Legislature begins work on budget deal ahead of special session
Minnesota's Legislature wrapped up the 2025 regular session late Monday night without passing the state's next two-year budget.
There will be a government shutdown if they don't pass a budget by June 30, so what is next?
They'll have to return to the Capitol for a special session sometime before then to pass the remaining pieces of a more than $66 billion budget deal reached by Democratic-Farmer-Labor Gov. Tim Walz and legislative leaders.
Major areas of the budget, like the K-12 education and health bills that account for about two-thirds of state spending, are still incomplete. There isn't a final bill on taxes either.
Negotiations continued Tuesday on those incomplete budget areas with 'working groups' made up of members of both parties from the Senate and House.
Compromise will be key as the House is tied between DFL and GOP 67-67 and the DFL has a one-seat majority in the Senate. Top legislators said those groups will have to finalize bills and make compromises before a special session can start.
'Hard decisions still have to be made and then we will come back when the governor calls us to finish up the work for Minnesotans,' Republican House Speaker Lisa Demuth told reporters after adjournment late Monday night.
Top lawmakers and the governor said they hope to get a budget passed before June 1, when the state will have to send layoff notices to state employees to prepare for a possible shutdown.
House DFL Leader Melissa Hortman told reporters before the midnight deadline to pass bills Monday that the earliest possible date for a special session was Thursday. Though she also said lawmakers might return to the Capitol on May 27, the day after Memorial Day weekend.
If the budget deal makes it through in its current form, the state will have a two-year budget of more than $66 billion. It aims to control spending growth in social services and education to address a projected $6 billion budget shortfall looming later this decade. It's down from the last budget, which topped $70 billion. There are also some tweaks to state taxes that result in cuts of more than $300 million in the next four years.
The deal seems to be holding together so far, though as the session wrapped up, Republicans and DFLers started blaming one another for delays and signaled they might press for changes. DFLers in particular pushed against Republican-backed rollbacks to a paid family medical leave that were outside the leaders' agreement.
Many DFLers say they won't vote for a part of the deal that would end state-funded health insurance coverage for adults in the U.S. illegally through MinnesotaCare, something Republicans strongly pushed for in negotiations.
'There are a lot of parts of this budget deal that aren't what either party would want if they have they had total control,' said House Floor Leader Harry Niska, R-Ramsey. 'We're all giving up something. We expect Democrats to pull their part of the deal.'
Hortman told reporters she planned to honor the deal and hoped the Legislature would avoid distractions and stay focused on getting the basic budget agreement passed.
'We've got to get on the train of working together, getting things done, and save … the partisan potshots for when we're in campaign season again,' she said.
The tax working group met on Tuesday to discuss a proposal to cut overall taxes by around $308 million in the next four years, but raise the tax on cannabis sales from 10% to 15% to bring in $147 million in the same period.
Already, there are disagreements on exactly what the deal does and does not allow. Lawmakers couldn't reach a consensus on tax exemptions for data centers, which may lose their exemption on an electricity tax as part of the deal.
'It would make it easier for everybody if we were all on the same page, and it's clear to me that we're not,' said Senate Taxes Chair Ann Rest, DFL-New Hope. 'We just need clarification from people who signed the agreement.'
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