Minnesota Legislature passes next state budget in special session, averting government shutdown
The Minnesota Legislature approved the remaining pieces of the next state budget overnight Tuesday during a special session that lasted less than a day, after lawmakers failed to complete their work in May.
They began their work Monday at 10 a.m., with the House adjourning around 10:40 p.m., and the Senate adjourning at about 2 a.m. Tuesday.
They had 14 bills on their to-do list; most were spending plans that made up the roughly $66 billion budget for the next two years.
The political makeup of the capitol is unique, with a tied House for only the second time in state history. It's as closely divided as a Legislature can be in Minnesota— with 100 Republicans and 101 Democrats — which made negotiations challenging and forced compromise
"And I think in the end, fighting for that equal shared power made this a better session," said former DFL House Speaker Melissa Hortman, DFL-Brooklyn Park. "And I think the way that today unfolded was about cooperation and collaboration, we could have had that from the word go. I'm really happy that we did finally get there."
A delayed start in the House, after DFL lawmakers boycotted the first few weeks over a power dispute, ended in overtime. But a divided Legislature is not unique in Minnesota. Four of the last five budget-writing sessions, including this one, have ended with special sessions because they didn't finish the budget on time when Republicans and Democrats shared power.
"We needed to make Minnesota an affordable place that people could afford their lives. We wanted to reduce mandates. Did we get everything done that we wanted to? No, we didn't, but we made a lot of great strides," said House Speaker Lisa Demuth, R-Cold Spring.
Finishing their work prevented nearly 30,000 state workers from getting layoff notices on Tuesday in advance of a partial government shutdown on July 1 if they failed to approve a budget.
The Senate passed a tax bill overnight and a bonding proposal funding infrastructure projects before they adjourned, but had approved the budget bills. The legislation made significant cuts to stave off a projected $6 billion deficit in future years.
Adult undocumented immigrants to lose MinnesotaCare
Most of the day was smooth sailing after lawmakers in the House began by passing the most contentious bill of the year that will remove undocumented immigrant adults from MinnesotaCare, a state health care coverage program, by the year's end.
The debate in that chamber lasted for four hours and at times was emotional. The change was a top priority for Republicans who are concerned that growing enrollment would balloon costs in an unsustainable way.
"We knew that was going to be a really hard issue," Demuth said. "Republicans, being in a tie, were able to accomplish much more, not as much as we wanted, but much more in making Minnesota affordable. We are not uncaring. We are looking out for the best interest of Minnesotans and being responsible with taxpayer dollars."
Democrats in both chambers were deeply opposed to the measure, which will preserve coverage for children despite the rollback for adults.
Through tears, Senate Majority Leader Erin Murphy, DFL-St. Paul, said approving it, which she agreed to in a larger budget compromise among legislative leaders, was among the most "painful" votes she ever had to take.
She and three other Democrats supported it in the Senate. Hortman was the sole DFL vote alongside Republicans in the House.
Hortman was similarly emotional when reflecting on that moment.
"I'll continue to have health insurance, so I'm fine. What I worry about is the people who will lose their health insurance," Hortman said. "I know that people will be hurt by that vote, and I'm — we worked very hard to try to get a budget deal that wouldn't include that provision, and we tried any other way we could to come to a budget agreement with Republicans, and they wouldn't have it. So, you know, I did what leaders do, I stepped up and I got the job done for the people of Minnesota."
The measure is on its way to Gov. Tim Walz's desk, and he is expected to sign it. There is a provision in another proposal that will withhold funding for the Minnesota Department of Health if he doesn't.
Walz said the issue threatened to derail the entire budget.
"It is my assessment, I think it was the assessment of the other leaders, that we were going to go to a shut down over this issue if we weren't willing to find a compromise," he said.
Lawmakers won't be back for the 2026 session until February, but leaders concede they may have to return for another special session if there are steep Medicaid cuts at the federal level.
Walz calls budget the "most impressive achievement" in his career
Walz spoke to the media about the budget Tuesday morning, saying lawmakers' ability to work together to reach a bipartisan agreement was "the most impressive achievement" he's seen in his 20 years in state politics.
"Not only do we have about $2 billion on the bottom line, which we meet our constitutional ability to balance the budget, we are nearly balanced in the second biennium out and that structural imbalance for '28-'29 has been reduced by almost 50%. That puts Minnesota in a strong position," Walz said.
The governor acknowledged the pain points along the way, from the delayed start to difficult decisions.
"This session started out rocky. A strange set of circumstances around the election in the House and some of the things that happened in the Senate, but amongst all that, folks continued to talk," he said.
Walz repeatedly referenced the "division and dysfunction" at the federal level, and even said Minnesota lawmakers could be forced to return to work if President Trump's "one big, beautiful bill" passes.
"If this monstrosity or atrocity I think as Elon Musk put it is able to pass, it will have catastrophic effects," Walz said. "What we did here will be undermined, especially in the areas of impact around Medicare, around food security, around education."
Still, Walz said he and other leaders — many of whom he thanked individually — are proud of the work done and the fact that "Democracy's strong and functioning in Minnesota."
"I think at the end of the day, this was a sausage-making situation," he said. "This morning we had some really good sausage that we were able to get done, and how you get there, you get there."
