Minnesota lawmakers strike budget deal, protest erupts on ending health care for undocumented adults

Gov. Tim Walz and legislative leaders struck a budget deal Thursday that rolls back health care coverage for undocumented immigrant adults, closes the Stillwater prison and makes other notable spending cuts.

After about two weeks of closed-door negotiations, Walz and leaders of the tied House and DFL-controlled Senate emerged with an agreement that is unlikely to fully satisfy either political party.

In an immediate sign of pushback, a group of DFL lawmakers protested the outside the governor’s reception room at the Capitol as Walz and legislative leaders discussed the deal, repeatedly banging on the door and chanting, “Don’t kill immigrants!”

“This is what happens when you compromise,” Walz said, referring to the protest on the other side of the doors. “These leaders knew that. They’re going to go hear this. I’m going to hear it. That’s the way this should be done. But I’m proud that this is a solid budget. It is fiscally responsible, it is pro-growth, it brought together a divided Legislature in a time ... of total chaos in D.C.”

A spokesperson for Walz said the governor and legislative leaders would meet with the group of frustrated DFLers later Thursday.

Walz announced the budget agreement alongside DFL Senate Majority Leader Erin Murphy, GOP House Speaker Lisa Demuth and House DFL Leader Melissa Hortman.

Missing was Senate Minority Leader Mark Johnson, R-East Grand Forks, who didn’t sign the budget agreement and issued a news release Thursday morning saying the deal fell short of what his caucus was seeking.

“Senate Republicans worked to put Minnesotans first by cracking down on the waste and fraud that’s grown under Democrat control, while advancing commonsense, bipartisan reforms to cut government red tape,” said Johnson, leader of the Senate GOP Caucus. “While the final deal includes some needed reforms, it falls short of acknowledging we need bipartisan support to stop the harmful progressive policies hurting small businesses and working families.”

Legislators have just days left before their May 19 adjournment deadline and could need a short special session to pass budget bills. House and Senate leaders will have to make sure there aren’t too many defectors in their respective caucuses.

Budget targets released by the governor’s office show their deal reduces a projected $6 billion deficit in the 2028-2029 fiscal biennium, but it doesn’t completely wipe out the imbalance. This coming two-year budget will be balanced under the deal announced Thursday.

The deal rolls back a new health care program that allows undocumented immigrants to enroll in MinnesotaCare, a state-funded health care program that provides coverage to low-income residents. Coverage will continue for children of undocumented immigrants but not for adults.

GOP lawmakers had pushed to repeal the program passed by Democrats in 2023, as it had been more popular than expected with triple the number of enrollees than what the state initially anticipated. Republicans worried the program’s cost would balloon over time and blow a hole in the state budget.

“That was something we looked at fiscally that could not go on,” said Demuth, R-Cold Spring. “But we also recognize the importance of allowing that care for children that are here.”

“It’s not a measure of being uncaring,” Demuth added, “it’s a fiscal issue.”

Coverage for undocumented immigrant adults will end Dec. 31 after just starting in January, said Hortman, DFL-Brooklyn Park.

As members of her caucus banged on the door of the reception room protesting the end of the coverage, Hortman said the issue is “deeply personal” for many Democrats.

“Our caucus is full of immigrants and children of immigrants,” Hortman said. “They know that these individuals’ lives are threatened by the removal of [the coverage].”

The fate of another 2023 DFL program providing summer unemployment insurance to hourly school-year workers will be decided in conference committee negotiations. The House education spending bill currently sets a 2028 expiration date on the program.

Hortman said that bill will pass the House as is and then head to conference committee with the Senate. She said House Democrats will not support the 2028 repeal in conference committee, preserving the program.

Other highlights of the budget agreement include closing the Stillwater prison by 2029, a move that will require the state to find new places for more than 1,200 inmates.

Demuth said the leaders also agreed to tweak the state’s new paid family and medical leave program, which is scheduled to start Jan. 1, reducing the payroll tax on employers and employees by 0.1%.

This is a developing story. Check back for updates.