Minnesota lawmakers pass $66B budget during special session: What's in it?

Gov. Walz says he'll sign budget bills [FULL]

Gov. Tim Walz said Tuesday he plans to sign budget bills passed during a special session, but expects lawmakers may have to return this summer to respond to federal changes.

ST. PAUL, Minn. (FOX 9) - Minnesota lawmakers worked into the night to reach an agreement on a new $66 billion budget, avoiding a potential government shutdown at the end of the month.

Budget deal reached

The backstory:

Despite announcing an agreement on the budget days before the May 19 deadline, Minnesota lawmakers failed to get the budget done before the end of the 2025 legislative session.

Leaders have spent the last three weeks negotiating at the capitol trying to hammer out a deal. Last Friday, Gov. Walz called a special session for Monday, June 9,for lawmakers to finish the budget.

Lawmakers faced a second deadline on July 1, the date a partial governmental shutdown would begin in Minnesota without a budget deal. If the budget hadn't been finished by Tuesday, June 10, the state would have begun the process of sending layoff notices to state workers.

Minnesota budget: Lawmakers pass bills overnight

Minnesota lawmakers wrapped up work in a special session early Tuesday morning, passing the bills that make up Minnesota's $66 billion two-year budget.

Big picture view:

Lawmakers worked throughout the day to finish business at the capitol, with the House gaveling out of session around 10 p.m. Monday, while Senate lawmakers debated into the early morning hours.

The most contentious issue of the day was the debate over healthcare for undocumented immigrants. Under a budget agreement reached by leaders last month, lawmakers agreed to cut MinnesotaCare coverage for undocumented adults but leave it in place for children. In the House, that sparked four hours of debate.

"There wasn't anything [GOP leaders] wanted to do more than make this cut," Senate Majority Leader Erin Murphy lamented, speaking with media at the end of the session. "And there wasn't anything we were going to do [otherwise] that was going to satisfy them."

"Our priority, no matter what happened in the chamber, was we would really prioritize Minnesotans," said Minnesota House Speaker Lisa Demuth. "We knew that was going to be a hard decision. But when we looked at it and made the decisions we needed to, also including a compromise of keeping undocumented children on until age 18, we knew it was going to be hard but we were able to get that work done."

Rep. Demuth told reporters Monday night their "line in the sand" was any calls for tax increases. The new budget comes with a significant cut over the last budget passed in 2023, which came with a $72 billion price tag.

"We are not uncaring, we are looking out for the best interests of Minnesotans," said Rep. Demuth, "and being responsible with taxpayer dollars."

What's next:

The budget bills now go to Governor Tim Walz's desk for approval.

Speaking on Tuesday, Gov. Walz said he planned to sign the budget bills. But added that lawmakers would likely need to return to the capitol at some point this year to respond to potential changes at the federal level if President Trump's "big, beautiful" bill were to pass.

"This is four times in a row balanced budget growth in Minnesota, but with a recognition over the horizon, if this monstrosity or atrocity, I think as Elon Musk put it, is able to pass, it will have catastrophic effects," said Walz.

What's in the new budget?

What we know:

Lawmakers passed a flurry of omnibus bills during the special session, covering health, education, commerce, environment, and transportation issues.

Here's a look at some of the bigger items:

• Lawmakers moved forward with the agreed-upon cuts to immigrant healthcare, removing MinnesotaCare coverage for undocumented immigrants who are at least 18 years old. That change takes effect starting Jan. 1.
• Lawmakers approved an increase to sales tax on cannabis products, moving it from 10% to 15%.
• New taxes on electric vehicles, including a five-cent tax per kilowatt hour on charging and an increased registration surcharge for EVs and hybrids.
• The bonding bill includes funds to fix aging water systems and improving drinking water.
• Changes to the Minnesota e-bike rebate program to require a lottery, instead of first-come, first-serve basis, if applicants exceed available rebates. Applications are also now limited to low-income individuals or people with disabilities.
• Increased safety at childcare centers including requiring cameras in infant and toddler rooms.
• A new dementia services program to coordinate Alzheimer's and dementia research and state policy.
• New training for health care providers on recognizing physical abuse of infants.
• More funding for the READ Act, including money for teacher training.
• Allowing students to carry and administer opioid antidotes (like Narcan).
• A boost to teacher pensions.
• $650 million for the Blatnik bridge replacement.
• Funds to prevent suicides at the Washington Avenue bridge on the University of Minnesota campus.
• Funding to review autonomous mowing technology for the Department of Transportation.
• Swapping the statue of Henry Mower Rice with a statue of Hubert Humphrey at the U.S. Capitol.

Data center legislation

A standalone bill passed during Monday's session was new rules for data centers in Minnesota. The new bill requires new data center permits to be referred to the state Department of Employment and Economic Development. Depending on the proposed water use for a new data center project, the bill also requires a review by the Minnesota DNR before the project can move forward.

Lawmakers also closed tax exemptions on electricity for data centers.