Capitol update: Budget Talks, permitting reform and business mandates

By Doug Loon
President and CEO
Minnesota Chamber of Commerce

It’s Friday and we're preparing for Memorial Day weekend. But, the Legislature has not completed its work for the year. Earlier this week, the Legislature adjourned as they were required to do by the Constitution, but they did not complete their work as they didn't complete their budget. The budget is required this year, and the state must balance its budget and produce a new budget for the upcoming fiscal year and biennium, which will start on July 1. The Legislature is working to complete that. And a special session is expected to be reconvened by the governor and go through the remaining budget items yet-to-be-completed and do so in a timely way.

We don't see any type of partial or full shutdown of the government as a result of their inability to get their jobs done, but I'm optimistic that they will, because they need to, but also because we've seen progress in them being able to reach deals to compromise. That's what's required this year at the Legislature. The makeup of the Legislature this year is a 34-33 split in the Senate with one-vote majority held by the Democrats. On the House side, it's an equal split of 67-67 between the two parties. That requires them to reach compromise, and that is being accomplished. We believe that will produce meaningful results and a budget before they are able to wrap up. 

Here at the Chamber, we have our priorities. We want to see a balanced budget. We want to see accountability and transparency in how government operates here in Minnesota. At the same time, we want to see scaling back of some really tough business mandates that were put in place in 2023, earned sick and safe time in particular, and the soon-to-be-launched paid family and medical leave. That starts January 1st, 2026. 

At the same time, we don't want to see new taxes. Back in 2023 and 2024, the Legislature raised taxes by about $10 billion after spending all of the budget surplus and increasing spending about 37%. That has put the state in a tough fiscal position, which makes this year's balancing a budget really difficult, but I think obtainable along the way.

At the same time, we want to make sure that in addition to scaling back some mandates and making some other policy adjustments, that we also invest in the state's economy as well. And we are calling for the Legislature to produce a research and development tax credit.

Minnesota used to lead in the area of investing in innovation. It's something that has been a key driver of our economic success going back decades, but other states have done better than we have investing in R&D, and now Minnesota needs to catch up and we have the opportunity to do it this year. The governor put it in his budget and it's making progress at the Capitol so that we can regain our edge on innovating and producing new products through research and development and businesses large and small across the state that create new products and potentially new businesses that can stay and grow and contribute to our economic success into the future. 

I'm very pleased to report that we've made some significant progress on permitting reforms as part of our overall regulatory reform strategy here in the state. And if you know from previous podcasts, the Chamber's Foundation produced a report that showed that Minnesota's permitting process is incredibly slow and creates uncertainty in the marketplace and really drives away good investments in economic development projects, large industrial projects or investments in existing facilities that want to produce better environmental sustainability strategies for those businesses. 

We're seeing meaningful progress to enable the agencies to do their jobs better and some changes to the statutes to enable that to occur. That package of proposals coming out of the Chamber's report now look they may be part of a larger bill regarding the environment and get it to the governor's desk for his signature in the coming days. 

I want to thank the policymakers who have stood with business this session to produce bipartisan results that will set up our economy for success into the future. We have more work to do and we have work to do on compliance with all the new laws that have come out of this session in previous sessions. 

We also want to make make sure that we're exercising our rights to ensure that good policies are out passed that can foster economic growth and support the business community. Thank you to all the policymakers that did that. Thank you for all of our members who stood with us to make their story heard, make their voice heard this year during this important regular session and special session of the Legislature. Thanks for being with us. We'll check in with you next week's Minnesota Business Podcast. Have a great weekend and Memorial Day holiday.