Gov. Tim Walz calls Monday special session after legislators strike deal on budget

Minnesota Gov. Tim Walz and top legislators have struck a deal on a two-year $66 billion state budget and will return to St. Paul on Monday for a special session to pass it.

Walz and legislative leaders on Friday announced an agreement for a one-day session that will begin at 10 a.m. and adjourn before 7 a.m. Tuesday.

Their two-page signed agreement, which was reached after weeks of behind-the-scenes dealmaking, could avert a partial government shutdown.

In a statement, Walz said the bipartisan pact will result in necessary spending cuts and is the result of “hundreds of hours of good-faith, bipartisan debate.”

“While all sides had to make concessions in order to reach a compromise, I’m grateful to our legislative partners for their collaboration and dedication to moving Minnesota forward,” he said.

Legislators adjourned their regular session May 19 without passing the vast majority of the bills that make up the budget.

They’ve since blown past a self-imposed deadline, with the stakes getting higher with each passing day: Budget bills must be signed into law by July 1 or much of state government will shut down.

Already, the state has sent out layoff notices to hundreds of nurses, and tens of thousands more notices will go out to government employees early next week if the bills aren’t signed into law.

The agreement will limit amendments to more than a dozen outstanding bills. Rules requiring multiple hearings for bills will be suspended to speed along the process.

Legislative leaders and Walz, who negotiated a basic budget framework late in the session, have pointed to the near-tie in the Legislature as the main reason budget bills weren’t passed before it ended in May.

Democrats hold a single-vote majority in the Senate, and the House is evenly split between Democrats and Republicans, which has forced the parties to find common ground on issues from health spending to energy policy.

“Nothing ever completely broke down,” House Speaker Lisa Demuth, R-Cold Spring, told reporters Friday afternoon. “It just took a little bit longer than we anticipated.”

Asked whether the effort to limit amendments is appropriate for a representative democracy, Demuth pointed to other avenues rank-and-file legislators had to air concerns, including speaking to media and writing bills next year.

“This isn’t an attempt to keep people quiet in any way, but we do have to fund state government,” Demuth said.

Lawmakers have met mostly in private over the past few weeks to discuss lengthy budget bills, only returning to public view once they had settled their differences.

For example, a human services bill of more than 300 pages, which would cut $255 million from disability services, was not published until Wednesday afternoon. It was the subject of a public hearing that lasted for more than two hours Thursday, but much of that time was taken by nonpartisan staff describing what was in the legislation.

One of the bills lawmakers will take up in the special session would extend unemployment insurance for more than 600 workers laid off from mines on the Iron Range. The legislation would grant another 26 weeks of pay to workers at Ohio-based Cleveland-Cliff’s operations in Hibbing and Virginia.

Lawmakers also agreed to pass a bill setting new guidelines for an influx of large-scale data centers to Minnesota. After leaders controversially agreed last month to reduce lucrative tax breaks for the data center industry, Amazon promptly announced it was suspending a multibillion-dollar data center in Becker.

Sen. Nick Frentz, DFL-North Mankato, said the deal extends the remaining sales tax exemptions for decades. It does not relax permitting regulations on backup power sources.

Frentz said the agreement includes “guardrail” provisions that many Democrats wanted, such as new rules governing water use and protecting utility customers from higher bills, and a requirement that data center operators pay for home conservation projects for low-income families.

A last-minute change to the transportation bill diverts tens of millions of dollars yearly raised by a recently established Twin Cities-area sales tax from counties to the Metropolitan Council for bus rapid transit projects.

Several county officials slammed the change at a hearing Friday, but House DFL Leader Melissa Hortman said the shift was necessary because of budget cuts elsewhere.

“They’re not getting as much new money as they were going to get,” the Brooklyn Park legislator said of the counties. “It’s still more than they were getting before.”

The agreement includes taking up a bill to modify a 2023 law that allowed undocumented immigrants to get health care through MinnesotaCare.

Leaders agreed to strip access to the program for adults but preserve it for children. Upset by the change, many Democrats have said they won’t vote for a bill that takes health care away from undocumented Minnesotans.

Hortman told reporters she will supply the lone DFL vote for that bill if necessary.

“In order to get a budget agreement that funds the government for the state of Minnesota, this is a compromise that I was willing to make,” she said.

As of Friday afternoon, the tax and health budget bills were not yet finalized. Neither was a borrowing package for construction projects across the state, known as the bonding bill. Demuth said lawmakers had agreed to a $700 million package.

House lawmakers supported a $700 million bill while the Senate wanted to spend more than $1.3 billion. Bonding bills require a three-fifths majority to pass, so buy-in is needed from both parties.

“It is a very good basic, bipartisan bonding bill,” Demuth said.

Walker Orenstein of the Minnesota Star Tribune contributed to this story.

Correction: This story has been updated to reflect that an agreement on data center policy would not relax permitting regulations on backup power.