The Minnesota Legislature held a special session on June 9 to finalize the state’s budget for Fiscal Years 2026-2027. The session concluded early on June 10 after both legislative chambers passed all necessary budget bills.
The new budget totals approximately $66 billion, down from the previous cycle’s $72 billion. Despite an earlier surplus of $18 billion, projections now indicate a potential deficit of $6 billion for FY 2028-2029. The final agreement projects a $1.9 billion surplus by the end of FY 2026-2027 and reduces the projected deficit to about $2.2 billion for FY 2028-2029.
A significant measure passed was a $700 million Capital Investment bill, requiring a super-majority vote due to its funding through state debt.
Efforts were made to modify the Paid Family and Medical Leave (PFML) program, with only a reduction in payroll tax cap passing. The Earned Sick and Safe Time (ESST) mandate saw several changes, including adjustments in notice requirements and documentation standards effective August 1, 2025.
Break time requirements were updated to specify rest breaks within every four hours worked and meal breaks for shifts over six hours starting January 1, 2026. Proposed penalties were removed from these provisions.
A proposal to raise the minimum wage to $20 per hour by August 1, 2029, did not pass. Similarly, efforts to provide unemployment benefits for striking workers failed.
Modifications were made regarding products containing PFAS and lead keys compliance deadlines extended until July 1, 2028.
The Tax Bill included accelerated sales tax payment provisions but excluded expansions like taxing services or increasing corporate franchise taxes. Funding was secured for reinsurance programs for plan years 2026 and 2027 using existing funds and federal contributions.
Some health-related proposals such as provider tax increases or mandates defrayal did not pass. However, authority related to public option waivers was repealed in the Health and Human Services Omnibus bill.
