Minnesota Legislative Session 2025: MAFP lobbyist Megan Verdeja and the United Strategies team share the latest updates from the Capitol—budget + House and Senate updates.
Governor’s Budget Released
Minnesota Governor Tim Walz has released his two-year budget proposal, which includes spending pullbacks and other measures to address a forecasted budget deficit. The plan projects leaving $2.1 billion in the budget for fiscal year 2026-27, and $355 million in fiscal year 2028-29.
Highlights of the budget include:
- Sales Tax Adjustment: Reducing the statewide sales tax from 6.500% to 6.425%, while expanding the tax to professional services (e.g., legal, accounting, and banking) for consumers. Business-to-business sales remain exempt.
- Curbing Spending Growth: Addressing the structural deficit by limiting the year-over-year growth of Medicaid waivers without limiting eligibility. This change would save the state more than $1.3 billion.
- Anti-Fraud Measures: Adding nine staff members to the Attorney General’s Medicaid fraud unit, expanding agency authority to stop payments to those suspected of fraud, and utilizing AI to detect and prevent fraud. The proposal also increases criminal penalties for stealing public funds by 20%.
- Economic Growth Investments: Expanding the Research and Development tax credit and Minnesota’s Sustainable Aviation Fuel tax credit, along with permitting efficiency measures to streamline business operations in the state.
View the 2025 Governor’s Budget.
What’s next? The House and Senate will craft their own budget proposals. Lawmakers discovered last month that they’ll have less fiscal flexibility than expected for budget negotiations. A deal must be reached before July 1, 2025, or risk a government shutdown.
Minnesota Senate Update
Following the unexpected death of Senator Kari Dziedzic (DFL-Minneapolis), control of the Minnesota Senate is currently tied at 33-33. Senate leaders from both parties have agreed to a power-sharing arrangement, which can be retracted once one party gains 34 votes—potentially after the special election in Senate District 60 on January 28, 2025. Review the Senate power sharing agreement.
Senate committees have begun meeting, though agendas have primarily focused on informational overviews, rather than bill hearings.
Minnesota House Update
House Republicans currently hold a temporary one-seat majority (67-66) and have assumed the roles typically given to the Majority party, including electing Representative Lisa Demuth (R-Cold Spring) as Speaker.
However, House Democrats are boycotting the session and have filed a lawsuit against Republicans, alleging violations of state law. The lawsuit challenges whether the House currently has a quorum or if Republicans are operating legally. The Minnesota Supreme Court will hear oral arguments on Thursday, January 23, 2025.
Secretary of State Steve Simon has filed a legal petition, which asks the State Supreme Court to void the Republicans’ actions and prevent further business on the House floor.
In District 54A (Shakopee), a judge ruled that the election results will stand, despite controversy over 20 missing ballots in a race decided by just 14 votes. Republicans have indicated they may use House powers to review whether Representative Brad Tabke (DFL-Shakopee) should be seated.
House DFL leader Representative Melissa Hortman has proposed a new power-sharing offer, which would give Republicans control of the House for the first three weeks of the session, including the speakership and committee control. The agreement would resume a 67-67 tie on February 3, 2025, with an Oversight Committee under Republican control for the next two years. However, any agreement in the House remains uncertain, which could impact the session’s trajectory.
Special Election Update
The Minnesota Supreme Court recently ruled on the timing of the special election in House District 40B (Roseville). The Court determined that Governor Walz’s writ calling for the special election on December 27, 2024, was issued too quickly. As a result, the special election will likely be delayed until the first week of March 2025, in line with the statutory timeline.
