Governor and Legislative Leaders Reach Agreement

Gov. Tim Walz, Senate Majority Leader Erin Murphy, House Speaker Lisa Demuth and House DFL Leader Zack Stephenson announced late Wednesday that they had reached a bipartisan supplemental budget agreement, releasing a signed spreadsheet outlining the framework of the deal. While legislative language is still being finalized, lawmakers now face a hard deadline to pass the implementing bills before adjournment at midnight Sunday. The agreement includes a $1.2 billion bonding package, $125 million in additional property tax relief, increased education funding, $75 million for county IT modernization, and a major healthcare stabilization package totaling roughly $705 million.

More on the Deal

The agreement reflects the realities of divided government, with Republicans and Democrats each securing major priorities after weeks of negotiations. Republicans highlighted a one-year, $250 million reduction in vehicle tab fees, anti-fraud reforms, and support for rural and critical access hospitals. Democrats emphasized preserving core government services, additional aid for counties and schools, and long-term healthcare funding. One unresolved issue remains the bonding bill itself, which will require bipartisan votes to pass — especially in the House — where leaders are signaling that members with local projects may be expected to support the package. Senate GOP Leader Mark Johnson did not sign the agreement, adding uncertainty as legislative leaders work to assemble final votes before Sunday’s deadline.

HCMC Funded

The largest single piece in the agreement is the state’s new funding structure for Hennepin County Medical Center. Under the deal, approximately $200 million will go to HCMC immediately, with additional funding support bringing the total package to as much as about $700 million through 2031. Rather than redirecting the expiring Hennepin County ballpark tax to support the hospital, negotiators chose to finance the package directly from the state’s general fund. The agreement also reportedly drops previously discussed transit and rail-related funding proposals, including train funding that had been part of earlier infrastructure conversations, allowing negotiators to consolidate available dollars around hospital stabilization and core budget priorities.

Tax Relief and Tab Fee Cuts

Tax relief emerged as one of the central components of the bipartisan budget agreement, with negotiators approving $125 million in expanded property tax refunds and a one-year, $250 million reduction in vehicle tab fees. Republicans framed the tab fee rollback as a direct response to voter frustration over sharply higher registration costs tied to changes approved in recent years, particularly for newer and electric vehicles. Under the agreement, tab fee rates would temporarily revert to 2022 levels without reducing transportation funding. Democrats, meanwhile, emphasized the property tax relief package as targeted assistance for homeowners and local governments facing mounting financial pressures. Together, the measures represent an attempt by both parties to address broader affordability concerns that have increasingly shaped legislative debates and local referendum outcomes across Minnesota.

House and Senate Agree on Housing Bill

The House and Senate yesterday approved a negotiated housing bill that ultimately stripped out several of the Senate’s more controversial tenant-protection proposals in order to secure final passage. Most notably, lawmakers removed manufactured home park language that would have imposed new protections for residents, including provisions viewed by opponents as a form of rent stabilization for lot rents in manufactured home communities. The final agreement also excluded a proposed amendment establishing rent control protections for senior housing, reflecting continued resistance among moderates and industry groups to statewide rent regulation policies. The decision to leave both measures out underscores how legislative leaders prioritized a narrower compromise focused on production, homelessness prevention, and financing over broader tenant-regulation reforms.

Funding remained the centerpiece of the final package. The bill includes roughly $184 million in appropriations for housing and homelessness prevention programs over the biennium, along with authorization for additional housing infrastructure bonds. Major investments include funding for rent assistance, the Housing Trust Fund, family homelessness prevention, workforce housing initiatives, and affordable rental preservation. Lawmakers also retained targeted appropriations for community stabilization efforts and infrastructure improvements, including funding connected to manufactured home parks, even as broader policy changes affecting those parks were dropped from the final agreement. Supporters framed the bill as a fiscally focused compromise aimed at maintaining affordable housing production and homelessness services amid a challenging budget environment.

May 15, 2026