After a morning of storm shopping here in Northeastern South Dakota, I got home to learn of the Minnesota state budget deal and republished MinnPost's Budget breakthrough? MinnPost on what Gov. Walz and MNLeg did and didn’t accomplish.
Just as I was wrapping up that post, I read Minnesota Reformer's latest coverage of the deal, republished below.
My sympathies are with legislators who were out in the hall, pounded on the door and chanting “don’t kill immigrants” and “One Minnesota, right?”
From the Minnesota Reformer.
Here are five key takeaways from the Minnesota legislative leaders’ budget agreement
by Madison McVan and Michelle GriffithLegislative leaders and Gov. Tim Walz on Thursday, at a press conference in the Capitol’s golden-fixtured reception room, proudly announced a long-sought, bipartisan deal that would finally bring the Legislature one step closer to passing a two-year budget of roughly $66 or $67 billion, about five billion less compared to the current two-year cycle.
Progressive Democrats were outraged, however, shouting and banging on the door into the room from which they were barred entry, drowning out Walz and the leaders’ remarks about their hard work and friendly negotiations.
The lawmakers shouted “don’t kill immigrants” and “One Minnesota, right?” — a dig at the governor’s 2018 election slogan.
The source of their anger: The budget deal that would end access to state-subsidized health insurance — MinnesotaCare — for undocumented adults. Undocumented children would still be eligible for the program.
Because of the change to MinnesotaCare, progressive Democrats in the House and Senate have vowed to withhold their votes for the measure, which would be included in a health omnibus bill.
Lawmakers won’t vote up or down on the budget, however. They’ll vote on a series of bills funding various government operations, from schools to parks to health and social services.
The big question was whether the progressive Democrats — particularly in the 34-33 Democratic-controlled Senate — would block all government spending bills, or just the health bill that would repeal MinnesotaCare for undocumented people.
Rep. Cedric Frazier, DFL-New Hope, said the People of Color Indigenous Caucus is focused on voting down the MinnesotaCare provision in the health bill, while evaluating whether to vote against more of the budget over the next few days. If progressive Democrats were to vote no across the board, Senate Majority Leader Erin Murphy, DFL-St. Paul, would need some Republican votes, and it wasn’t clear Thursday that she had them.
Senate Minority Leader Mark Johnson, R-East Grand Forks, didn’t sign the budget agreement and said Thursday he wasn’t sure whether his caucus would vote for the budget agreement as written.
But in a statement, Johnson was more forceful: “While the final deal includes some needed reforms, it falls short of acknowledging we need bipartisan support to stop the harmful progressive policies hurting small businesses and working families. We still have a lot of work before the end of the session.”
On top of all this, time is running out: The legislative session ends on Monday, and the Minnesota Legislature will likely need a special session to pass its 2026-2027 budget.
Here are five key takeaways from Thursday’s budget deal announcement.
‘We are going to fight this ‘till the very end’
Members of the progressive POCI Caucus said they were blindsided by the deal to roll back MinnesotaCare for undocumented adults. At a press conference, about 30 Democratic lawmakers vowed they will not vote for it.
Sen. Alice Mann, DFL-Edina, said taking away health care for undocumented immigrants was Republicans’ top priority and accused Republicans of not caring if these Minnesotans die due to a lack of health care.
“What we have is a party who is willing to take away insulin from diabetics, inhalers from people with asthma, cancer treatments for people who just want a few more years with their children, all for political points, all for political gain,” Mann said. Republicans, she said, are telling immigrants that “they can suffer, they can die and we don’t care.”
“We are going to fight this ‘till the very end,” Mann said.
MinnesotaCare was created in 1992 to help close the gap in coverage for low-income working families who make more than the income threshold for Medicaid, which is called Medical Assistance in Minnesota.
In 2023, the DFL trifecta expanded the social safety net to include undocumented immigrants, beginning on Jan. 1 this year.
Enrollment has surpassed estimates, and Republicans argue undocumented people should be taken off the rolls to save money and discourage people from moving here for coverage.
The Department of Human Services says that its most recent data show that as of April 24, 20,187 undocumented people had enrolled in MinnesotaCare. The program is fee-for-service, meaning the state only pays claims after services are administered.
DHS says it has received 4,306 claims for service, costing Minnesota $3.9 million. This is nearly $1 million over what the state had projected by this date, according to DHS. Some of the undocumented immigrants on MinnesotaCare pay a monthly premium, like other residents who are on the program.
State Sen. Jordan Rasmusson, R-Fergus Falls, who has been at the forefront of the Republican effort to repeal the expansion of MinnesotaCare for undocumented people, celebrated the deal in a statement: “This change is a benefit for Minnesota taxpayers and is an acknowledgement that including all illegal immigrants in MinnesotaCare made us a magnet for those who broke the law to enter our country.”
That’s a strong signal that Republicans would vote for the health bill, helping push it over the finish line in the absence of progressive DFL votes.
Emilia Gonzalez Avalos, executive director of Unidos Minnesota, said that working immigrants in Minnesota have been used as human shields in Minnesota legislative leaders’ budget deal.
“This is not an issue that will magically go away at the end of session. A countdown has begun, and people that were receiving treatments for life-saving procedures now have through the end of the year,” Gonzalez Avalos said.
House Speaker Lisa Demuth, R-Cold Spring, said the compromise leaders came to isn’t heartless.
“It’s not a measure of being uncaring. It’s a fiscal issue, and there are still opportunities those Minnesotans that are here illegally can still join the private market,” Demuth said.
There’s still a lot we still don’t know
The budget agreement gives the topline numbers for spending increases and cuts by agency.
The biggest cuts over the next two years are to human services ($270 million), transportation ($115 million), and health ($98 million).
The agreement doesn’t specify how, exactly, those agencies will make the changes to revenue and spending.
For example, the budget agreement calls for $270 million in cuts to the Department of Human Services.
In the House, lawmakers want to shift costs to counties and reduce the number of people receiving extra payments to cover care for people with extraordinary needs. In the Senate, the DFL majority passed a bill that would instead cut funding to nursing homes. And Walz has his own ideas for how to slow down DHS spending.
It’s not clear what aspects of each plan — House, Senate and governor — were incorporated into the agreement. In a press conference Thursday, no one mentioned the specifics of the DHS portion of the bill.
Leaders did discuss how they plan to achieve some of the savings: ending MinnesotaCare for undocumented adults; repealing one part of a tax credit for data centers; and pushing some costs to counties.
Details of the budget cuts will trickle out as lawmakers meet in conference committees, taking aspects of the House and Senate versions of budget bills until they reach the target handed down to them by leadership.
Looming over the process is the expected cuts from the Republicans in Washington.
If Congress moves forward with a federal budget that would slash funding to states — which would likely happen in September just before federal government funding expires — lawmakers would have to reconvene to find even more cuts.
Stillwater prison to close in 2029
The budget agreement includes the closure of the state’s second-largest prison, in Stillwater.
The 111-year-old facility has a massive backlog of maintenance needs. The prison has issues with leaking, flooding, dangerously hot interior temperatures, and structural deterioration, according to a recent report on the crisis caused by a lack of resources in Minnesota prisons.
“Minnesota Correctional Facility-Stillwater needs such significant updating and investments that closing the facility must be seriously considered,” the Office of the Ombuds for Corrections wrote in the report.
The facility’s 1,100 residents must be relocated over the next four years, assuming the Legislature moves forward with the plan.
Soft cuts
There are some areas of the state budget — including education and some parts of DHS — that automatically increase each year to account for inflation.
In the areas of the budget where inflation adjustments aren’t automatic, however, lawmakers are opting not to give agencies a funding bump to cover their expected cost increases over the next two years.
That means widespread smaller cuts, beyond those specified in the targets, are expected at state agencies, as the cost of providing services — labor, supplies, transportation, etc. — increase with inflation, while the agency’s budget does not.
Demuth during the budget announcement highlighted a small change to paid leave that would “reduce the tax for businesses.” But the change would only reduce the payroll tax cap that the Department of Employment and Economic Development could implement each year from 1.2% to 1.1%.
DEED has said it would launch the program in January with a 0.88% payroll tax, which will be split between workers and their employer.
Education cuts down the road?
The budget agreement calls for no changes to education funding, except the mandatory inflation adjustment, over the next two years.
In the following two years, 2028 and 2029, the agreement calls for $420 million in cuts, which accounts for nearly a quarter of the savings projected in those years.
But the people who signed the agreement may not have the political power or will to follow through with those cuts. They would need to be approved by the 2027 Legislature. By 2027, Minnesota will have elected an entirely new House, Senate and governor.
While Walz and other leaders might run again, the political dynamics could be entirely different.
Photo: Sen. Alice Mann speaks as she and other members of the People of Color and Indigenous Caucus hold a press conference responding to the morning announcement of a budget deal Thursday, May 15, 2025 at the Minnesota State Capitol. (Photo by Nicole Neri/Minnesota Reformer).
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- Budget breakthrough? MinnPost on what Gov. Walz and MNLeg did and didn’t accomplish.
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