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BUDGET BACKGROUND & UPDATES
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The budget forecast released by Minnesota Management and Budget in March showed a challenging outlook for the state’s finances. The projected balance for Fiscal Year 2026-27 is $456 million, which is $160 million lower than previous estimates in November. The projected deficit for Fiscal Year 2028-29 has risen as well, from $5.15 billion in November to almost $6 billion. The negative financial outlook means that the House and Senate have reduced budget targets, which are guidelines for how much general fund money committees can allocate as they put together the state budget. In the House, due to the tied nature of the body, Democratic and Republican leadership negotiated a compromise that would reduce spending by $1.2 billion for the upcoming budget cycle and $2.6 billion in future years. The most significant cuts would be in health and human services.
The targets released by the Senate Democrats reduce state spending by $754 million in the upcoming two-year budget and by $1.7 billion in future years. As in the House, the largest cuts would be in health and human services, as well as environment, energy, transportation and education.
Last week, most House and Senate finance committees put the finishing touches on their budget bills. When the legislature returns from the Easter/Passover break next week, these bills will be heard in the House Ways and Means and Senate Finance committees before moving to the floor of each respective body. There are differences between the House and Senate versions of the bills, which must be reconciled before adjournment on May 19. If agreements are not finalized and passed by then, a special session will be needed to pass a budget and avoid a government shutdown.
Here is where things stand with budget bills of interest right now:
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K-12 EDUCATION COMMITTEES
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Overall, the Senate education budget bill target allowed for no increases in spending in FY26-27 and a budget reduction of $687 million in FY28-29. Key components of the Senate proposal include removing future funding inflationary increases in basic per-pupil funding, which is the backbone of funding for public education, reduction in charter school facilities maintenance funding, and eliminating funding provided to private school materials, health and counseling services, and transportation. The Senate proposal provides one-time funding for school districts to cover costs related to unemployment insurance benefits for hourly school employees and address fiscal cliffs related to funding that supports low-income, at-risk students.
The House budget bill target allocated $40 million in one-time funding for FY26-27 and no increase in FY28-29. The House has not yet advanced their education budget bill.
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HOUSE CHILDREN AND FAMILIES COMMITTEE
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Overall, the House Children and Families budget bill target was $25 million in FY26-27 and a budget reduction of $15 million in FY28-29. The key proposal in the bill appropriates one-time funding of $40 million for an IT modernization project of the child welfare system. Additional funding is also provided for food shelves, food banks and prepared meals, low-income asset-building programming, federal compliance for childcare assistance, and early learning scholarships.
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SENATE HEALTH AND HUMAN SERVICES COMMITTEE
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The Senate Health and Human Services (HHS) Committee was required to reduce spending by $261 million in FY26-27 and reduce spending by $336.8 million in FY28-29. And while the target required them to reduce spending, the Senate HHS omnibus bill did include some new spending because the Senate HHS budget included budget cancellations, increases in certain health-related fees, shifts from the Health Care Access Fund, and an increase in the Provider Tax to make up for the spending reductions.
The Senate HHS budget bill funds programs and grants in the Departments of Human Services, Children, Youth, and Families, and Health. It includes funding for mental health programs like Psychiatric Residential Treatment Facilities and grants for youth mental health, HIV/AIDS support services, homelessness supports, and the establishment of a dementia services program. The bill also includes $10 million for an IT modernization project of the child welfare system, ongoing funding to meet federal compliance for childcare assistance, and funding for food shelves, food banks and prepared meals.
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HOUSE HEALTH COMMITTEE
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The House Health Committee budget target required a budget reduction of $50 million in FY26-27 and a budget reduction of $175 million in FY28-29. The House Health Committee has yet to come to an agreement on an omnibus health budget bill.
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SENATE HUMAN SERVICES COMMITTEE
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The Senate Human Services Committee budget target required a reduction of $272 million in FY26-27 and a budget reduction of $430 million in FY28-29. The committee captured some of these budget reductions through reducing federal waiver expenditures, grant and administrative reductions and transfers, and billing and other fund modifications.
The bill includes new funding for several substance use disorder programs, support services for people with autism under age 21, and operating funds for the newest state agency, the Department of Direct Care and Treatment. The bill also moves the Governor’s Council on an Age-Friendly Minnesota into the Age-Friendly Minnesota Council and provides additional funding to the Minnesota Board on Aging. It also includes additional funding for critical access nursing facilities and payments to SEIU Healthcare under a self-directed bargaining agreement.
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HOUSE HUMAN SERVICES COMMITTEE
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The House Human Services Committee budget target required a reduction of $300 million in FY26-27 and $1 billion in FY28–29. The committee was able to capture some of these budget reductions through reducing waiver growth, funding cancellations, and billing modifications. The bill also includes a nursing facility surcharge, which is listed as a savings of just over $177 million over the next four years. It also would reinstate parental fees under the TEFRA program (Tax Equity and Fiscal Responsibility Act), which provides Medical Assistance benefits for children with disabilities.
The House Human Services Budget invests $125 million over four years in the Community First Services and Supports program, which allows people greater independence by ensuring that they have services to stay in their own homes and replaces personal care assistance and the consumer support grant. It also includes funding for housing and homelessness support services like Safe Harbor Grants, Homeless Youth Act Grants, Shelter Capital and the Emergency Services Program. Finally, the bill funds programs to improve and expand internal systems, including the Department of Human Services program integrity and investigative analytics infrastructure and a new background studies disqualification program under the Office of the Inspector General to address fraud, waste, and abuse.
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HOUSING COMMITTEES
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The Senate Housing and Homeless Prevention Committee had a budget target of $3 million in FY 26-27 and $1 million in FY 28-29. In putting together their budget, the committee also took back $10 million from previously appropriated but unspent community stabilization funds. The Senate’s housing and homelessness budget invested largely in additional funding for the family homelessness prevention and assistance program. The bill also included additional funding for infrastructure programs in Greater Minnesota and community-based first-generation homebuyer programs.
The House Housing Finance and Policy Committee had a budget target of $75 million in FY26-27 and $7.6 million in FY28-29. The House budget includes one-time additional funding for housing infrastructure programs and workforce housing programs in Greater Minnesota, manufactured home grants, low-income affordable housing infrastructure programs, and Housing Infrastructure Bonds.
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TRANSPORTATION
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The House Transportation budget target provides no change from the February forecast base Transportation budget in FY 26-27 and FY 28-29. Key proposals found in the bill include additional funding in road construction, reductions in passenger rail service, delaying implementation of the greenhouse gas emissions assessment project and vehicle miles traveled requirements, and authorizing online driver license renewals.
The Senate Transportation omnibus bill target provides $227 million in reductions to the general fund in FY26-27 and $132 million in FY28-29. Some of the key provisions include additional funding for state roads, operating increases for MN Department of Transportation and Department of Public Safety, numerous traffic safety measures, cancelation of funding for the proposed passenger train between Duluth and the Twin Cities, Northern Lights Express, and a temporary adjustment in the percentage of sales tax on auto parts appropriated to the Highway User Tax Distribution Fund.
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TAXES
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The House and Senate Taxes Committees are not subject to committee deadlines and generally produce tax bills later in the legislative session. Both committees have been holding hearings on bills and laying them over for consideration for future inclusion in an omnibus tax bill.
The House Taxes budget target reduces tax aids and credits by $40 million for FY26-27 and FY28-29. The Senate Taxes Committee target includes tax increases of $365 million in FY26-27 and $370 million in FY28-29.
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KEY LEGISLATIVE DATES
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April 11-21, 2025 – Passover/Easter Break
April 11, 2025 – Third Committee Deadline
April 23, 2025 – Gov. Walz’s State of the State Address
April 29, 2025 – Senate District 6 Special Election
May 19, 2025 – Last Day of the 2025 Minnesota Legislature (Adjournment)
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THE IMPACT OF CITIZEN TESTIMONY
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Testifying before a legislative committee is a powerful way to influence policy and ensure your voice is heard. However, the process can seem intimidating, especially if you’re new to it. So, Ewald’s Government Relations Team has created a video to walk you through the steps of preparing and delivering effective testimony. A recent blog post shares real stories about the impact of citizen testimony.
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HELPFUL RESOURCES TO FOLLOW ACTION AT THE STATE CAPITOL
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Follow these links to keep up with action at the State Capitol:
To find your legislators, visit Who Represents Me
For updates on activities at the House of Representatives,
visit the House Session Daily website.
For updates on activities at the Senate, visit Senate Media Services.
To follow committee hearings, visit the Combined Committee Schedule.
To watch House committee and floor sessions, visit the
House of Representatives YouTube Channel.
To watch Senate committee and floor sessions, visit the Senate YouTube Channel.
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