Walz Highlights Policy Record and Future Priorities in Final State of the State

In his final State of the State address, Governor Tim Walz highlighted the key policy initiatives and investments that have defined his administration, with a focus on infrastructure improvements, public safety efforts, and reforms to Minnesota’s human services systems. He pointed to ongoing work to modernize Medicaid and strengthen service delivery, emphasizing the importance of making government programs more efficient and accessible. Walz framed his tenure around economic stability, support for working families, and long-term investments designed to position the state for continued growth.

Looking ahead, the governor underscored the need for continued collaboration among state leaders to address fiscal challenges and sustain recent policy gains. He called for a steady approach to budgeting and implementation, particularly as the state continues to refine oversight of major programs and adapt to evolving economic conditions. Walz closed by emphasizing continuity and shared responsibility in maintaining Minnesota’s progress beyond his time in office.

House Budget Resolution Sets Modest Spending Targets as Session Nears Final Weeks

The House Ways and Means Committee has approved a budget resolution outlining approximately $41.1 million in new spending for the 2026-27 biennium. The resolution, while not required in an even-numbered year, establishes funding targets for a range of finance bills already moving through the legislative process. Major allocations include $15.4 million for public safety, about $1.5 million for higher education, and smaller amounts for workforce development and elections, along with a proposed $2 million reduction in housing funding.

In addition, roughly $25.6 million is reserved for standalone bills that have been heard or are expected to be considered, signaling continued movement on individual policy priorities late in session. The resolution also sets limits on spending from the Workforce Development Fund and maintains key budget reserves, including $3.42 billion in the state’s reserve account. Lawmakers noted that additional budget resolutions may follow as more omnibus packages advance, with the Legislature facing a May 18 deadline to complete its work.

Senate Tax Committee Advances Omnibus Tax Bill

The Senate Tax Committee on Thursday advanced SF 5052, its omnibus tax bill for the 2026 session, setting up the chamber’s tax priorities for the final weeks of session. The package would reduce state revenues by $10.2 million in FY 2027, followed by a net increase in revenue of approximately $417 million in FY 2028–2029. While the committee has approved the measure, the Senate cannot yet take it up on the floor, as lawmakers are waiting for the House to release and pass its own tax bill. With divided control in the House, the proposal’s timing and scope remain uncertain as the legislature enters its final stretch.

The Senate package includes a mix of tax relief, new revenue measures, and policy changes. It adopts a limited approach to federal tax conformity, including bonus depreciation but excluding several other business-related provisions. The bill also creates a new social media excise tax based on subscriber levels, projected to raise significant revenue, and modifies incentives for sustainable aviation fuel production. Additional provisions establish a Department of Revenue ruling program to provide taxpayer guidance, increase funding for the homestead credit refund program, and authorize or extend dozens of local sales taxes. The bill also proposes changes to worker classification standards and extends and increases a Hennepin County sales tax to support hospital funding, among other provisions.

Pass-Through Entity Provision to Be Added on Senate Floor

During the Senate Tax Committee hearing on Thursday, Committee Chair Ann Rest said a key pass-through entity (PTE) provision—allowing certain businesses such as partnerships and S corporations to elect to pay state income taxes at the entity level rather than on individual owners’ returns—was intentionally excluded from the omnibus tax bill, SF 5052. She explained the provision will instead be offered as the first floor amendment, emphasizing that it previously received unanimous bipartisan support in committee. Rest noted that bringing it forward separately will give all senators the opportunity to vote on the policy, and she expressed hope that advancing it in this way will once again position the Senate to lead on the issue as discussions with the House move forward.

Bipartisan OIG Bill Likely to Make it to Finish Line

While there are still many issues waiting to be resolved, one of them—a bill to establish an Office of Inspector General (OIG)—passed a key committee Wednesday night and seems poised to become law. The OIG bill (S.F. 856, Sen. Gustafson / H.F. 1338, Rep. Norris) was first introduced in 2025 and passed by the full Senate in May 2025 with an overwhelming bipartisan vote of 60-7. Despite the bill advancing out of at least ten committees in the Senate, it stalled in the tied House. Throughout the 2026 legislative session, the House passed the bill through various committees, while supporters engaged in bipartisan and bicameral negotiations. Though the bill was placed on the April 29 agenda in the House Ways and Means Committee, the committee recessed for several hours while negotiations continued and it was unclear if the bill would make it out of committee that day. However, when the committee did reconvene, it was announced that a bipartisan agreement had been reached with the Senate. The bill was amended to reflect the agreement and passed out of committee. Its next stop will be the House floor. The OIG bill is considered a key component of the legislature’s attempts to address fraud in government programs.

May 1, 2026