$1.24 billion capital investment law funds projects statewide, reduces car tab fees for a year

A new law will fund capital investment projects across the state focusing on transportation, public facilities authority and employment and economic development projects.

It also contains language for a onetime temporary car tab fee reduction and a Fiscal Year 2027 transfer of $254 million from the General Fund to the Highway User Tax Distribution Fund for this purpose.

Sponsored by Rep. Mary Franson (R-Alexandria) and Sen. Sandra Pappas (DFL-St. Paul), the law took effect May 28, 2026, unless noted.

[MORE: View the spreadsheet]

HF719*/SF390/CH130

Transportation

The law appropriates nearly $176.32 million for transportation projects which includes $99 million in grants to municipalities and counties for road improvements, interchange projects and reconstruction, $47 million for local road improvement fund grants and $25 million for local bridge replacement programs.

Employment and Economic Development

The law appropriates $135.4 million to the Department of Employment and Economic Development, mostly for 28 grants to political subdivisions. Funding includes $40 million for renovations to the Roy Wilkins Auditorium in St. Paul, $10 million for a skilled nursing facility in Mahnomen, $4.15 million for a South St. Paul aquatic facility, $3.6 million to construct a Minnesota Latino Museum in St. Paul, $3 million for a Mississippi Riverwalk Connection Project in St. Cloud, and $800,000 for improvements to a public works building in Osseo.

Water

The law appropriates $409.01 million for the Public Facilities Authority, including $30 million for drinking water grants, $26 million for wastewater projects, $19 million to match federal grants for the clean water revolving fund, $17 million for the emerging contaminants grant program and $15 million for lead service line replacement.

The law also appropriates $216 million across 67 grants to political subdivisions for projects including $17.5 million for a water treatment plant in Hastings, $13.22 for a sanitary sewer expansion in Rochester, $13 million for underground sanitary sewer infrastructure improvements under West Seventh Street/Trunk Highway 5 in St. Paul, $12.36 million for a structural liner along 2.6 miles of a 36-inch water main in Minneapolis and $12 million for Phase I of a new wastewater treatment facility in Goodhue County.

Education

The University of Minnesota will receive $40 million for asset preservation and $35 million for construction of a campus center on the St. Paul campus. Minnesota State is to receive $69.8 million: $64.61 million for asset preservation, $4 million for Phase 2 of capital improvements at Alexandria Technical and Community College, and $1.2 million for renovation of a gymnasium at Southwest Minnesota State University.

Construction of an education learning center in East Grand Forks to house a regional educational program for students with autism, cognitive disabilities, emotional and behavioral disorders, and other students with specific educational needs is funded with $6.5 million.

The law also provides $1.7 million for asset preservation at the Minnesota state academies and $1.3 million for Perpich Center for Arts Education asset preservation.

Department of Natural Resources

Of the $79.4 million for the Department of Natural Resources, $30 million is for asset preservation; $19.84 million goes to the state’s flood hazard mitigation grant assistance program, including $10 million for a flood mitigation infrastructure project in Moorhead; $5.6 million for Coon Rapids Dam improvements; almost $4.7 million for operational and safety improvements to the Rum River Dam in Anoka; $3.5 million is for reforestation; $3 million is for betterment of DNR buildings; $2 million each for upgrades at the Brainerd airport to support the state’s emergency response, state trail renovation, constructing a paved trail segment of the Cuyana Lakes State Trail, extending the Root River State Trail from Preston to Carimona, and constructing the rehabilitation of the historic Forestville Bridge; $840,000 for design of flood hazard mitigation projects in the Interstate 35W corridor; and $350,000 to construct a jetty and bank stabilization improvements upstream of Mississippi crossings in Champlin.

Other funding includes:

• $77 million to veterans affairs: $45.1 million for renovations at the Minnesota Veterans Home in Hastings; $17.2 million to renovate Minnesota Veterans home Building 16 in Minneapolis, and $15 million for asset preservation at the state’s veterans homes and veterans cemeteries;

• $57.83 million to the Metropolitan Council, including $15 million for the inflow and infiltration grant program and $10 million for the Metropolitan Regional Parks and Trails Grant Program, and $27.83 million for political subdivision grants that include $9.35 million for a new big cats and African animal exhibit at Como Zoo and $6 million to equip improvements at North Commons park in Minneapolis;

• $52.14 million for the Department of Corrections, including $39.21 million for asset preservation and $10.71 million to expand vocational programming space at the Faribault facility;

• $23 million to direct care and treatment asset preservation;

• $19 million for public safety-related grants to political subdivisions including Lake of the Woods County for law enforcement and government facilities and the City of Mendota Heights for a public safety and city hall facility;

• $17.5 million for public housing rehabilitation;

• $12.01 million to the Pollution Control Agency: $10.51 million for a solid waste capital assistance program and $1.5 million for the statewide drinking water contamination mitigation program;

• $10 million for newly created emergency shelter facility capital grants;

• $10 million for the Capital Asset Preservation and Replacement Account;

• $9 million for asset preservation and betterments to infrastructure and exhibits at the Minnesota Zoo;

• $5.8 million for military affairs: $3.5 million for a new hangar at the Duluth airport in support of the 148th Fighter Wing and $2.3 million in asset preservation;

• $5 million for historic sites asset preservation;

• $4.5 million for the local government roads wetland replacement program;

• $4.5 million for asset preservation at the National Sports Center;

• $2 million for the Reinvest in Minnesota Reserve Program;

• $2 million for library construction grants;

• $800,000 for Capitol Area trees; and

• $750,000 for Mighty Ducks grants.

A handful of policy provisions are in the law, including removal of a requirement from a 2023 law that an 8-foot perimeter fence and security controls are not required to be built at the Bureau of Criminal Apprehension Maryland Building site. This takes effect July 1, 2026.

Also effective that day, the state must convey for no consideration all state-owned land within the Cloquet Forestry Center to the University of Minnesota. A $1.3 million Fiscal Year 2027 General Fund appropriation “is to prepay and defease any outstanding state general obligation bonds used for improvements and betterments at the University of Minnesota Cloquet Forestry Center, and other associated financing costs to facilitate the university's goal of returning this land to the Fond du Lac Band of Lake Superior Chippewa.

An emergency shelter facility account is created in the bond proceeds fund, effective July 1, 2026. Money in the account is appropriated to the Department of Human Services to make grants for projects to improve or expand emergency shelter facility options by:

• renovating existing facilities not currently operating as emergency shelter facilities;

• renovating existing emergency shelter facilities, including major projects that address an accumulation of deferred maintenance or repair or replacement of mechanical, electrical, and safety systems and components in danger of failure;

• adding additional emergency shelter facility beds through acquisition and construction of new emergency shelter facilities; and

• improving the safety, sanitation, accessibility, and habitability of existing emergency shelter facilities,

A grant can pay for 100% of total project capital expenditures or a specified project phase, up to $7 million per project. At least 40% must be awarded to Greater Minnesota projects.

HF0719* / SF0390 / CH130