Minnesota Revenues Fall Short of Forecast

Minnesota collected $3.78 billion in general fund revenues during February and March 2026, falling $182 million, or 4.6 percent, below the state’s February forecast, according to Minnesota Management and Budget. The shortfall was driven largely by weaker-than-expected individual income tax collections, which came in $126 million below projections due to significantly higher refunds. Corporate tax revenues and other revenue categories also underperformed, while sales tax receipts provided a modest bright spot, slightly exceeding expectations. Overall, the variance leaves fiscal year-to-date revenues tracking 0.8 percent below forecast, signaling softer-than-anticipated collections despite relatively stable consumer spending.

Minnesota’s Macroencomic Consultant Predicts Softer Economy in 2026

In its April 2026 forecast, Standard & Poor’s Global Market Intelligence (SPGMI), Minnesota’s macroeconomic consultant, predicted that the U.S. economy has weakened slightly since Minnesota’s February Forecast. Updated forecasts now show U.S. economic growth slowing to 2.1 percent in 2026, with higher inflation, rising unemployment, and sluggish job growth expected to weigh on activity. Analysts point to elevated energy prices, ongoing trade uncertainty, and cooling labor market conditions as key risks. While a recession is not currently projected, the outlook suggests continued pressure on consumer spending and business investment, leaving Minnesota’s budget outlook sensitive to national economic headwinds in the months ahead.

Addressing Impacts of Artificial Intelligence

As artificial intelligence (AI) becomes increasingly ubiquitous in our society, the Minnesota legislature has taken steps to regulate the technology in different ways. For example, it previously passed a law prohibiting use of AI in campaign ads in certain circumstances. During the current legislative session, many bills have been introduced to limit use of AI or mitigate AI’s impact. Despite the good intention of these initiatives, they have created a piecemeal approach to AI regulation. In response, more than two dozen entities sent a letter to Governor Walz and legislative leaders expressing their frustration with this disjointed approach. In addition to calling for a “pause” on AI regulations this session, the groups “urge the Legislature to take a more structured and collaborative approach moving forward…includ[ing] the creation of dedicated AI subcommittees in both the House and Senate with primary jurisdiction over AI-related policy, with mandatory referral for any AI bill.”

Lawmakers Consider Food Shelf Funding

Hunger relief advocates have been warning legislators that Minnesota food shelves are under intense strain as demand reaches historic levels, with nearly 9 million visits annually according to statewide data compiled by The Food Group in partnership with state agencies. As a response, lawmakers are considering proposals to increase funding for the Minnesota Food Shelf Program (MFSP) and provide more direct support to food banks. In the House, H.F. 3624, which is in the Ways and Means Committee, includes approximately $5.4 million in ongoing funding for the MFSP, while funding in the Senate will be added to the Health and Human Services supplemental budget bill. Despite these efforts, advocates say these measures may still fall short, particularly as recent federal SNAP benefit cuts push more families to rely on charitable food programs. With budget constraints and competing priorities complicating the debate, policymakers are confronting a widening gap between need and resources, leaving food shelves as an essential, but increasingly overburdened, safety net.

Partisan Spat over Impeachment

On April 15, the House Rules and Administration Committee held a hearing on Republican-backed resolutions to impeach Governor Tim Walz (and separately Attorney General Keith Ellison), led by GOP Representatives Drew Roach, Ben Davis, and Mike Wiener. The effort centered on allegations that the administration failed to adequately respond to a major fraud scheme and retaliated against whistleblowers, with testimony from Faye Bernstein, a state employee who works at the Department of Human Services. DFLers forcefully disputed the claims, and the committee ultimately deadlocked 8–8 along party lines, preventing the resolutions from advancing and leaving the impeachment effort stalled for now. Matt Gehring, director of House Research, outlined how impeachment works under Minnesota law, noting that impeachment is governed by the state constitution—not statute—with the House holding the power to impeach and the Senate responsible for conducting any trial, requiring a two-thirds vote for conviction.

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a final rule to codify the elimination of reputation risk from their supervisory programs. The final rule, which becomes effective June 9, 2026, adopts the proposed rule with minor modifications and formalizes in federal regulations the removal of reputation risk. The final rule prohibits the OCC and FDIC from performing the following activities in supervisory programs:

• Criticizing or taking adverse action against an institution on the basis of reputation risk;
• Requiring, instructing, or encouraging an institution to (i) close an account, (ii) refrain from providing an account, product, or service, or (iii) modify or terminate any product or service on the basis of a person or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk (excluding compliance for persons or entities sanctioned by the Office of Foreign Assets Control); and
• Taking any supervisory action or other adverse action against an institution, a group of institutions, or the institution-affiliated parties of any institution that is designed to punish or discourage an individual or group from engaging in any lawful political, social, cultural, or religious activities, constitutionally protected speech, or, for political reasons, lawful business activities that the agencies or its personnel disagree with or disfavor.

The final rule defines reputation risk to mean “any risk, regardless of how the risk is labeled by the institution or regulators, that an action or activity, or combination of actions or activities, or lack of actions or activities, of an institution could negatively impact public perception of the institution for reasons not clearly and directly related to the financial or operational condition of the institution.”

The final rule broadly defines “adverse action” to include:

• Any negative feedback delivered by or on behalf of the OCC to the supervised institution, including in a report of examination or a formal or informal enforcement action;
• A downgrade, or contribution to a downgrade, of any supervisory rating, including, but not limited to:
  • Any rating under the Uniform Financial Institutions Rating System (or any comparable rating system);
  • Any rating under the Uniform Interagency Consumer Compliance Rating System;
  • Any rating under the Uniform Rating System for Information Technology; and
  • Any rating under any other rating system;
• A denial of a licensing application;
• Inclusion of a condition on any licensing application or other approval;
• Imposition of additional approval requirements;
• Any other heightened requirements on an activity or change;
• Any adjustment of the institution’s capital requirement; and
• Any action that negatively impacts the institution, or an institution-affiliated party, or treats the institution differently than similarly situated peers.

The prohibition on the use of reputation risk is codified in 12 C.F.R. § 4.91 for the OCC and 12 C.F.R. § 302.100 for the FDIC.

The OCC and FDIC cite the following reasons, among others, for the prohibition:

• Using reputation risk as a basis for supervisory criticisms increases subjectivity and unpredictability without adding any material value from a safety and soundness perspective
• No clear evidence shows that supervisory interference to protect the banks’ reputations has actually protected banks from losses or improved banks’ performance
• Institutions and agencies should devote resources to managing concrete and quantifiable financial risks that have been shown to present significant threats to institutions, such as credit risk, liquidity risk, and interest rate risk
• Reputation risk does not predict bank failures.

The Federal Reserve Board (the Board) issued a notice of proposed rulemaking to codify the removal of reputation risk from the Board’s supervisory programs in February with comments due by April 27, 2026 that includes a general prohibition on the use of reputation risk in 12 C.F.R. § 262.9. We expect the Board’s final rule to include similar language from the FDIC and OCC’s final rule.

In 2025, the federal agencies signaled that these changes were coming. On March 20, 2025, the OCC removed reputation risk from its Comptroller’s Handbook booklets and guidance issuances and instructed its examiners that they should no longer examine for reputation risk. In a March 24, 2025 letter to the U.S. House Subcommittee on Oversight and Investigations, Acting FDIC Chairman Travis Hill stated that the FDIC has reviewed all mentions of reputational risk in regulation, guidance, examination manuals and other policy documents and planned to eradicate reputation risk from the FDIC’s regulatory approach. On June 23, 2025, the Board announced that reputational risk would no longer be a component of its bank examinations.

The removal or reputation risk from examinations is a positive development for the banking industry and will enable banks to focus on measurable risks.

Please reach out to Winthrop & Weinstine’s Banking Regulatory team if you have any questions about this final rule or regulatory compliance.

All banks operating in Minnesota must be aware of the recent decision in United Prairie Bank v. Molnau Trucking LLC. In that case, the Minnesota Supreme Court significantly reshaped the priority landscape between secured lenders and sureties in the public construction market. In brief, the Court held that a performing surety’s rights take priority over a bank’s perfected security interest in contract funds—even where the bank was first-in-time under the UCC.

For banks lending to contractors, this decision highlights a new material and underappreciated risk when borrowers engage in bonded public works projects.

Background Facts

The facts of the case are fairly straightforward: Molnau Trucking obtained loans from the secured bank, granting the bank a perfected security interest in its accounts receivable. Separately, Molnau entered into public works contracts requiring payment bonds issued by a surety (Granite Re, Inc.). When Molnau defaulted on both its loan obligations and its obligations to pay subcontractors and suppliers, Granite paid those claims under its bonds.

A dispute arose over remaining contract funds (including retainage). The bank claimed priority under its first-in-time perfected UCC security interest; the surety claimed priority through “equitable subrogation.”

Key Holdings

The Minnesota Supreme Court ruled in favor of the surety, holding:

• A performing surety is entitled to equitable subrogation regardless of its notice or failure to investigate UCC filings;
• A surety’s rights have priority over a secured lender over bonded contract funds, absent a “superior equity.”

The Court emphasized that a surety, having paid laborers and suppliers under compulsion of its bond, steps into the shoes of those parties (and the project owner), giving it rights superior to a lender whose claim derives only from the contractor.

The “Superior Equity” Exception

Not all is lost, though. The Supreme Court reaffirmed a narrow exception under which a lender may still prevail—often referred to as the “superior equity” scenario. A bank can obtain priority over a surety only if it effectively acts like a surety, meaning:

• The bank is obligated (not merely permitted) to advance funds;
• The funds are specifically earmarked for payment of laborers and suppliers; and
• The funds are actually used solely for those purposes.

General working capital loans—even if partially used on a bonded project—are insufficient. Thus, a bank must be able to document and prove the above requirements to meet the “superior equity” exception.

Practical Takeaways for Banks

This decision introduces meaningful priority risk for lenders financing contractors engaged in public works. Banks should consider the following risk-mitigation strategies:

• Loan documents should require borrower disclosure of bonded public projects and restrict entry into such projects without lender notice and consent.
• Where public projects are anticipated:
  • Engage with the surety at underwriting or project inception;
  • Seek subordination or intercreditor agreements where feasible;
  • Clarify expectations around contract funds and priority.
• If financing project costs:
  • Tie advances to specific obligations (labor/material payments);
  • Require segregation and tracing of funds;
  • Consider mechanisms (e.g., controlled disbursements) ensuring funds are used solely for bonded obligations.
• Accounts receivable arising from public works projects may be impaired or effectively unavailable as collateral in a default scenario. Thus, banks should require:
  • Affirmative reporting of bonded contracts and claims activity;
  • Restrictions on assignment of contract proceeds;
  • Enhanced monitoring of receivables tied to public entities.
• Given diminished priority, banks may need to rely more heavily on:
  • Equipment, real estate, or non-project collateral;
  • Guarantees or additional credit enhancements.

Summary

The Supreme Court’s decision underscores that traditional UCC-based priority assumptions do not hold in the public construction surety context, except in very narrow circumstances as discussed above. For lenders and credit officers, diligence, structuring, and coordination with sureties or underwriting to not include bonded A/R in certain situations are now critical to preserving expected collateral value and properly evaluate the credit at origination.

Banks navigating these issues after origination should work closely with experienced counsel to evaluate risk, collateral exposure, and overall credit structure to avail themselves of the exception identified by the Supreme Court—or contract and/or underwrite around it.

Where Are the Budget Targets?

With the House and Senate approaching the April 17 third committee deadline for finance bills, it is highly unusual that neither the House nor Senate has released committee budget targets. Budget targets are benchmarks that typically guide omnibus bill construction and signal caucus priorities. In most years, targets are distributed well in advance of the third committee deadline to give committees time to assemble and reconcile spending bills. The absence of targets this late in the process creates significant uncertainty at the Capitol.

The delay comes despite Minnesota entering the session with a positive near-term fiscal outlook. The latest Minnesota Management and Budget forecast projects a roughly $3.7 billion surplus for the current FY 2026–27 biennium, providing some flexibility for policymakers, while the out-biennium (FY 2028–29) shows only a modest balance of about $377 million and an ongoing structural imbalance that continues to concern budget officials.

Is HCMC Too Big to Fail?

The Hennepin County Medical Center (HCMC) debate in the 2026 Session centers on whether and how the state should intervene to prevent the potential collapse of a financially distressed but critical “safety-net” hospital. On Thursday, the House Taxes Committee considered HF 4841, a bill aimed at stabilizing HCMC by redirecting and expanding the existing Hennepin County sales/ballpark tax from 0.15% to a full 1%. The new revenues would generate significant new revenue to support hospital operations.

Supporters said the measure is needed to address a growing financial crisis at HCMC, the state’s primary safety-net hospital and busiest trauma center, which faces ongoing operating losses driven by uncompensated care and Medicaid funding pressures. Testifiers emphasized the hospital’s statewide role in providing care, training healthcare workers, and supporting rural systems, warning that failure to act could jeopardize access to critical services. While lawmakers from both parties acknowledged the urgency, some raised concerns about the scale of the tax increase and the need for accountability or internal reforms alongside new funding. The bill was laid over as discussions on an omnibus tax bill continue.

Capital Investment Committees Continue Work

With the 2026 Legislature returning from its Easter/Passover recess, the House and Senate Capital Investment Committees continued hearing bills this week. The challenge these committees have is agreeing on a bipartisan borrowing package to fund significant statewide infrastructure needs amid competing priorities and fiscal constraints. Demand for funding is extremely high—total project requests approach $6–7 billion—while the Governor has proposed a much smaller package of roughly $900 million. While it is unclear what size of bill will pass, comments from capital insiders suggest a final bill closer to about $1 billion, if one passes at all.

Bonding bills require a 60% supermajority, forcing cooperation in a politically divided, election-year legislature, which historically makes negotiations difficult and uncertain. The debate is further shaped by urgent infrastructure needs (e.g., water systems, transportation, and asset preservation backlogs) and competition among local projects, creating tension between widespread demand for investment and the limited borrowing capacity and political will to approve it.

Senate Energy Committee Debates Nuclear Power

The Senate Energy, Utilities, Environment, and Climate Committee on Wednesday, April 8, took up the omnibus energy bill but laid it over after a contentious debate over a nuclear power study. The study would focus on whether Minnesota should revisit its longstanding restrictions on new nuclear energy development. Supporters framed the study as a pragmatic, forward-looking step to assess nuclear energy’s potential role in delivering reliable, carbon-free power amid rising electricity demand and concerns about grid stability. Opponents, however, warned that even studying the issue could signal a shift toward reopening the door to expensive and controversial nuclear projects, arguing the state should remain focused on expanding renewable energy and storage instead. The Committee will reconsider the bill on Monday, April 13.

Bills to Ban Prediction Markets Heard in House and Senate

Minnesota lawmakers are moving forward with legislation to prohibit prediction market platforms, with hearings held in both the House Commerce Committee and Senate State Government Committee on Thursday. The companion bills, HF 4437/SF 4511, would classify event-based trading—where users wager on outcomes like elections, sports, or public policy decisions—as illegal gambling, and would extend liability to operators and promoters. The proposals reflect growing concern that these platforms are operating as unregulated sportsbooks without consumer protections. Supporters argue the measures are necessary to close a regulatory gap and prevent expansion of quasi-gambling products, while opponents warn the bans could conflict with federal oversight and face legal challenges. SF 4511 advanced to the Senate Commerce Committee while HF 4437 was laid over in the House Commerce Committee.

Earlier this month, the FTC released updated text of the Fair Credit Reporting Act (FCRA), which compiles the complete text of the FCRA, including all amendments, into one document to assist users and furnishers of consumer reports with compliance. The document was revised to include the Homebuyers Privacy Protection Act’s (Public Law 119-36) requirements in Section 604 on pages 17 and 18, which went into effect earlier this month. The Act was implemented to prevent consumer reporting agencies from selling consumer reports to third parties for mortgage trigger leads, as such practice results in excessive and unwanted loan solicitations to consumers.

The Act includes the following limitations on requests for prescreening reports:

“If a person requests a consumer report from a consumer reporting agency in connection with a credit transaction involving a residential mortgage loan, that agency may not, based in whole or in part on that request, furnish a consumer report to another person under this subsection unless—

• the transaction consists of a firm offer of credit or insurance; and
• that other person—
  • has submitted documentation to that agency certifying that such other person has, pursuant to paragraph (1)(A), the authorization of the consumer to whom the consumer report relates; or
  • has originated a current residential mortgage loan of the consumer to whom the consumer report relates; or
  • is the servicer of a current residential mortgage loan of the consumer to whom the consumer report relates; or
  • is an insured depository institution or credit union and holds a current account for the consumer to whom the consumer report relates.”

This Act is a reminder for financial institutions to review their FCRA policies and procedures to ensure that such documents require that they have a permissible purpose for every consumer report that they obtain and that they do not furnish reports to another person unless such person has a permissible purpose to obtain the report.  In particular for those organizations engaged in mortgage lending, now is a good time to review policies and practices as it relates to the use of consumer reports in the organization’s mortgage operations.

Please reach out to Winthrop & Weinstine’s regulatory team if you or your organization has any questions about compliance with the FCRA.

Legislature Reaches First and Second Bill Deadline

The first and second committee deadline today (Friday) marks a key milestone in the 2026 legislative session. By this date, most policy bills must clear committees or risk being set aside for the year. These deadlines help narrow the field of proposals, allowing lawmakers to focus on the bills with real momentum and begin shaping broader omnibus legislation ahead of the upcoming third deadline for major appropriation and finance bills on April 17. The Legislature is on its Easter/Passover recess beginning at 5:00 pm on Friday, March 27, and returning on Tuesday, April 7.

What’s Next

Work on a supplemental budget will begin in earnest after the Easter/Passover break. With a projected $3.7 billion surplus for FY 26–27 and a much smaller surplus of $377 million in FY 28–29, DFLers and Republicans are expected to debate competing interests, including tax relief, targeted investments, capital expenditures and long-term fiscal stability. The narrower FY 28-29 balance is likely to shape a more cautious approach to new spending commitments. Leadership in both chambers, along with Governor Tim Walz, will play a key role in negotiating a final agreement before adjournment.

Senate Approves Rule Change Allowing Children on Floor

After a lengthy—and, at times, emotional—debate on Wednesday, the Minnesota Senate voted 41–25 to change its rules to allow senators to bring their children onto the Senate floor during sessions. The proposal gained momentum after Senator Clare Oumou Verbeten was asked to leave the chamber with her infant, prompting a bipartisan push led by Senators Julia Coleman and Erin Maye Quade to make the workplace more accommodating to parents. Supporters argued the change reflects the realities of long legislative hours and limited childcare, sharing personal stories about balancing public service and parenting, while framing the move as a step toward making elected office more accessible. Opponents raised concerns about decorum, distractions, and fairness, suggesting alternatives such as nearby childcare or remote participation, and unsuccessfully proposed limits on children’s ages and a sunset provision. The final rule, which allows children of any age with leadership approval, took effect immediately, with supporters calling it overdue modernization and critics warning of potential impacts on chamber operations.

Repeal of César Chávez Day Receives Rare Unanimous Vote in House and Senate

Minnesota lawmakers are moving quickly to repeal the state’s César Chávez Day designation, reflecting one of the fastest-moving and most highest-profile issues of the 2026 session. Following recent allegations against Chávez, the House and Senate this week unanimously passed repeal legislation with leaders aiming to finalize the bill before the March 31 holiday. The bill now goes to Governor Tim Walz who is expected to sign the bill.

“Ghost Gun” Ban Stalls in House

HF 3407, a bill to ban “ghost guns,” was heard in the House Public Safety Finance and Policy Committee this week and failed on a 10-10 tie vote with DFLers voting in favor of the bill and Republicans voting against. The bill sought to prohibit the manufacture, possession, and transfer of firearms lacking serial numbers and to regulate unfinished frames and receivers. Proponents argue HF 3407 would enhance public safety by closing regulatory gaps around unserialized firearms, making weapons more traceable and limiting access to guns that can currently be obtained without background checks. Opponents contend the bill could infringe on Second Amendment rights and impose burdens on lawful gun owners and hobbyists, while raising concerns about enforceability and the regulation of digital design files. The Senate’s version of the “ghost guns” bill, SF 3661, passed the Judiciary Committee and is awaiting action on the Senate Floor.

The legislature will be on break next week, so stay tuned for the next Legi Top 5 on April 10, 2026.

This is an update to the client alert previously published on March 3, 2026

On March 19, 2026, a federal district court struck down FinCEN’s new “Residential Real Estate Rule” as beyond the scope of its authority under federal law.[1] The Rule, which FinCEN began enforcing March 1, requires certain professionals involved in real estate conveyances to submit detailed reports regarding non-financed transfers of residential real estate to legal entities or trusts. In Flowers Title Companies, LLC v. Bessent et al, the U.S. District Court for the Eastern District of Texas, Tyler Division, found that the final Rule violates FinCEN’s authority to require and maintain procedures for reporting suspicious transactions under the Bank Secrecy Act and Administrative Procedure Act. The Court called the government’s arguments “vague, conclusory and unpersuasive,” determining, among other things, that the Rule “declare[s] an entire category of residential real estate transactions to be ‘suspicious’ with no proof or sufficient explanation why.”[2] Based on its analysis, the Court universally vacated and set aside the Rule.[3]

What does this mean for the real estate industry and otherwise reportable transfers under the Rule?

In light of the Court’s decision, FinCEN is not currently enforcing the Rule or imposing liability on individuals who fail to file the required reports while the vacation order remains in force.[4] However, industry professionals can likely anticipate the government to appeal, which may result in a stay of the vacation order and reinstatement of the Rule. As such, appellate activity and FinCEN guidance over the next several weeks will continue to adapt as courts determine the validity of the Rule.

Potential “reporting persons” under the Rule may benefit from continuing to analyze and conduct potentially reportable transfers in line with the requirements of the Rule (other than submitting reports) in the event FinCEN successfully appeals the Court’s decision.

Winthrop & Weinstine’s Real Estate attorneys continue to track this topic as it evolves. For more information, feel free to reach out to our Real Estate team, or your regular Winthrop contact.

[1] See Flowers Title Companies, LLC v. Bessent et al, Case No. 6:2025cv00127 – Doc. 34 (E.D. Tex. 2026).

[2] Id. at 10–11 (original quotations).

[3] Id. at 17-18.

[4] Financial Crimes Enforcement Network, Residential Real Estate Rule, https://www.fincen.gov/rre (last visited Mar. 24, 2026).

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.

There has been a recent surge of lawsuits and regulatory actions against major banks and brokerages alleging that cash sweep programs pay unreasonably low rates while the banks/brokerages generate significant revenue. As is the typical trend, the largest banks and financial institutions have been targeted first—for example, Wells Fargo, Merrill Lynch, J.P. Morgan Chase, and Ameriprise—but opportunistic lawsuits against mid-size banks and brokerages will surely follow.

One recent decision that is noteworthy for financial institutions reviewing their cash sweep programs is the United States District Court for the District of Minnesota decision in Futo et al v. U.S. Bancorp et al. In Futo, the court held that the terms of, and disclosures contained in, the customers’ contracts reigned supreme. The Futo decision further reinforced the often-heard advice to banks and financial institutions to disclose, disclose, disclose and then disclose again. Making the required disclosures in the controlling contractual documents resulted in dismissal of all claims and the defendants saving millions in potential damages.

In April 2025, Adam Futo and Saul Ellis filed a complaint against U.S. Bancorp alleging that its subsidiary, U.S. Bancorp Investments, Inc. (“USBI”), shorted customers who participated in its cash sweep program. USBI offered its customers a number of brokerage accounts that allowed its customers to trade mutual funds, stocks, and securities. USBI offered those brokerage customers the option to also participate in USBI’s cash sweep program.

Under USBI’s cash sweep program, USBI continuously transfers uninvested cash balances in customers’ brokerage accounts into interest-bearing deposit accounts at U.S. Bank. Under the program, interest compounds daily on customer’s cash, and USBI pays interest to customers’ monthly. Mr. Futo and Mr. Ellis alleged that the average interest customers received was between 0.03% and 2.00%, whereas the average monthly federal funds rate was between 1.19% to 5.33%, and that other cash sweep programs were over 3.5%. Mr. Futo and Mr. Ellis alleged that Defendants’ below-market interest rates (BMIR) improperly benefited themselves while shorting the customers. Mr. Futo and Mr. Ellis’ complaint asserted a purported class action in which they estimated over $140 million in potential damages.

Such damages were avoided, and all claims dismissed, because the contract documents contained, among other things, the following disclosures:

• Notified customers of the option not to participate in the cash sweep program and to invest their account’s cash balances in products offered outside of the program;
• Explained that USBI received fees and benefits from the cash sweep program;
• Notified participants that the cash sweep vehicle “should not be viewed as a long-term investment option” and that money market funds carried “investment risk including the possible loss of the principal amount invested”;
• Stated that the interest rate available through the cash sweep program “may be higher or lower than the interests rates available” through other investment vehicles, and that “USBI has no obligation to ensure you receive a particular rate or the highest rate available.” The contract further stated that USBI “has no obligation to ensure you receive a particular rate [of interest] or the highest rate available.”; and
• Stipulated that “[W[hen [USBI] act[s] in a brokerage capacity, you will exercise your own independent judgment in determining whether to act on our recommendations. We are not your investment advisor or fiduciary unless we have expressly agreed with you in writing to act in such a capacity.”

While the court thoroughly analyzed each of Mr. Futo and Mr. Ellis’ seven claims—breach of fiduciary duty, negligence, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation and omission, violations of the Minnesota Consumer Fraud Act and the Minnesota Deceptive Trade Practices Act, and unjust enrichment—the Court repeatedly went back to the contract documents, held that the parties’ contract controlled, and determined that the claims must be dismissed in light of the terms, conditions, and disclosures contained in the parties’ contract. In short, in order to protect themselves, financial institutions should provide detailed risk disclosures (such as loss of principal, market fluctuations, and the potential superiority of other investment vehicles), clearly disclose the parameters of its fiduciary obligations, disclose obligations (or lack of obligations) regarding the rate of return, and disclose the benefits that the financial institutions receive.

At the end of the day, the safest path forward is to disclose, disclose, and disclose again because Courts look to the terms of the parties’ contract and those terms generally reign supreme.

House GOP Outlines Affordability Agenda for 2026 Session

Minnesota House Republican leaders held a press conference outlining their affordability priorities for the 2026 legislative session, focusing on targeted tax relief and cost-saving measures intended to ease the financial burden on families. Speaker Lisa Demuth and House Floor Leader Harry Niska emphasized plans to lower car tab and boat fees, repeal the retail delivery fee, and conform state taxes to recent federal changes to eliminate taxes on tips and overtime pay packages. They also highlighted making the state’s reinsurance program permanent and returning portions of the budget surplus to taxpayers. House DFLers have their own affordability agenda focused on a broad package aimed at lowering costs for families by addressing health care, child care, housing, energy and other everyday expenses.

Proposed Ban on Local Government NDAs Passes

The House Elections Committee held a hearing this week on H.F. 4077, Representative Emma Greenman’s (DFL-Minneapolis) bill to prohibit local governments from entering into non-disclosure agreements (NDAs) with private entities. Greenman said the bill would prevent “corporate secrecy from corrupting public processes” and would protect the public’s right to know how decisions are made.  She clarified that it would not interfere with legitimate trade secret protections. Testifiers from Hermantown, Pine Island, Farmington, North Mankato, Monticello and other communities described data center proposals negotiated under NDAs that they said limited public input, waived ordinances, restricted elected officials’ access to information, and eroded trust in local government. The bill passed out of committee on a voice vote.

Rental Assistance Plan Clears Senate

The Minnesota Senate debated a high-profile proposal to appropriate $40 million in one-time emergency rental assistance aimed at helping renters at risk of eviction amid rising housing instability. Majority DFLers said the bill is a targeted response to climbing eviction filings and a way to keep families housed by directing funds to counties, tribal governments and community programs. Republicans raised concerns about the source of the funds and questioned eligibility rules, including whether aid recipients should be required to prove legal immigration status. The Senate passed the bill by a 35-32 vote.

Gov. Walz DHS Transformation Plan Appears to be DOA

On Tuesday, Gov. Tim Walz announced a bold plan to transform the delivery of the state’s human services programs. According to a press release from his office, “The proposal would streamline Minnesota’s service delivery model, moving away from the complex, layered administration managed by a patchwork of counties, Managed Care Organizations, and state agencies to a single, centralized entity.” Following the announcement, several Republican legislators quickly denounced the plan, while DFLers largely remained quiet. Notably, Sen. John Hoffman (DFL), Chair of the Human Services Committee, admonished the Walz administration for announcing such significant changes without thorough consultation with legislative committees.

Tick-Tock

We are roughly one month into the 2026 legislative session, and just two weeks remain before the first committee deadline. While there had been speculation that Governor Walz would have announced his supplemental budget proposals this week, the rumor is now that it will happen early next week. As a reminder, here are the key dates for the remainder of session:

• March 19 – No official action due to Eid
• March 27 – First committee deadline
• March 28-Apri 6 – Legislative break
• April 17 – Final committee deadline
• May 18 – End of legislative session