Walz, legislative leaders strike budget deal including HCMC rescue, $1.2 billion infrastructure package

It may have taken until four days remain in the Legislative session, but legislators now know what budget targets they must reach to make the math work on the last bills of the biennium.

On Wednesday evening, House and Senate leaders and Gov. Tim Walz came to agreement on a supplemental budget framework that includes funding to keep Hennepin County Medical Center in operation, provides property tax relief, and modernizes the technology that helps administer the state’s human services programs.

The agreement also includes fraud-fighting measures, temporary fee reductions on vehicle registrations, and a $1.2 billion bonding bill.

“This agreement reflects the disciplined, fiscally responsible approach Minnesotans expect,” Walz said in a statement. “We are keeping a balanced budget, making targeted reductions, and focusing every dollar on core priorities: fiscal sustainability, critical infrastructure, and the health and wellbeing of our communities.”

Details will need to be worked out by legislators, but the nearly $660 million agreement calls for $205 million in immediate stabilization funding for HCMC and up to $500 million for a reserve account that could come to include other hospitals around the state dealing with issues of uncompensated care.

The agreement also directs $125 million toward a 12% increase in homestead tax credit refunds, payable for taxes due in 2026.

“While this certainly doesn't include everything House DFLers wanted, it is a strong step forward on important issues while working in divided government,” said House DFL Caucus Leader Zack Stephenson (DFL-Coon Rapids). “Providing certainty and stability for HCMC was a necessity.”

The deal also calls for a quarter-billion-dollar cut to vehicle registration fees this year, according to Senate Minority Leader Mark Johnson (R-East Grand Forks), who was not among the leaders who signed the agreement.

“Our caucus has fought all session long for car tab relief, property tax cuts, and meaningful anti-fraud measures,” said House Speaker Lisa Demuth (R-Cold Spring). “This budget delivers that, along with help for rural and critical access hospitals across the state and relief for our counties. … This gives that affordability relief for Minnesotans that people have been desperate for.” 

While happy that the leaders came to agreement, Senate Majority Leader Erin Murphy (DFL-St. Paul) rued what was left out of the pact.

“There are things that we are leaving behind strictly because of politics,” she said, listing small business relief, low-income rent and energy assistance, rural emergency medical services stabilization, a social media data collection tax, a manufactured home bill of rights, and banning private equity from buying nursing homes and single-family housing.

Murphy also expressed frustration with the process that brought the deal together.

“Over the years, and especially in the last eight, there has been an increasing number of issues that are being resolved in cabinet meetings,” she said, adding that she believes such negotiations should take place in conference committees and in public.

“I am insisting with the new governor that we set up a new framework because this does nothing for the people of Minnesota.”

— Session Daily Editor Mike Cook and writers Graham Johnson and Winter Keefer contributed to this story.