After months of negotiations, the House has passed its version of the independent Office of the Inspector General (OIG) bill. SF 856, authored by Reps. Patti Anderson (R, Dellwood) and Matt Norris (DFL, Blaine) and the most high-profile proposal to address fraud in state programs this session, passed 127-5 on May 7.
The legislation would create a new independent office within Minnesota’s executive branch to strengthen oversight, transparency, and fraud prevention across state government programs. The office would have authority to investigate fraud, evaluate agency performance, and issue public reports — with a particular focus on public assistance programs such as WIC and food support.
SF 856 also establishes an Anti-Fraud and Waste Bureau within the OIG with statewide investigative and law enforcement authority. The Inspector General would be appointed by the governor from recommendations made by a legislative advisory commission and could only be removed for cause following a public hearing.
The proposal requires state agencies and nonprofit organizations to make fraud reporting tools more visible online and outlines procedures for referring credible fraud allegations to state officials and the legislative auditor. The bill would take effect Jan. 1, 2027, or upon federal approval.
WALZ STATE OF THE STATE ADDRESS
In his final State of the State address, Gov. Tim Walz reflected on his nearly eight years in office. He discussed major events that shaped his time as governor, including the COVID-19 pandemic, social unrest in 2020, and ongoing political divisions. He also acknowledged recent tragedies — including the loss of Speaker Melissa Hortman and her husband, and the shooting of Sen. John Hoffman and his wife. He stressed Minnesota’s resilience and the importance of communities coming together during difficult times.
The governor highlighted legislation passed during his time in office, particularly investments made in the areas of education, children, families and economic development, arguing these policies have helped move the state forward despite recent crises. He also addressed criticism over fraud in state programs, defending his administration’s response while expressing support for stronger oversight and accountability measures.
Walz outlined several priorities he hopes lawmakers will address before his term ends. These include expanding financial support for families through measures like the child tax credit, exploring new policies related to emerging technologies such as artificial intelligence, and continuing economic support for communities facing uncertainty.
SENATE PASSES FIREARMS BILL
Less than a year after the Annunciation Catholic Church Shooting, the Senate has passed a sweeping gun bill. It would restrict ghost firearms without serial numbers and binary triggers in addition to outlawing assault weapons and high-capacity magazines. It would also promote school safety programs and mental health services. On the floor on Monday, Republicans introduced an amendment that would have eliminated the proposed gun bans while keeping funding for school safety and mental health programs, but the amendment was not adopted. The bill passed along party lines, 34-33. The bill faces an uncertain path; the House, where the chamber is tied, is divided on gun policy.
DHS COMMISSIONER SHAKEUP
This week, Gov. Walz announced that Minnesota Department of Human Services (DHS) Commissioner Shireen Gandhi would no longer hold that post. The governor appointed John Connolly as acting commissioner.
Questions surrounding this leadership shakeup at DHS intensified this week after the newly-appointed temporary commissioner disclosed he will be on medical leave for the next month while undergoing treatment for colon cancer.
Gov. Walz appointed Connolly on Monday, replacing Gandhi just before her scheduled Senate confirmation hearing. Gandhi was reassigned to a deputy commissioner role focused on Medicaid oversight and fraud prevention. During Connolly’s absence, DHS said Gandhi and Deputy Commissioner Andrew Johnson will manage day-to-day agency operations.
The transition comes as DHS faces mounting scrutiny over fraud in public assistance programs, and federal Medicaid funding freezes. In an internal memo, Connolly said his priority is maintaining continuity and strengthening oversight of Medicaid programs while he undergoes treatment.
Republicans criticized the timing of the move, arguing it allowed the administration to avoid public accountability over DHS’s handling of fraud investigations. The Walz administration defended Gandhi’s continued role, saying she has played a key part in efforts to strengthen oversight and combat fraud within the agency. Senate Democrats also said they will continue pressing DHS leadership for answers regarding fraud prevention and misuse of public funds.
PERMANENT SCHOOL FUND
The Minnesota Permanent School Fund is a constitutionally established endowment, funded largely by revenue from school trust lands. Approximately 2.5 million acres were granted to the state at statehood to support public education. As stipulated in the state constitution, the fund’s earnings are distributed annually to school districts and charter schools on a per-pupil basis, while the trust lands themselves generate ongoing revenue through timber sales, mineral leases, and other uses managed by the state.
This week, the House and Senate passed bipartisan legislation (SF3593/HF3900) to place a constitutional amendment on the November 2026 ballot to change the distribution formula, which ultimately could mean increased payments to schools from the state’s Permanent School Fund. The House bill passed unanimously with no amendments, but it had a different path in the Senate. There, it was amended to require that any future statutory changes to the distribution formula be approved by a two-thirds vote in both bodies, then was passed 59-8. Because the House and Senate versions now differ, the two chambers will need to reconcile the bills before final passage.
It’s the final stretch of the 2026 legislation session and dynamics at the Capitol are still uncertain, as a tied House has stalled the traditional process of moving companion omnibus bills into conference committees. Legislators say the lack of alignment between chambers is making negotiations less predictable, with some raising concerns about a lack of coordination between both bodies.
At a recent press conference, Gov. Walz emphasized that he will not sign a budget that fails to address the state’s structural imbalance and emphasized a continued focus on fiscal responsibility in the final weeks of session. Leadership is expected to set joint budget targets soon, potentially around the fishing opener. Walz also noted ongoing discussions around HCMC funding outside the current budget framework, highlighted tensions between the House and Senate, and pointed to fraud prevention, shifting revenue streams, and property tax pressures as key issues shaping negotiations.
REVENUE AND ECONOMIC UPDATE
Minnesota’s fiscal outlook took a slight downturn in the latest update from Minnesota Management and Budget. April figures show revenues falling $182 million short of the February forecast, a 4.6% gap.
The bigger concern is the shifting economic outlook. Growth expectations for 2026 have been revised down to 2.1%, and projections for inflation, unemployment, and interest rates have all moved in less favorable directions. While a recession isn’t currently anticipated, the report signals that slower growth could raise the risk of an economic downturn, with the state’s outlook remaining vulnerable to changes in financial, fiscal, and trade conditions.
OFFICE OF INSPECTOR GENERAL
Several proposals have been put forward this year attempting to address fraud in state programs, the highest profile being a bill to establish an independent Office of the Inspector General. Early estimates suggest the watchdog program would cost about $15–16 million to launch and operate in its initial years. While there is bipartisan support for the concept, legislators are still debating the agency’s structure, authority, and overall cost.
The proposal is part of a wider effort to prevent future fraud, but disagreements could impact whether it is approved before the legislative session ends. While an OIG bill was passed with bipartisan support by the Senate last year, the journey in the House has been more difficult. The House version now has bipartisan authors, but a key disagreement between Democrats and Republicans is whether there should be a law enforcement division within the agency. Democrats have said this provision would be redundant because the MN Bureau of Criminal Apprehension already serves this purpose and expressed concerns over the price tag. Rep. Patti Anderson (R, Dellwood), the lead Republican co-author, stressed that having a law enforcement component is standard practice and essential to the proposal.
FRAUD BILLS PASSED
Legislators continued their focus on combating fraud in state programs on Monday with unanimous House passage of HF 4425. Sponsored by Rep. Andrew Myers (R, Tonka Bay), the bill extends the statute of limitations for Medical Assistance fraud and other theft of government funds from 6 to 10 years. Myers said the change reflects the complex, often multi-layered nature of fraud cases, which can take years to uncover. The bill passed 133-0 and is headed to the Senate.
The House also passed HF 3621 unanimously. This bill builds off legislation passed last year by expanding state agencies’ ability to withhold payments in suspected fraud cases by lowering the standard to a “credible allegation,” removing the 60-day limit, and applying it to both individuals and entities. It also allows cross-agency withholding, replaces formal appeals with agency reconsideration, and makes the authority permanent.
OMNIBUS BILLS
Here are the omnibus bills that have been passed off the floor of their respective bodies so far:
CONSTITUTIONAL AMENDMENT ON PERMANENT SCHOOL FUND DISTRIBUTION
The Minnesota Permanent School Fund is a constitutionally established endowment, funded largely by revenue from school trust lands, approximately 2.5 million acres granted to the state at statehood to support public education. The fund’s earnings are distributed, as stipulated in the constitution, annually to school districts and charter schools on a per-pupil basis, while the trust lands themselves generate ongoing revenue through timber sales, mineral leases, and other uses managed by the state.
The Minnesota Legislature is considering bipartisan legislation (SF3593/HF3900) to place a constitutional amendment on the November 2026 ballot to change the distribution formula, which ultimately could mean increased payments to schools from the state’s Permanent School Fund.
The bill has passed out of its required committees and is awaiting action by the full House and Senate. Once the House and Senate pass the legislation, the questions will be before the voters on the ballot in the November 2026 election.
IMPORTANT DATES
April 28: Gov. Tim Walz’s State of the State Address
May 9: Minnesota Fishing Opener
May 18: Adjournment of Legislative Session
HELPFUL LINKS TO FOLLOW ACTION AT THE STATE CAPITOL
LEGISLATORS RETURN AFTER BREAK, ENTERING FINAL STRETCH
Legislators returned to the Capitol this week following the Easter and Passover break and are now entering the final stretch of the 2026 session. With policy committee deadlines in the rearview mirror and just over a month until the May 18 adjournment, legislators now have a week to finish work on major finance bills ahead of the April 17 deadline. Attention has turned to assembling omnibus bills, though there is still uncertainty about whether agreements on supplemental budget and bonding bills will be reached this year.
BILLS SIGNED INTO LAW
As the session continues, a few bills have been signed into law by Gov. Tim Walz.
HF 3615 (Hanson, J.) extends the deadline for hemp-derived products testing allows lower-potency hemp edibles that don’t contain intoxication cannabinoids to be tested at any recognized laboratory by extending the expired laboratory testing requirements. This measure permits testing through May 31, 2027. This gives businesses more time to use out-of-state testing facilities.
SF 3623 (Johnson-Stewart) mandates that a vehicle must stop whenever a school bus’s red lights flash. irrespective of the extension of the stop signal arm. The law also includes a clause that says a school bus’s flashing amber lights alert any oncoming cars that it is halting and will shortly be flashing red lights.
HF 4541 (Perez-Vega) repeals “Cesar Chavez Day” after recent allegations of abuse committed by Chavez.
HF 3425 (Howard) allocates $9 million of remaining supportive housing program grants to address a funding gap with the federal Continuum of Care program. In late 2025, the Department of Housing and Urban Development (HUD) proposed changes to how funding is prioritized for the Continuum of Care program, raising concerns about whether current participants would continue receiving renewals. Legal challenges followed, and a court ordered HUD to maintain its previously announced funding priorities for 2024–2025. At the state level, Minnesota created a supportive housing program funded by the Minnesota Housing Finance Agency (MHFA).
FRAUD PREVENTION
Addressing fraud in state programs remains a central focus at the legislature, with growing bipartisan support for establishing a new Office of the Inspector General. While details are still being finalized, inclusion of funding in Gov. Walz’s supplemental budget proposal increases the likelihood the measure will get passed.
At the administrative level, Minnesota Management and Budget has launched a new public-facing reporting tool to make it easier to flag suspected fraud across public programs. The site directs users to the appropriate agency based on the type of concern, ranging from public program misuse to consumer fraud.
The rollout comes as legislators continue to discuss oversight efforts, with additional hearings expected on how agencies are implementing recommendations to prevent fraud and improve accountability.
ETHICS COMPLAINTS
House Speaker Lisa Demuth has removed Reps. Elliott Engen (R, Lino Lakes) and Walter Hudson (R, Albertville) from their committee assignments for the rest of the legislative session after Engen was arrested for driving under the influence late last month. Hudson was a passenger in his vehicle.
The House DFL filed an ethics complaint after Engen and Hudson left the House Education Finance committee hearing early to go to a bar, and consumed alcohol before floor session that evening. Under House rules, the complaint would be referred to the House Ethics Committee for review.
Republican House members have filed an ethics complaint against Rep. Alex Falconer (DFL, Eden Prairie) over an alleged conflict of interest related to outside employment with Republicans claiming that Falconer’s actions make him “effectively a legislator lobbyist.”
These ethics complaints must be resolved by the end of session and will add even more tension and political divide to the final stretch of session.
STATE OF THE STATE ADDRESS
Gov. Tim Walz will deliver his 2026 State of the State Address on April 28, 2026, during a joint House and Senate session.
The address will likely outline his final term priorities and will be his final State of the State Address.
IMPORTANT DATES
April 17: Third Committee Deadline
April 28: Gov. Tim Walz’s State of the State Address
May 18: Adjournment of Legislative Session
HELPFUL LINKS TO FOLLOW ACTION AT THE STATE CAPITOL
On March 17, Gov. Tim Walz released his 2026 budget recommendations.
Unlike a biennial budget, which is constitutionally required to pass during every odd-numbered year, this is a supplemental budget, which is optional. As a result, this proposal serves as the governor’s suggested roadmap and starting point for negotiations during the remainder of the legislative session. Here is a one-page summary document and one-page spreadsheet from the governor’s office. A more detailed 42-page “Accounts by Agency”document includes all budget items, as well as policy changes that carry no fiscal impact but remain part of the broader package.
In a press release, the governor’s office said the proposal “prioritizes lowering costs for middle-class families, helping Minnesotans through workforce disruptions caused by artificial intelligence, and responding to Operation Metro Surge, while making responsible cuts to continue Minnesota’s record of balanced budgets.”
An overview of key provisions follows.
Tax Relief & Economic Policy
Expand the Dependent Care Tax Credit by increasing maximum eligible expenses by $3,000 (one child) and $6,000 (two or more children under age 5)
Reduce the statewide sales tax rate by 0.075%, and expand it to include services like accounting, banking, and law
Establish a council to study the future AI economy
Implement a new social media tax on large technology companies
Response to “Operation Metro Surge”
Provide rental assistance for impacted individuals
Offer small business loans to businesses affected by the surge
Create a $10 million emergency fund to respond to future impacts
Public Safety & Gun Policy
Assault weapons ban
Close the “ghost gun” loophole
Enhance State Capitol security
Increase penalties for impersonating a police officer
Expand mental health and school-based safety resources
Fraud Prevention
Increase statewide fraud detection efforts
Modernize outdated IT systems at the Department of Human Services
Expand staffing in the Attorney General’s Medicaid Fraud Unit
The governor’s proposed budget aims to reduce projected state spending by $370 million in fiscal year 2029, cutting the structural deficit by nearly 20%. Under the proposal, the state would maintain an estimated $1.8 billion balance heading into the FY 2028–29 biennium.
The governor also noted the state is projected to carry forward a $3.7 billion balance in the current biennium and nearly $800 million in the next, while acknowledging that “tough choices” are necessary to maintain long-term fiscal stability. Much of his proposed savings come from cuts to long-term care and special education transportation funding.
LEGISLATIVE PATH FORWARD
At this stage, bill language has not yet been released, and all proposals must still move through the legislative process. Legislators are expected to use the governor’s proposal as a framework for negotiations during the last two months of the session.
IMPORTANT DATES
March 27, 2026: First and Second Committee Deadlines
March 27-April 7, 2026: Easter/Passover Break
April 17, 2026: Third Committee Deadline
May 18, 2026: Adjournment of Legislative Session
HELPFUL LINKS TO FOLLOW ACTION AT THE STATE CAPITOL
The newest budget forecast from the Minnesota Department of Budget and Management shows Minnesota’s budget outlook has improved amid significant near-term economic and fiscal uncertainty.
The FY 2026-27 projected balance is now $3.7 billion, $1.3 billion higher than November estimates. A slightly improved economic outlook drives a higher revenue forecast largely driven by more volatile sources of revenue. Spending growth outpaces revenue growth through projections for FY 2029.
The projected general fund balance for the FY 2028-29 biennium is now $377 million; however, a significant structural imbalance remains. Shifting policies at the federal level and missing or incomplete data due to recent federal government shutdowns introduce significant uncertainty to the projections.
This is the last substantial glimpse into state finances lawmakers will get before they ramp up their work in St. Paul.
The full report can be viewed online at the Department of Minnesota Management and Budget.
GOVERNOR INTRODUCES ANTI-FRAUD PROPOSALS
Last week, Gov. Tim Walz presented his proposals aimed at combating fraud in state programs. They focus on three main areas:
Better detection and oversight: A proposal to provide additional funding for the Managed Care Organizations (MCOs) and having staff within DHS dedicated to MCOs oversight. This also includes using technology to detect fraud earlier by using predictive analytics for pre- and post-payment review. Additionally, this includes ending appropriations to legislatively named grantees, with grants awarded through a competitive RFP process. It also proposes to add staff at Minnesota Management and Budget to independently review high-risk audit findings.
Strengthen Investigation and Enforcement Authority: This proposal would expand the Bureau of Criminal Apprehension’s (BCA) Financial Crimes and Fraud Unit and increase the number of investigators focused on Child Care Assistance Program fraud. It would also expand staffing within the Attorney General’s Medicaid Fraud Unit. In addition, the plan would expand the Responsible Contractor Law to disqualify individuals convicted of fraud involving public funds, preventing bad actors from creating new businesses to avoid accountability. The proposal would also expand subpoena authority related to identity theft and financial exploitation, broaden the definition of identity theft to include misuse of a person’s digital likeness, and increase the statute of limitations to seven years for certain financial crimes.
Increased Criminal Penalties: This proposal would increase penalties by 20% compared to existing theft laws and extend the statute of limitations for certain fraud-related crimes to seven years, beginning when fraud is discovered but no later than seven years after the crime occurred.
INDEPENDENT OFFICE OF INSPECTOR GENERAL
The bill to establish an independent Office of Inspector General, a significant proposal for addressing fraud in state programs, passed the Senate with bipartisan support last session, but was not passed by a tied House. While legislators from both sides of the aisle and the governor support the general concept of the proposal, disagreements over specifics are proving to be a hindrance. The proposal has continued to stall in the House this year.
The previously passed Senate version established an independent office with its own law enforcement division, but House Republicans and Democrats are divided on whether the office should have independent investigative authority or rely on the Minnesota Bureau of Criminal Apprehension’s financial crimes unit, with Republicans preferring the former and Democrats the latter.
Additional disputes with the bill involve the appointment of the Inspector General and funding levels for the office. The bill has failed to advance out of committee twice so far this session as negotiations continue.
FEDERAL MEDICAID PAUSE
Last week, Vice President J.D. Vance and CMS Administrator Dr. Mehmet Oz announced that the federal government would pause nearly $260 million in Medicaid payments to Minnesota as part of a crackdown on health care fraud. The state will have 60 days to provide evidence to CMS that Medicaid claims for the 1.2 million Minnesotans on Medicaid from the last quarter of 2025 are all legitimate for the funds to be unfrozen.
PERMANENT DHS COMMISSIONER
It was also announced last week that Interim DHS Commissioner Shireen Gandhi will stay on as permanent DHS Commissioner through the end of Gov. Walz’s term. Commissioner Gandhi took over in an interim capacity after Commissioner Jodi Harpstead, who served as DHS Commissioner for more than five-and-a-half years, resigned in January 2025. Commissioner Gandhi joined DHS in 2017 as Deputy Commissioner overseeing budget and financial operations.
IMPORTANT DATES
March 20, 2026: Eid Break
March 27, 2026: First and Second Committee Deadlines
March 27-April 7, 2026: Easter/Passover Break
April 17, 2026: Third Committee Deadline
May 18, 2026: Adjournment of Legislative Session
HELPFUL LINKS TO FOLLOW ACTION AT THE STATE CAPITOL
The 2026 legislative session convened Tuesday under somber circumstances, marking the first time in 20 years that a session has begun without Speaker Emerita Melissa Hortman. The day was dedicated to remembering Hortman and her husband Mark, and family dog Gilbert, who were assassinated last June.
Sen. John Hoffman (DFL, Champlin) was recognized during Tuesday’s ceremony as well. He and his wife, Yvette, were also targeted that night, but survived and are on the road to recovery.
Members of the House and Senate read a joint resolution honoring Hortman’s legislative accomplishments and reflecting on her family’s life, highlighting her empathy, leadership style, and personal passions. DFL Leader Zack Stephenson (DFL, Coon Rapids) described her as one of the most consequential Speakers in state history. House Speaker Lisa Demuth (R, Cold Spring) spoke about Hortman’s approach to leadership, saying, “Melissa’s brand of leadership brought people in instead of pushing people out.” Gov. Tim Walz reflected on his working relationship with Hortman and described her as a steady presence who brought humor, discipline and decency to her work.
As the ceremony concluded, members placed roses on Hortman’s desk, which will remain as a memorial throughout the session.
The Senate also recognized Sen. Bruce Anderson, who unexpectedly passed away in July.
CAUCUS PRIORITIES
On Monday, Republican and DFL leaders held press conferences to highlight their respective priorities this session.
Speaker Lisa Demuth (R, Cold Spring) and Leader Harry Niska (R, Ramsey), speaking for the Republican caucus, said their focus this year would be on combating fraud, making the state more affordable, and getting a bonding bill passed. HF1, authored by Rep. Patti Anderson (R, Dellwood) proposes to create an independent Office of the Inspector General to investigate state agencies for fraud. This is one of several bills Republicans are introducing to address fraud. To address affordability, they spoke about bills to establish a permanent reinsurance program to lower healthcare costs and a commission to investigate the rise of property taxes.
The DFL leadership focused on responding to the recent immigration enforcement surge in the state that resulted in the killing of two Minnesotans by federal agents. Proposed bills aim to curb the actions of federal agents — like requiring identification, prohibiting masks, staying away from childcare centers and schools, and restricting the use of tear gas and flash bangs, among others. DFL Leader Zack Stephenson (DFL, Coon Rapids) spoke about the opportunity for bipartisan support on this issue.
FEDERAL IMMIGRATION ENFORCEMENT MEASURE HEARD IN HOUSE EDUCATION POLICY COMMITTEE
The first bill addressing federal immigration enforcement in the state was heard in the House Education Policy committee on Wednesday. HF 3435, authored by Rep. Sydney Jordan (DFL, Minneapolis) would prevent federal agents from entering schools without providing identification, a statement of purpose, judicial warrant, and approval from a district’s superintendent. Under these conditions, agents would be restricted from areas of the school where students are present. The bill failed to pass out of committee on a 7-7 party line vote. Rep. Peggy Bennet (R, Albert Lea) said it is not fair to shift responsibility to schools, and that the solution is cooperation from state and local government so federal agents leave.
WEAPONS SCREENING AT THE CAPITOL
New security measures are now in place at the Capitol. Weapons screening checkpoints have been added at four entrances to the building. The screening technology detects potential threats and does not require visitors to remove jackets, shoes, or belts, and is safe for individuals with medical devices such as pacemakers.
The primary public entrances are the main doors beneath the Capitol steps. Additional screening locations are at the main entrance to the Minnesota Senate Building, the underground tunnels connecting to the Senate Building to the State capitol and in the tunnel between the Judicial Center and the State Capitol.
Individuals with conceal carry permits may still bring firearms into the Capitol — but must present both their permit and a valid ID during the screening process. Legislators are exempt from screening.
BUDGET
Minnesota Management and Budget (MMB) reported that January tax collections came in $513 million above projections, which is 17 percent higher than anticipated. This is the last revenue report before the release of the February budget forecast that will outline the larger picture of the state’s fiscal situation. The individual income tax was the main reason for this variance, at $479 million more than previous projections. Corporate and sales taxes remained steady. MMB officials caution that monthly revenue reports can fluctuate and should not be viewed as definitive indicators of long-term trends.
IMPORTANT DATES
March 20, 2026: Eid Break
March 27, 2026: First and Second Committee Deadlines
March 27-April 7, 2026: Easter/Passover Break
April 17, 2026: Third Committee Deadline
May 18, 2026: Adjournment of Legislative Session
HELPFUL LINKS TO FOLLOW ACTION AT THE STATE CAPITOL
The 2026 Legislative Session officially begins on February 17, less than two weeks away. Starting Monday, the House can start to prefile bills, which means House members can get bills dropped into the hopper — they will be formally introduced on the first day of session. Committees in both the House and Senate can start meeting, and legislative action will begin. With a tied House and narrow 34-33 DFL majority in the Senate, bipartisan cooperation will be needed to get anything passed this session. Potential issues the legislature will discuss include:
Public safety and safety at the Capitol.
Fraud, waste and abuse.
Responding to federal government budget cuts and freezes for low-income support programs.
KLOBUCHAR ANNOUNCES CANDIDACY FOR GOVERNOR
After Gov. Tim Walz’s decision not to seek reelection, U.S. Sen. Amy Klobuchar announced that she is entering the race for Minnesota governor. Klobuchar, elected in 2006, is currently serving her fourth term as Minnesota’s senior U.S. senator.
In her campaign announcement video, Klobuchar said, “These times call for leaders who can stand up… who are also willing to find common ground and fix things.”
Klobuchar was the first woman elected to the U.S. Senate from Minnesota. A lifelong Minnesotan, she is the granddaughter of a miner, the daughter of a sports journalist and a teacher, and was born in Plymouth. Prior to serving in the U.S. Senate, she was the Hennepin County Attorney. Klobuchar brings significant statewide name recognition and has already received endorsements from several state leaders.
Republican leaders have also responded to her entry. Minnesota House Speaker and Republican gubernatorial candidate Lisa Demuth said Klobuchar “cannot deliver the change that our state needs” and characterized her candidacy as a continuation of the Walz administration. Critics have also raised questions about how Klobuchar would address fraud in state programs.
Klobuchar’s entry reshapes the 2026 gubernatorial field and raises additional questions, including how the open Senate seat would be filled if she is elected governor. Under Minnesota law, the governor would appoint a temporary replacement until a special election is held to fill the remainder of her term.
SPECIAL ELECTIONS
Last week, two special elections were held to fill vacant House seats in District 64A and 47A. 64A was previously held by St. Paul Mayor Kaohly Her, vacant since she was elected mayor last fall. The race was won by DFL candidate Meg Luger-Nikolai with 95.28% of the vote. 47A has been vacant since Sen. Amanda Hemmingsen-Jaeger resigned to take her seat in the state Senate. The seat was won by DFL candidate Shelley Buck, running unopposed.
With the DFL retaining both seats, the House will remain at a 67-67 tie going into the 2026 legislative session.
CAUCUSES AND POLLS
Minnesota politics has always been local. It has also been the focal point of national news in recent months; something that Minnesotans certainly felt as they turned out in droves for precinct caucus night on Tuesday to make their voices heard on their preferred candidates. Republican caucus turnout was around 18,000 voters, while the DFL reported turnout was around 30,000.
The caucus straw polls, while not binding, give us a better picture of what the governor’s race may look like this year. U.S. Sen. Amy Klobuchar solidified her position as the DFL nominee with 79% of the vote. 16% were uncommitted and the rest backed other candidates.
Speaker Lisa Demuth received the most support in the Republican caucus with 32%, followed by businessman Kendall Qualls at 25% and MyPillow founder Mike Lindell at 18%. No other candidate exceeded 1,000 votes.
In addition to the caucus results, a recent KSTP poll indicates that voters have not yet decided who they prefer in the U.S. Senate race. On the DFL side, the largest share of respondents, 26%, said they were undecided. Among named candidates, Rep. Angie Craig received 20%, followed by Lt. Gov. Peggy Flanagan at 19%. Former broadcaster Michele Tafoya led Republican candidates at 13%. Other respondents selected former Senate candidate Royce White with 7%, and Tom Weiler with 5%.
WEAPONS SCREENING
The Senate (SP 8.50) and Governor’s Office (EO 26-02) have implemented new policies regarding weapons screening at the Capitol Complex. There will be weapons screening at entrances to the Capitol and Senate Building, with locations to be designated by the Rules committee. Those with a Permit to Carry will be asked to show their permit upon screening and will be allowed to carry inside both areas. Permit holders will not be allowed to carry in the Senate gallery, however.
RETIREMENTS
The list of legislative retirements continues to grow. Recently, long-serving Republicans Sen. Warren Limmer (the longest-serving Republican senator), Sen. Gary Dahms and Rep. Paul Torkelson all announced they will not seek reelection. On the DFL side, Senator Tou Xiong announced last month that he will retire as well. You can view the list of previous retirement announcements here.
IMPORTANT DATES
Feb. 17, 2026: Start of Legislative Session
March 20, 2026: Eid Break
March 27, 2026: First and Second Committee Deadlines
March 27-April 7, 2026: Easter/Passover Break
April 17, 2026: Third Committee Deadline
May 18, 2026: Adjournment of Legislative Session
EWALD GOVERNMENT RELATIONS TOOLKIT
The Ewald Government Relations team is sharing content along with our updates to help you better understand the legislative process and how to engage effectively. From decoding how the Legislature works to learning how to advocate for your priorities, these resources are designed to support your advocacy every step of the way.
This week’s article provides an overview on what to expect when meeting with legislators.
Engaging with government can feel intimidating. The process can be complex and difficult to navigate. However, advocacy is a vital part of shaping policies that impact you and your organization. Your voice matters!
In a new short video (less than 5 minutes), our team shares practical advocacy tips to help you communicate your priorities, build strong relationships with legislators, and make a real impact throughout the legislative session and beyond.
Gov. Tim Walz announced Monday that he will not seek a third term in office, ending his reelection campaign and shaking up the 2026 gubernatorial race. Walz said he made the decision so he could focus his remaining time as governor on issues including addressing fraud in state programs rather than running a political campaign, saying, “Every minute that I spend defending my own political interest would be a minute I can’t spend defending the people of Minnesota against the criminals who prey on our generosity and the cynics who want to prey on our differences. So I’ve decided to step out of this race, and I’ll let others worry about the election.” His announcement follows increased attention in recent months on fraud allegations in Minnesota’s state programs. Walz, a former teacher and member of Congress who later rose to national prominence as the 2024 Democratic vice-presidential nominee, did not announce future plans.
Walz’s decision opens the field for new candidates on the Democratic side. Potential Democratic contenders are now being discussed, including U.S. Sen. Amy Klobuchar, who has said she is considering a run.
Several Republicans have already entered the race, including House Speaker Lisa Demuth, Rep. Kristin Robbins, Kendall Qualls, and MyPillow founder Mike Lindell. 2022 Republican nominee former state senator Scott Jensen is also running.
Responses to Walz’s announcement largely reflected party divisions, with Democratic leaders highlighting his leadership and Republicans criticizing his record, particularly the fraud allegations.
NEW LAWS
Several new Minnesota laws take effect with the new year, introducing changes that affect employment, elections, public safety, and natural resources.
Among the most significant is the implementation of the state’s paid family and medical leave program, which allows eligible employees to take up to 12 weeks of paid leave for their own serious health condition or to care for a family member, and up to 12 weeks for the birth or adoption of a child, with a maximum of 20 weeks per year. Benefits will replace a portion of wages based on income, and the program will be funded through a payroll tax.
Additional new laws address election procedures, workplace standards, and insurance premium fraud prevention. Beginning in 2026, online absentee ballot applications will require expanded identification information, and new disclaimers will be required on non-government election mailings. Workplace laws will establish minimum requirements for rest and meal breaks, while changes to workers’ compensation rules aim to reduce fraud in the construction industry.
Other updates include allowing deer hunters additional firearm choices, revised watercraft surcharges and water-use permit fees, and a new legal process that allows courts to issue protective orders to help prevent the financial exploitation of vulnerable adults.
RURAL HEALTH TRANSFORMATION PROGRAM FUNDING
Minnesota has been awarded more than $193 million in first-year funding through the federal Rural Health Transformation Program to support health care delivery in rural communities across the state. The funding, provided by the Centers for Medicare & Medicaid Services, will support investments in technology, help improve outcomes for chronic conditions such as heart disease and diabetes, grow the rural health care workforce, and enhance the financial stability of rural providers. State health officials said the investment comes at a critical time for rural Minnesota and reflects extensive collaboration with local stakeholders, health systems, Tribes, and public health partners, with implementation expected to begin in early 2026. The federal Rural Health Transformation Program, included in H.R.1, allocates up to $50 billion nationwide over five years to offer support for rural communities impacted by a $137 billion reduction in federal Medicaid spending. More information can be found on the Minnesota Department of Health’s website.
TRUMP ADMINISTRATION WITHHOLDING FEDERAL FUNDS
On Tuesday, the Trump administration said it is withholding federal funding for several social safety net programs, including the Child Care Development Block Grant, Temporary Assistance for Needy Families, and the Social Services Block Grant, citing concerns about fraud. The administration has not released details of the claims yet, but alleges that California, Colorado, Illinois, Minnesota, and New York have improperly directed funds to people in the country illegally. Federal childcare assistance to Minnesota was suspended last month amid probes into suspected fraudulent activity at day care facilities. Minnesota has been facing snowballing reports of fraud in state programs, mostly notably in the Feeding Our Future case.
IMPORTANT DATES
Jan. 27, 2026: Special Election for House Districts 47A and 64A
Feb. 17, 2026: Start of Legislative Session
March 20, 2026 – Eid Break
March 27, 2026 – First and Second Committee Deadlines
March 27-April 7, 2026 – Easter/Passover Break
April 17, 2026 – Third Committee Deadline
May 18, 2026: Adjournment of Legislative Session
EWALD GOVERNMENT RELATIONS TOOLKIT
We are sharing content along with our updates to help you better understand the legislative process and how to engage effectively. From decoding how the Legislature works to learning how to advocate for your priorities, these resources are designed to support your advocacy every step of the way.
This week’s article provides an overview of how to testify at committee hearings.
On Dec. 4, Minnesota Management and Budget (MMB) released the November budget and economic forecast, the first look into the state’s fiscal health before the 2026 Legislative Session. The forecast showed that Minnesota is on a solid fiscal footing for the current budget cycle. This is largely due to higher revenue than expected throughout the fiscal year and a favorable year-end financial close, which leaves the state with an expected $2.465 billion surplus in the current biennium. Longer-term projections, however, are less favorable. Rising costs in the health care sector and expected sluggish economic growth are putting pressure on the state’s outlook, leading to an anticipated $2.960 billion budget shortfall in the FY 2028–29 biennium. Despite these future challenges, the state’s general fund reserves remain robust, holding steady at the statutory level of $3.771 billion.
During a press conference on Thursday, Gov. Tim Walz and legislative leadership spoke about the new budget forecast. Gov. Walz and DFL leadership emphasized that Minnesota’s financial position remains strong, with a budget surplus, reserves, and economic growth outpacing much of the country; results they attributed to responsible budgeting. They said the negative outlook is a product of national economic trends resulting from changes at the federal level — including HR1, which Congress passed this summer. Republican leaders criticized the budget outlook, saying the projected deficits come from excessive spending during the DFL trifecta and inadequate oversight of fraud by the Walz administration. Several questions were asked about the impact of fraud on the forecast, which MMB representatives said is not factored into the forecast. Both sides spoke on the fiscal restraints they face going into the 2026 session, and the importance of addressing fraud in state programs.
Gov. Walz and legislators will use the November Forecast to develop potential budget proposals for a supplemental budget. The legislature is not constitutionally required to enact a supplemental budget, even with a budget surplus.
SHIFTING POLITICAL LANDSCAPE
The legislative landscape has shifted significantly this year due to special elections, retirements, and 2026 candidacies. Following is a summary of the developments so far.
Sen. Matt Klein (DFL, Mendota Heights), Sen. Eric Pratt (R, Prior Lake) and Rep. Kaela Berg (DFL, Burnsville) are running for the Second Congressional District seat — which is currently held by U.S. Rep. Angie Craig, who is running for U.S. Senate.
Speaker Lisa Demuth (R, Cold Spring) and Rep. Kristin Robbins (R, Maple Grove) will vie for the Republican nomination for governor. Rep. Heather Keeler (DFL, Moorhead) is running for the Seventh Congressional District. Rep. Elliott Engen (R, White Bear Township) and Rep. Dan Wolgamott (DFL, St. Cloud) are running for State Auditor. Lastly, Rep. Cedrick Frazier (DFL, New Hope) is running for Hennepin County Attorney.
The list of legislative retirements continues to grow with the recent retirement announcements of Sen. Alice Mann (DFL-Edina) and Rep. Tim O’Driscoll (R, Sartell). Previously announced retirements include Sen. Steve Cwodzinski (DFL, Eden Prairie), Sen. Rich Draheim (R, Madison Lake), Sen. Jeff Howe (R, Rockville), Rep. Sandra Feist (DFL, New Brighton), Rep. Erin Koegel (DFL, Spring Lake Park), Sen. Sandy Pappas (DFL, St. Paul), Sen. Jim Carlson (DFL, Eagan), Sen. Ann Rest (DFL, New Hope), Sen. Jeremy Miller (R, Winona), Rep. Kelly Moller (DFL, Shoreview) and Rep. Ron Kresha (R, Little Falls).
Legislative retirements and changes can be found here.
Two special elections to fill vacant House seats in Districts 47A and 64A will take place on Jan. 27, 2026, following writs issued by Gov. Walz. The seats became vacant when Reps. Amanda Hemmingsen-Jaeger and Kaohly Vang Her resigned to assume new roles: Hemmingsen-Jaeger after winning a special election to the state Senate, and Her after being elected mayor of St. Paul. The balance of power in the House will remain an even 67–67 split if Democrats hold both seats when the Legislature returns on Feb. 17. Primaries will be held on Dec. 16.
There have also been committee leadership changes. Rep. Erin Koegel (DFL, Spring Lake Park) will be co-chair of the House Commerce Finance and Policy Committee following the resignation of Rep. Kaohly Her. Rep. Koegel served as co-chair of the House Transportation Committee, and will be succeeded in that role by Rep. Brad Tabke (DFL, Shakopee).
HOUSE RESEARCH OVERVIEWS
The Minnesota House Research Department provides nonpartisan and neutral research to legislators, staff, and the public. They recently published an updated overview of Minnesota’s Medical Assistance Program, which includes summaries of eligibility requirements, benefits, funding, and program spending. You can find the report here: Medical Assistance.
House Research also published a guide for School Finance in Minnesota, aimed at educating legislators. This report can be found here: School Finance.
IMPORTANT DATES
Dec. 16, 2025: Special Primary Elections for Districts 47A and 64A
Jan. 27, 2026: Special Election for House Districts 47A and 64A
Feb. 17, 2026: Start of Legislative Session
May 18, 2026: Adjournment of Legislative Session
EWALD GOVERNMENT RELATIONS TOOLKIT
We are sharing content along with our updates to help you better understand the legislative process and how to engage effectively. From decoding how the Legislature works to learning how to advocate for your priorities, these resources are designed to support your advocacy every step of the way.
This week’s article provides a basic overview of how the State Legislature functions.
