January 23, 2025

The Minnesota House of Representatives currently has 67 Republican and 66 DFL members due to one elected DFL member being ineligible due to residency. House DFL have refused to show up at the Capitol until the vacant seat is filled after the Supreme Court found Governor Walz called a special election prematurely. House Republicans moved forward electing Speaker Lisa Demuth, conducting committee meetings, and hiring staff without the DFL. Secretary of State Steve Simon and the House DFL have sued to determine whether a quorum existed on January 14th when session began. I’m confident the Supreme Court is getting fed up spending all their time on legislative issues.

Meanwhile, the Senate currently holds a 33-33 split of GOP-DFL due to DFL Senator Kari Dziedzic’s passing last December from ovarian cancer. A shared power agreement has been put in place until a special election on January 28th determines the majority party.

Governor Walz wasted no time presenting his proposed budget. The good news is that there is no increase in the state property tax general levy imposed on commercial/industrial property and there is a research and development 25% tax credit for $45 million in FY 26-27 & $40 million in FY 28-29. Governor Walz proposed reducing the state sales tax rate from 6.875% to 6.8% - though remember in the metro we have several other sales taxes added onto the state rate. However, Walz also recommended expanding sales tax to legal, accounting, brokerage, trust and some bank services. This would generate $185 million in FY 26-27 and $240 million in FY 28-29. Also included is establishing a Corporate Franchise Tax division and a Health Maintenance Organization (HMO) surcharge increase from .6% to 1.25%, both raising revenues. Bottom line—there are no overall savings to the consumer. Of his spending cuts proposed, most hit the disability community and other health & human services.

Back at the House, the DFL has introduced their priorities in their top 10 bills, which include reducing childcare costs, protecting paid family and medical leave, reducing housing costs through building homes to rent, stopping out-of-state corporate home ownership & stopping landlords from price fixing, protecting worker rights, and investing in clean energy, water & infrastructure. View the House DFL session priorities »

The House Republicans’ priorities are focused on combatting fraud, a constitutional amendment returning a portion of tax surpluses to the taxpayer, no tax on social security, environmental permitting reform, and others. View bills introduced by the House Republicans »

It will be a challenging yet respite year at the Capitol. Along with the dysfunction, the State Office Building is under a two-year, $550 million renovation and the House has been relocated to the Centennial building where most believe ghosts preside. Lucky for us we have Donovan Hurd and David Johnson who are our ghost busters. Who knows, this could be the next University Challenge site!

Roz Peterson
Public Policy Director | NAIOP Minnesota
roz@naiopmn.org | (612) 708-5281