Minnesota Legislative Session 2026: Key Tax and Funding Measures Passed
The legislative session of 2026 concluded on May 18, with state lawmakers passing crucial budgetary and tax measures just before the constitutional deadline. Notably, a $705 million aid package for Hennepin County Medical Center and a significant reduction in vehicle license tab fees were dispatched to the governor's desk for approval.
The omnibus tax bill, HF 2435, stands out for its alignment with recent federal changes in 2025. It incorporates a one-time $125 million boost for the property tax refund program but excludes responses to local sales tax requests. This reflects a strategic shift towards easing tax burdens while maintaining comprehensive regulatory compliance.
Capital funding initiatives are divided into two key proposals. HF 719 authorizes $1.1835 billion through general obligation bonds, complemented by an additional $91.25 million from various sources. Meanwhile, HF 2484 directs $46.465 million from the general fund, focusing on city infrastructure needs and several earmarks targeting specific community projects.
In a bid to enhance public sector benefits, an omnibus pension reform bill has been signed into law. It allocates $15 million for the current budget and introduces an ongoing $25 million to modify retirement plans. Key amendments include a reduction in the cost-of-living adjustment waiting period for the Minnesota Public Employees Retirement Association (PERA) Police & Fire Plan and the establishment of a new retirement plan for local government probation officers and telecommunicators.
The pension bill further mandates, effective January 1, 2027, a 7.5% PERA contribution from public employers for reemployed retirees. This regulatory amendment eliminates previous exemptions, promoting equitable financial practices within public sector employment.
Housing policy advances with the enactment of Chapter 100, a $165 million finance and policy bill. This includes $100 million for housing infrastructure bonds and an additional $40 million for the Family Homeless Prevention and Assistance Program. The Minnesota Housing Finance Agency will allocate $25 million from fiscal year 2027 interest earnings to support the Workforce Housing Development Program and the Manufactured Home Park Infrastructure Grant Program.
The omnibus cannabis bill introduces regulatory enhancements to optimize supply chains for both medical and adult-use cannabis. This legislation introduces minor municipal operational changes and a new microbusiness license, enriching the existing regulatory framework. Governor Tim Walz, with the authority to sign or veto these bills within 14 days of session adjournment, has a singular veto record since taking office in 2019.