On Monday, May 19, the state legislature adjourned with much of the state budget left undone. In order to complete their work before state funding runs out on June 30, legislative leaders and the governor quickly agreed to continue meeting with the goal of reaching deals on taxes, education, healthcare, transportation, other major spending jurisdictions. MFU’s legislative team has maintained a presence at the State Capitol, working to ensure that our priorities are included in a final budget deal.

The governor is empowered to call lawmakers back for a Special Session, which is expected as soon as a deal is reached.

“We’ll continue to do the work, and when the work’s ready, I’ll bring them back for a one-day special session and we’ll button things up,” said Gov. Walz on Monday.

In a bright spot of early agreement—and one day before the legislature was set to adjourn—the Minnesota House and Senate passed a new, two-year budget for agriculture programs (HF2446) on a broad bipartisan basis. Out of 201 legislators, only 12 legislators voted against the final package. See how the legislators voted below.

While there’s still work left to do on a state budget, family farmers, food businesses and others can be sure that agricultural programs will be funded through the next biennium.

The ag bill was negotiated by Senate Chair Aric Putnam, DFL-St. Cloud, and Co-Chairs Rep. Paul Anderson, R-Starbuck, and Rep. Rick Hansen, DFL-South St. Paul.

According to an agreement negotiated by legislative leaders and the governor, the package increases general fund investment in agricultural programs by $9 million over the next two years and $3 million in the following, which is notable given the long-term fiscal challenges facing the state.

“This is in stark contrast to what we’re seeing in Washington, D.C., where we’re still waiting on a new Farm Bill,” said Minnesota Farmers Union (MFU) President Gary Wertish in a press release following passage. “In Minnesota, lawmakers came together on a bipartisan basis to get a bill done and they did it on time. There’s still work to do on the state budget, but we’re grateful that farmers will have the certainty of knowing agricultural programs will be funded through the next two years.”

In addition to increased base funding for the Department of Agriculture (MDA), the Board of Animal Health (BAH), and the Agricultural Utilization Research Institute (AURI), the next two-year budget for agricultural programs includes:

• Over $2 million in new funding to expand local and regional markets, including:
  • $1.4 million to create a new Local Food Purchasing Assistance (LFPA) program to help organizations establish wholesale agreements with farmers to provide food to people in need.
  • $550,000 in additional funding for Farm to School and Early Care, helping farmers access new markets and ensuring young people have access to healthy, nutritious meals.
• New support for local and regional processing, including:
  • $1.5 million in additional state funding for meat inspections.
  • $100,000 in additional funding for meat processing grants, in addition to continued support for value-added grants which help meat, poultry, dairy, and other processors start up, expand, or modernize their facilities.
• Support for new and emerging farmers, including:
  • $500,000 in additional funding for Farm Business Management (FBM).
  • $500,000 in additional funding for Down Payment Assistance Grants, along with a change that will allow up to $20,000 per eligible farmer.
  • Continued funding for the Emerging Farmers Office (EFO) and farmland transition support through the Farm Advocate program.
• $200,000 in new funding for Farm Safety and Rural Mental Health to support MDA’s outreach and counseling services. This is in addition to continued base funding for Minnesota’s Rural Mental Health counselors.
• Continued funding for Farm Advocates to continue their work to support farmers, funded at $337,000 per year.
• Over $2 million in new funding for zoonotic disease preparedness, including an increase for the Board of Animal Health (BAH) and:
  • $1.5 million in new, one-time funding for the Ag Emergency Account, to ensure the state is well-prepared to respond quickly in the face of an outbreak of HPAI, H5N1, or another animal disease.
  • $400,000 in new funding for livestock Protect Grants to help poultry farmers install measures to prevent the transmission of avian influenza.
• Continued funding for Cooperative Development Grants, funded at up to $200,000 per year.
• Increased potential grant awards for small Livestock Investment Grant projects, increasing the state share of projects under $20,000 from 10 percent of project costs to 50 percent of project costs.
• $350,000 in additional funding for livestock depredation to compensate farmers and ranchers for depredation from wolves and elk.
• Continued funding for Soil Health Financial Assistance Grants.
• Continued funding for the Forever Green Initiative at the University of Minnesota to help develop new perennial and winter annual crops.
• Continued support for county fairs to help promote agriculture and enhance arts education.
• $1 million in new funding to control the spread of noxious weeds, through grants to county ag inspectors.
• $3 million in one-time funding to support First District Association in upgrading their wastewater treatment facilities to continue operating at full capacity and serving small and mid-sized dairies.

The bill also updates cottage food laws, creates a new license for milk marketers, gradually increases fees for some grain buyers to fund the inspection program, and boosts support for ‘limited land access farmers’ using the Beginning Farmer Tax Credit.

Though agriculture programs saw an increase in spending, belt tightening was required across state government and agriculture was no exception. In order to make room for other investments, this budget cut Green Fertilizer Grants by $3 million to $4 million, cut biofuels infrastructure grants by $500,000 down to $5.5 million, and cut $1 million from the previously appropriated DAIRI program, which is still awaiting an updated Farm Bill.

Bill funding AG’s office passes

Another bill the legislature passed before their Monday midnight deadline was the State and Local Government and Elections omnibus bill, which includes funding for the Attorney General’s Office. The legislation includes a $4 million increase in operating funding in the coming biennium (FY26-27) and a $3 million increase in FY28-29. While this funding is less than what Attorney General Keith Ellison had proposed to legislators, this budget will protect the progress that has been made in recent years. A significant increase in funding passed during the 2023 legislative session allowed Ellison to hire additional antitrust attorneys and establish a standalone Antitrust Division. This enhanced capacity has supported the office’s work to crack down on anticompetitive behavior impacting farmers and rural communities.

Working groups continue meeting

Once the legislature gaveled out, the Tax Committee was the first to resume public deliberations as a ‘working group’ on Tuesday night. Sen. Anne Rest, DFL-New Hope, chaired the meeting and put forward a Senate offer that included Sen. Putnam’s bill to lift the cap on total state funding for the Beginning Farmer Tax Credit. She also included the provision MFU has worked hard on in recent years to allow farmers on small acreages and cut flower farmers to participate in the Ag Homestead Tax Credit.

In their opening offer—and with new joint budget targets—the Senate dropped their proposal to pilot a $5 per acre tax credit for farms participating in the Minnesota Agricultural Water Quality Certification Program (MAWQCP). The Houses bill is more limited and doesn’t include these provisions.

If you have any questions, please reach out to Stu at (320) 232-3047 or stu@mfu.org.