Minnesota lawmakers fail to finish budget on time, head toward special session
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The halls of the Capitol were quiet and the chambers nearly empty Tuesday morning after the 2025 legislative session concluded late Monday and overtime work was required to finish a new budget.
Informal working groups charged with crafting compromise budget bills around education, health, human services, energy, commerce, transportation and jobs were scheduled to meet to button up agreements that could advance through the almost evenly divided Legislature.
Asked what was on the agenda for the day, Republican House Speaker Lisa Demuth said “good conversations,” before heading into the governor’s cabinet room. That’s where legislative leaders met with chairs of those working groups to help break through any negotiation snags those groups hit at the end of session.
The first up was the working group for the environment and natural resources bill. That bill, members said, had been stymied by disagreements over making changes to permitting. The governor, along with several Republicans, are pushing to speed up and ease the permitting process — something they say will help businesses.
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The House GOP lead in that group, Rep. Josh Heintzman, said after the meeting that they’d found agreement on permitting.
“There have been four months of negotiations, and in just the last hour, a deal was reached,” he said. “So I believe that is kind of the kingpin in this discussion that needed to be resolved so the rest of the pieces could fall into place.”
Some members of those committees sipped coffee on the House floor and prepared to exchange offers between the DFL-led Senate and tied Minnesota House.
“I am not at all surprised that we're going to have a very brief — I hope — special session to finish this up,” Senate Majority Leader Erin Murphy said on MPR’s Morning Edition on Tuesday.
Less than 10 percent of the Minnesota budget fell into place prior to the end of the Legislature’s 2025 session, leaving lawmakers with plenty to sort out before they can complete their must-do task.
"Hard decisions still have to be made, and then we will come back when the governor calls us to finish up the work for Minnesotans and then get back into our districts,” House Speaker Demuth said after the final gavel fell just before midnight Monday.
Her DFL counterpart in a knotted-up House, Melissa Hortman, said she doesn’t expect a sudden turnaround given a Wednesday evening deadline imposed on the working groups to wrap up or have leadership step in.
“The earliest a special session then would start would be Thursday,” she said. “But more realistically, probably the earliest a special session would happen would be Friday, just at the pace people are going.”
Until they get finalized agreements, Gov. Tim Walz has indicated he won’t summon the full Legislature back for a special session to ratify them. He said urgency remains because parts of government would be closed if a new budget isn’t in place by July 1. And he said impacts of not putting a new budget in place could surface sooner.
“Once we get past June 1, we'll be obligated then to start looking at ‘What does it look like if you shut down,” Walz said. “That means we send out the layoff notices (to state employees) and things like that. That is not without a cost.”
After a legislative session that took a series of twists and turns, the session’s adjournment came with a whimper.
Not much happened throughout the day — leaving lots of downtime as the Legislature moved toward its certain special session. Some passed the countless hours of waiting by walking around inside the Capitol. Others kept busy with charades or even karaoke.
There was no sign that the biggest parts of the state budget were on the cusp of being sealed up. A school funding bill and a social service package for the poor, elderly and disabled were among those hung up by disputes over the details. Those two bills make up more than two-thirds of the budget.
Also unresolved are budget bills for economic development, higher education, energy industry oversight, state parks operations and pollution control. Those represent more than 90 percent of expected spending in the next budget.
Disagreements over changes to new worker benefit programs and who should pick new members of the University of Minnesota’s governing board stalled discussions over pieces of the state’s $66 billion-plus two-year budget.
Similar disputes have blown up budget deals in years past. Walz said it is now up to caucus leaders in the DFL-led Senate and tied House to bring home the bills.
“They have to socialize it with their members, and that's always a bit of a challenge,” Walz said.
Murphy, DFL-St. Paul, acknowledged that several members of her caucus opposed an effort to end public health insurance coverage for adult immigrants without legal status. That was a priority for Republicans.
Murphy also noted that other budget areas like education, health and energy had disagreements that top lawmakers and the governor would work to break through later this week if working group members couldn’t compromise.
“I think that the work of unsticking, where we have people stuck, is going to be the hard part of this next week, but that's what we have to do to get the budget put into place,” Murphy said Monday night.
Republican Sen. John Jasinski said the need for extra time is “frustrating” but a sign that actual give and take is involved this year after two years of Democrats getting most of what they wanted.
“I think the main thing is the other side has been used to having full control for two years and I think they need to realize that they need to compromise,” he said. “And I think that’s where a lot of things are sticking.”
Republicans could buck provisions of the deal that don’t call for adjusting programs that let workers accrue earned sick time and paid long-term leave for family care.
Demuth said those items are outside the budget deal but should be able to advance if they attract enough votes.
“If there is a desire to do that here in the Legislature, that could be part of things as we move forward,” she said. “I have no intent of going back on the global deal that was reached. We signed that in good faith. Hard decisions were made, and this is what we need to do.”
GOP lawmakers and some moderate Democrats want to revise the new time-off programs. That’s frozen talks over at least one budget bill. Republicans in the House also tried to bring up a bill creating a new office of the inspector general in the final hour of the legislative session but failed to get the votes needed to bring it up for consideration.
This session saw the creation of a new anti-fraud and state oversight committee in the House. GOP lawmakers said the state should take more aggressive measures to combat fraud and misuse of state funds. Democrats, meanwhile, pointed to provisions that passed ahead of the legislative deadline that could curb improper use of state funds.
Rather than turn to an immediate special session, legislative leaders decided it was better to let some members scatter for a few days while a smaller set of negotiators on health, taxes, education and energy conference committees finish their work.
A working group work plan was signed by the two leaders in the tied Minnesota House, Senate Leader Murphy and Walz. The work groups will be expected to hold meetings and operate within the confines of a prior budget agreement. They must get there by 5 p.m. Wednesday or risk intervention.
“Hopefully, soon enough we’ll have a special session,” Murphy said, adding, “It could be the case that we’re in special session by the end of this week or very early next week. Knock on wood.”
