younger, parental permission would be required and a restriction would limit what content could be shown.
No inclusion in the Omnibus Tax Bill of any local sales, lodging, food, or beverage taxes.
A bailout totaling $700 million for the Hennepin County Medical Center (HCMC) and other hospital systems.
HCMC will receive an immediate infusion of $205 million.
The bill would establish a new board with 11-15 members charged with governing HCMC. Seventy percent of the new board’s membership must include members with the professional training and expertise needed to govern a health system and safety net hospital.
A Hospital Stabilization Fund of $500 million will be set aside for HCMC and other hospital systems to tap into. Those funds will be available through 2031.
A one-year reduction of $256 million in vehicle tab fees, returning to the pre-2023 depreciation structure. The changes will take place on all renewals made in calendar year 2027 and starts on January 1st.
Property Tax Relief through the homestead tax credit with a one-time infusion of $125 million to support property tax refunds.
$1.2 billion in bonding for public infrastructure, local projects, and maintenance.
$50 million to the City of St Paul to support efforts for facility renovations and improvements to the Grand Casino and Roy Wilkins arenas.
$180 million for local roads, bridges, and transportation projects.
$12.5 million in additional funding to support school-based mental health grants.
Funding to support technology upgrades for counties, a safety and security package for legislators, the judicial and executive branch and additional fraud investigators within the Attorney General’s office.
Throughout Monday, Legislative Leaders met with the media to offer their perspectives on the final agreements and the just completed legislative session. Unlike previous years, leaders of the same political party but different chambers did not participate in these media briefings together. We may be reading too much into this decision, but it could also indicate the election season has begun and how the different caucuses plan to message the session and put some distance between themselves on that messaging.
For the most part, all the leaders focused on the positives and the successes they have been able to achieve over the last two years, in an incredibly challenging environment. The GOP Leaders of the House seemed the most positive and talked about the bipartisan working environment in a tied House. DFL Leaders expressed greater disappointment with what they were unable to get passed over the last two years. Specifically focusing on the inability to pass bills supported by the parents of the victims of the Annunciation shooting that related to gun control, bills to address the economic impacts of the metro surge and legislation limiting federal immigration enforcement.
Based upon those conversations, we have pulled together the following list of proposals which were legislative priorities of the various caucuses and members of the legislature that failed to advance this session.
A bipartisan proposal that would make permanent the restrictions on manufacturers interfering with the delivery of medications to a pharmacy that has a 340B contract. This was a legislative priority for the Minnesota Hospital Association and many rural hospitals.
A Governor Walz initiative to broaden the sales tax base to a handful of services and using some of that revenue to reduce the overall sales tax rate. However, the proposal was not revenue neutral and quickly became defined as a tax increase.
GOP initiatives to address concerns with the Minnesota Earned Safe and Sick Time and Paid Family and Medical Leave Program, which are also legislative priorities of Minnesota’s business community.
DFL proposals to increase revenues by creating new taxes on digital advertising and social media companies and raising both individual and corporate taxes.
GOP proposals for use of the significant budget surplus to reduce taxes or provide tax rebates.
A DFL initiative to establish a $100 million fund to support individuals and businesses impacted by the metro surge and federal immigration enforcement.
A GOP proposal to adopt federal tax conformity and the elimination of income taxes on tips and overtime.
DFL initiatives to regulate the activities of federal immigration officers, including the removal of masks, limitations on where federal immigration activities may take place and the allowance for individuals to sue federal immigration officers.
Numerous proposals addressing the use of chatbots in a variety of settings and applications. Several new labor mandates, minimum wage increases and the definition of an employee.
As I mentioned above, Monday was a day to celebrate the careers of forty-three legislators who have decided not to seek their current seat in the November election. For some, it is the end of their careers as elected officials, others are looking to run for other offices. Overall, 43 of the 201 members of the legislature will not be back to the seat they hold, this is before any losses in the November elections. Those 43 members of the legislature represent 475 years of legislative experience and knowledge. Three members of the Minnesota Senate alone represent 118 years of service, DFL Senators Sandy Pappas and Ann Rest and GOP Senator Warren Limmer.
Here is a link to the most up-to-date list of legislative retirements.
Two years ago, Minnesota voters decided, for just the second time in the state’s history, to present a tie in the Minnesota House and a one seat advantage to the DFL in the Minnesota Senate. Voters and Legislators talk about the need for bipartisanship and a hope the two parties will work together to address the serious issues facing the state of Minnesota. The last two years have required legislators to work together; some members of the Legislature thrived in the tied House. Those legislators who invested in bipartisan relationships realized fighting over areas of non-agreement was a waste of time and resources. They focused on areas of compromise and worked to get the most out of those agreements. Other members of the Legislature chose to focus more on trying to score political points, election fodder, and divisive issues. When their opposition would not fold, they argued their positions were principled, while the opposition were cowards.
Several members of the House DFL have never served in the minority and were accustomed to just doing whatever the majority wanted. Some of those members struggled to accept the new reality of the Minnesota Legislature, while GOP members were happy to flex their new ability to say no and force the other side to meet them halfway.
While the tie in the Minnesota House was at times painful, the result kept either party from running roughshod over the other. Legislation was moderated. While the GOP was unable to undo or modify legislation adopted during the trifecta in 2023 and 2024, the DFL was also forced to consider and include the perspective of the GOP in every bill passed over the last two years. Hopefully, future legislators will be able to incorporate some of what was learned over the last two years into the process and make the outcomes better for all Minnesotans.
The Legislature is set to return for the 95th Legislative Session at noon on January 12th, 2027. Pease reach out to any member of our team with any questions or concerns you may have.