Governor Releases Supplemental Budget

Governor Tim Walz’s supplemental budget was released this week. While relatively modest in net fiscal impact, it resembles a full biennial budget in scope, introducing significant policy ideas such as new taxes, expanded credits, fraud prevention measures, and investments in IT and human services. The supplemental budget would have a modest $63 million net impact in FY 2026-2027 and a projected $435.4 million budget reduction in FY 2028-2029.  The plan includes $488.8 million in new spending this biennium, largely offset by $425.5 million in cuts and new revenue, while future years see $801.7 million in spending balanced by $1.237 billion in reductions.

Governor Proposes Sales Tax Expansion,Tech Platform Tax, and Federal Conformity

The Governor proposes several tax increases expected to generate significant revenue, led by $321.6 million from expanding the sales tax base to professional services and certain bank charges. This expansion is paired with a slight overall rate reduction from 6.5% to 6.425%. Another $267.2 million in new revenue comes from federal tax conformity changes, primarily in the out-biennium. Additional revenue includes $37.4 million from a new gross receipts tax on firearms and ammunition. Separately, a proposed social media tax on large platforms would raise an estimated $240.8 million over four years for a workforce development fund tied to AI-related job displacement, rather than the general fund. The plan also includes extending the pass-through entity tax and creating a new pass-through audit unit.

Stay-or-Pay Mandate Stalls in House but Moves in Senate

HF 2567/SF 2533 would prohibit “stay-or-pay” provisions in employment contracts. “Stay-or-pay” clauses require workers to repay training or other costs if they leave a job early. HF 2567/SF 2533 makes these clauses unenforceable and allows employees to sue for violations, with limited exceptions for tuition tied to transferable credentials under strict conditions. Supporters argue these agreements can trap workers in jobs through costly exit penalties, calling them coercive and a barrier to job mobility. Opponents, including business groups, counter that such provisions are legitimate tools to recoup training investments and support workforce development, warning that banning them could discourage employers from investing in employee skills. The bill failed on a tie vote in the House Workforce, Labor, and Economic Development Finance and Policy Committee.  In the Senate, the bill passed the Labor Committee and is waiting to be heard in the Judiciary and Public Safety Committee.

Gun and School Safety Bills Advance in Senate

The Senate Judiciary and Public Safety Committee advanced a package of gun and school safety proposals, signaling continued momentum on the issue in that chamber. However, similar measures—including restrictions on assault-style weapons—remain stalled in the House, where tied, party-line votes have blocked progress. The divide underscores the issue as one of the most politically contentious at the Capitol this session. Lawmakers on both sides point to public safety as a priority, but differ sharply on approach, with DFL members emphasizing prevention and access restrictions, while Republicans raise concerns about constitutional rights and enforcement impacts. With the House evenly divided, any movement on these proposals will likely require bipartisan compromise, making the path forward uncertain as key legislative deadlines approach.

House Commerce Committee Advances Bill to Cap Ticket Resale Prices

The House Commerce Finance and Policy Committee advanced HF 4250, a bill aimed at limiting ticket resale prices and increasing pricing transparency, sending it next to the House Judiciary Finance and Civil Law Committee. HF 4250 seeks to curb ticket price gouging by limiting resale prices to 115% of face value and requiring clear disclosure of original prices and markups. The proposal comes amid growing frustration as concertgoers face steep resale markups that can price out fans and divert money away from artists, venues, and local businesses. Supporters, including representatives from First Avenue, argue the bill would help rein in a “distorted” resale market driven by bots and brokers, while opponents warn that price caps could backfire by pushing sales to unregulated marketplaces, creating enforcement challenges, and potentially reducing ticket availability.

March 20, 2026