The Final Countdown – Minnesota Hill Capitol Strategies May 18, 2025
With midnight Monday, May 19th lurking in the shadows, the Minnesota Legislature and the Walz Administration spent the last week trying to reach an agreement on global spending targets and a path to land the 2025 Legislative Session. Thursday, Legislative Leaders and the Governor announced a deal had been reached and set in motion the plan for wrapping up a session which has been anything but normal. However, Senate Republicans and their Minority Leader, Sen. Mark Johnson did not participate in the announcement and are not in agreement with the final compromise. Since Thursday’s announcement, everyone – including the chairs of the various conference committees – are all learning what was agreed too beyond spending targets and the few pieces released in the leader’s joint press event.
The deal gives some wins to each party to point towards. For the Republicans, they stood firm in their opposition to any new taxes and mostly won. Republicans were also successful in stopping the continuation of free healthcare for undocumented adults, while children will continue to receive free coverage. The state’s budget will see what GOP Leaders are calling a historical reduction in state spending, which may be true when compared to the budget during the last biennium, but much of the previous budget was also based on spending the enormous surplus on one-time projects. The GOP was also able to provide for the continuation of the state’s healthcare reinsurance program. While the Democrats and the POCI caucus are furious with changes to the undocumented healthcare program, they can be happy they were able to protect several programs created during the trifecta years. The state-wide Paid Family Medical Leave Program remains intact along with the Statewide Safe and Sick Time Program. The DFL was also successful in defending their program to provide unemployment benefits to seasonal workers at public schools and found a way to pay for another two years of the program. Progressive members of the DFL were also successful in changing the tax breaks given to data centers – a program the Governor has been praising and pointing to as a big factor in attracting these enormous investments.
The big winner however may have been Governor Walz. The Governor was able to secure all agency proposed operating and fee increases. If the final deal remains in place just about every Minnesota Business will see the fees, they pay to state agencies going up. Minnesotans will also see increases to the fees they pay for things like state park admissions, registering boats and recreational vehicles. While some will argue these are fees and not taxes, the cost for everyday Minnesotans are going to be going up. The Governor also secured the ability for state agencies to maintain the carryforward of any unsent agency funds at the end of each biennium, rather than diverting those unspent funds back to the state’s general fund. The Governor also secured the unprecedented authority for his agency heads and commissioners to veto any spending proposals they oppose in the final conference committee reports. As conference committees began completing their work last night, members from both parties raised big concerns with this overwhelming level of power and influence granted to the administration.
While the framework for the agreement is in place, conference committees are racing to complete their work and get conference committee reports to the floor where final votes can be taken. Its clear, not all committees will complete their work before the clock strikes midnight on Monday night. The House just passed their education budget bill off the floor late last night and has yet to debate or pass the tax bill. The Health Conference Committee members were just appointed on Friday, and have yet to meet. It appears the budget bills for K-12 Education, Health, a Tax Bill and a potential bonding bill will be left to be dealt with in a special session. When that session takes place is yet to be determined.
There are at least two issues which have the potential to derail the agreement. The first is the decision regarding health insurance coverage for undocumented individuals. As the Leaders were announcing their deal on Thursday morning in the Governor’s office, members of the BIPOC, POCI and Progressive Caucuses could be heard pounding on the door to the Governor’s office demanding they be let in and demonstrating their opposition. It would appear the Senate DFL, with a one-seat majority, will need help from the Republicans to pass a bill with that provision, at least 6 DFL Senators have announced they will not support that change. In the House, which is tied, there will need to be bipartisan support for the bill. Senator Mark Johnson, who represents the only minority caucus in the Minnesota Legislature, may have some opportunity to further refine the final agreements in order to provide the necessary votes.
The second issue, which caught everyone by surprise, was the announcement the Leaders and Governor had reached an agreement to decommission the Stillwater Prison over the next four years. The unions representing the staff at the facility is incensed by the announcement. Members of the Legislature who may support the decision are also concerned it’s premature to announce the closure without a more concrete plan in place to implement the closure. The facility, built in the late 1800’s, has become a money pit needing hundreds of millions of dollars in deferred maintenance. The Administration announced the decision will save the state more than $40 million in annual costs. The Public Safety Conference Committee included the language directing the closure in their conference committee report as they closed up their bill last night.