Lawmakers returned to the Capitol on June 9 for a special session and completed their remaining work.

Gov. Tim Walz called the Legislature back to St. Paul for a special session on Monday, June 9, to finish the budget items left unresolved after the 2025 regular session adjourned on May 19. Since then, committee chairs and legislative leaders have worked to finalize the outstanding items.

During the one-day special session, the House and Senate passed 15 bills. The House adjourned at approximately 10:40 p.m. on June 9, and the Senate followed on June 10, just before 2 a.m. after completing its work.

This article provides high-level summaries of bills the League tracked during the session. More detailed information about the 2025 regular session and special session outcomes will be published in the 2025 Law Summaries, expected in late June or early July.

Bonding

Capital project funding includes a net of $700 million in new general obligation bonds, and $10.5 million of general fund appropriations. Most of the funding supports state facility preservation and construction, and programs that allocate funds to local governments for specific purposes.

• View details of the general obligation bonding bill: First Special Session HF 18 (pdf).
• View details of the general fund appropriations bill: First Special Session HF 17 (pdf).

Notable allocations include:

• Over $200 million for water and sewer infrastructure.
• $80 million for local road and bridge funding and local road wetland replacement.
• $26 million for public housing rehabilitation.

Taxes

The taxes omnibus bill, First Special Session HF 9 (pdf), increases state revenue by $118 million in the first biennium and $190 million in the second. Key revenue sources include:

• Repeal of an electricity exemption for data centers.
• Changes to the cannabis gross receipts tax.

The final bill does not reduce local government aid (LGA), despite earlier proposals. Key city-related provisions include:  

• Cannabis gross receipts tax change: The bill increases the tax rate from 10% to 15%, and repeals local government cannabis aid (LGCA). LGCA was to be distributed to cities based on the number of licensed cannabis retailers in each city. The increase in the tax rate and the repeal of LGCA is expected to raise $80 million in the first biennium and $132 million in the second.
• Tax increment financing (TIF): There are 19 special-local TIF provisions for 15 cites. It also extends temporary pooled increment authority by one year (from 2025 to 2026) for projects that help create and retain jobs.
• Low-income rental housing property tax treatment: A 2024 Minnesota Supreme Court decision ruled that certain low-income housing owned by qualifying nonprofit entities are exempt from property taxes. These properties fell under the 4(d) class rate, and the implication of this ruling meant tenants of the properties would be liable for personal property tax. This bill limits the exemption so rental housing is not eligible for the exemption, and tenants will not be liable for personal property taxes, as they will be paid by the building owner.
• Local sales tax authority: This bill does not make changes to the general local sales tax laws. The moratorium expired on May 31, 2025, and was not extended in this bill. The proposal to provide general authority to cities was also not included.
• Other: The bill provides LGA forgiveness for multiple cities, updates public finance statutes, and makes various smaller property tax changes.

Transportation

The transportation finance and policy omnibus bill, First Special Session HF 14 (pdf), contains no major changes to city street funding. The 2023 revenue increases remain intact, though cities may see small reductions in municipal state aid and Transportation Advancement Account payments due to lower-than-expected revenue collections.  

Greater Minnesota transit funding is reduced by $22 million for the biennium. A controversial provision that would have transferred $93 million in regional transportation sales tax revenue from metropolitan counties to the Metropolitan Council for bus rapid transit was removed shortly before the special session convened. DFL committee chairs expressed frustration with this change, saying the bill would hurt transit service in the metropolitan area.

The bill includes $3 million in Local Road Wetland Replacement funds, a program supported by cities and counties. (Notably, the bonding bill contains an additional $5 million for this program.)

The package does not include a delay sought by cities and counties in the implementation of greenhouse gas emissions that the Legislature passed in 2023, but it does contain a League-supported measure that requires the Minnesota Department of Transportation (MnDOT) to update its policy on local cost participation in trunk highway projects.

Jobs, labor, and economic development

The jobs, labor, and economic development omnibus bill, First Special Session SF 17 (pdf), sets budgets for the Department of Employment and Economic Development (DEED) and the Department of Labor and Industries (DLI). It has a net reduction of $28 million in fiscal years 2026-2027 and a net reduction of $40 million in fiscal years 2028-2029.

It include minor updates to Minnesota Paid Leave and changes to earned sick and safe time (ESST), which were originally passed into law in 2023. The change to Minnesota Paid Leave reduces the maximum premium levied by DEED from 1.2% of taxable wages to 1.1%. No other changes were agreed to by the House and Senate this year.

It also includes four policy changes to ESST that were agreed upon in the final days before the special session. The changes, effective Jan. 1, 2026, apply to:  

• Notices: Previously, employers could require notice from employees on the usage of ESST “as soon as practicable.” Notice can now be required as “reasonably required by the employer.”
• Documentation: Allows employers to require documentation if ESST is used for two or more consecutive scheduled workdays (it was previously three consecutive days).
• Replacement workers: Clarifies that ESST statute does not prohibit an employee from voluntarily seeking or trading shifts with a replacement worker to cover ESST hours used.
• Prorating frontloaded hours: Employers may advance ESST hours based on the an employee’s projected work hours for the remaining portion of the accrual year.

Environment

The environment and natural resources omnibus finance and policy omnibus bill, First Special Session SF 3 (pdf), largely continues prior spending levels with some operating adjustments. However, it does roughly double the water appropriation fees paid by city water systems to the Department of Natural Resources. Those fees had not been adjusted since 2008.

Commerce

The commerce omnibus bill, First Special Session HF 4 (pdf), includes a new framework for transitioning customers from traditional telephone service in areas where viable Voice Over Internet Protocol (VOIP) alternatives are available. Notably, the bill includes language negotiated by the League to ensure that telephone providers must plan to transition or maintain critical government lines that cannot transition to VOIP.

Other budget areas

The Legislature also passed budget bills for health and human services, education, higher education, and other areas including MinnesotaCare, data centers, and technical corrections.

Emergency medical services (EMS)

The health and human services omnibus bill, First Special Session HF 2 (pdf), includes EMS-related funding and program changes, including:

• $27.5 million for the biennium for EMS. The funds will be managed by the Minnesota Office of Emergency Medical Services (OEMS).
• Funding for ambulance attendant training and education.
• New programs and accounts including a rural uncompensated care pool payment program, an ambulance service training and staffing grant program, and an ambulance operating deficit grant program.

What’s next?

Gov. Tim Walz has 14 days (including Sundays) after the Legislature adjourns to sign or veto a bill. If the governor takes no action within these 14 days, the bill will become law. Gov. Walz has only vetoed one bill since taking office in 2019.

Now that the two-year state budget is complete, it is unlikely that there will be another special session called. The Legislature will return for the 2026 regular session on Feb. 17.

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