The legislature has just 10 full days left until they are constitutionally required to adjourn on Monday, May 19. Competing House and Senate omnibus proposals for taxes, healthcare and energy are still advancing to first passage, while others including agriculture are awaiting conference committee. On the federal level, a delegation from MFU is just returned from a Week of Action, meeting with lawmakers in Washington about the need for a new farm bill. As always and through the final days of the legislative session, we’re working hard to ensure that our grassroots policies are reflected in a final deal.

In Minnesota, with the end of session close-at-hand, legislative leaders and the governor are continuing to meet to define a shared budget framework, including joint spending targets for each conference committee. While some budgets—like agriculture—are a relatively small part of that global deal, it’s unlikely we’ll see any of those numbers until there’s full agreement on the bigger finance pieces. Possibly chief among them is how much to cut spending in fiscal years 2028 and 2029 in order to cut a projected deficit.

According to the latest estimates, this biennium the state has a narrow $456 million surplus and next the state is set to be short an estimated $6 billion.

Quoted in MPR yesterday, Gov. Walz shared that his measures to manage the projected shortfall—cuts in social service spending and ways to increase revenue—are sticking points. He said it’s still “too early to say . . . But you can read the writing on the wall.”

The drop dead deadline for the state to approve a new budget and avert a government shutdown is June 30.

While we continue to wait on a global deal—newly this session defined through a four-way negotiation that includes both caucuses in the tied Minnesota House—lawmakers have continued to release omnibus bills and move them off the House and Senate floor.

First, the House and Senate released their omnibus tax proposals this week. These large, catch-all tax proposals didn’t need to meet committee deadlines and ultimately need to balance against spending in every other jurisdiction. They’re a huge piece of the puzzle.

In the House, co-Chairs Greg Davids, R-Preston, and Aisha Gomez, DFL-Minneapolis, released a limited tax deal that they shared minimized the erosion of the tax base, avoided shifting costs onto local governments and counties, and cuts $80 million dollars from the state budget. With a limited focus and more complex negotiations, their budget didn’t include any of the bills MFU supported in committee this session.

To close the meeting, Co-Chair Davids named the official tax bill song—the Beatles’ “We Can Work it Out.” Co-Chair Gomez replied with a lyric from the song, “life is very short and there’s no time for fussing and fighting, my friend.” Like others, this House bill was a compromise and is now moving for approval by the full House.

Then late Tuesday night, Senate Tax Chair Anne Rest, DFL-New Hope, released a tax bill that was far more extensive—both in the number of proposals and in the amount of new revenue to pay for them. In her statement, she highlighted what this bill will do for farmers across the state. And indeed, she not only heard from MFU members on priority issues throughout session, but also took action make sure our priorities were reflected in the final bill.

“This is a forward-looking bill that responds to the needs of Minnesota farm families,” said MFU President Gary Wertish in a letter to committee members. “We hope it earns the committee’s full support.”

As outlined in our letter, the Senate Tax bill includes Sen. Aric Putnam’s, DFL-St. Cloud, proposal to lift the cap on total state funding for the Beginning Farmer Tax Credit, which will ensure that beginning farmers can rely on this tax credit to negotiate deals for renting or purchasing, equipment, or livestock, helping more Minnesotans build a life in agriculture. Due to lack of funding and for the first time since establishing the credit in 2017, a large percentage of farmers were turned away from the program last year. This year, the Department ran out of funding in January.

“Lifting the cap as in your bill and helping more new farmers get on the land is a win not just for those families, but also our communities and state,” reads a letter MFU led with 21 other farm and agriculture organizations who support this change. “Beginning farmers often mean new businesses in rural communities, more money spent at main street, and new kids in rural schools.”

The bill also expands the Agricultural Homestead Tax Credit to those farming small acreages, a proposal MFU has worked hard on with bill author Sen. Putnam. Combined with a proposal from Sen. Steve Drazkowski, R-Mazeppa, to add floriculture, this will help more small, beginning, and emerging farmers build their farm businesses. In 2023, the legislature expanded this credit to keep pace with skyrocketing land values and help family farmers retain their land—a move MFU strongly supported. Unfortunately, very small farmers operating on less than 11 acres are often unable to benefit.

This proposal will rectify that inequity while establishing new safeguards to ensure that the tax credit goes to farmers who are genuinely building farm businesses. Importantly under the new compromise language farmers would need to demonstrate at least $20,000 in gross income on their Schedule F in the previous year to quality. This ensured key support from the Association of Minnesota Counties who included support for this provision in their written comments to the committee.

Beyond targeted property tax relief, this will help ensure that small farmers are zoned correctly and all with a negligible impact to revenue. This has been a big deal for Allie Kuppenbender and Tony Lent, new MFU members who are building an impressive cut flower business in the Zumbro River Valley. You can read more about what this change would mean for them here.

Also related to Southeast Minnesota, the Senate Tax Bill includes Sen. Drazkowski’s proposal to pilot a new, $5-per-acre property tax credit for farms enrolled in the Minnesota Agriculture Water Quality Certification Program (MAWQCP) in Southeast Minnesota.

“MAWQCP is a valued and respected partner . . .  because they employ a wholistic approach, working with farmers on a case-by-case basis to identify risks to water quality and then defining a plan for addressing those risks,” Wertish wrote in his comments to the committee citing that this could encourage more farmers to participate and signaling our support for expanding this type of investment in voluntary conservation across the state.

In addition to many other agriculture related proposals, the Senate Tax Bill provides additional support to Soil and Water Conservation Districts through a local government aid style program. You can find a county-by-county analysis of that proposed investment here.

And finally, the bill renews and updates the Sustainable Aviation Fuel tax credit. Led by Chair Rest, this includes new compromise MFU and other agriculture groups have worked on with environmental groups related to barring foreign feedstocks, addressing land-use change, and defining qualifying use of green hydrogen.

In order to fund these investments, the Senate tax omnibus proposes raising revenue, including by taxing social media companies that harvest and sell user data—the first of its kind.

“We could be a model for the rest of the country, and no Minnesotans themselves are not going to be taxed by this,” said Chair Rest as quoted by MPR. “Companies have been taking our data, our personal data, for years, and we haven’t charged them to do that at all. This is a way to charge them as kind of their fair share.”

In all—and particularly given the difficult financial situation for the state—the bill is an exceptional win for MFU and agriculture more broadly and we’ll be working to ensure these provisions make their way into a final tax deal.

Speaking of agriculture, the agriculture bills are scheduled for a first conference committee tomorrow at 9:30 a.m.. Absent a joint budget target, they can’t reconcile the $17 million difference between their budget targets, but they can walk through the bills and prepare for those negotiations.

For agriculture, Senate conferees are:

• Chair Aric Putnam, DFL-St. Cloud
• Vice Chair Rob Kupec, DFL-Moorhead
• Ranking Member Torrey Westrom, R-Elbow Lake

House conferees are:

• Co-Chair Paul Anderson, R-Starbuck
• Co-Chair Rick Hansen DFL-South St. Paul
• Co-Vice Chair Bobbie Harder, R-Henderson
• Co-Vice Chair Andy Smith, DFL-Rochester
• Rep. John Burkel, R-Badger
• Rep. David Gottfried, DFL-Shoreview

To pass out of committee, the omnibus bill needs a majority of members from each party, so the fact that the balance of House members and Senators is uneven is of little consequence. You can find details on all the conference committees here.

Beyond taxes and agriculture, both chambers are making progress in passing major healthcare omnibus bills. The Senate Health and Human Services (HHS) Omnibus bill (SF2669) authored by Chair Melissa Wiklund, DFL-Bloomington, has made all its committee stops and awaits action on the Senate floor. The bill includes a number of provisions MFU has supported including increasing Medicaid payment rates for physician and ambulatory services, prohibiting health systems from charging hospital facility fees for outpatient visits done outside a hospital campus, a targeted per prescription dispensing fee to at-risk community pharmacies and reforms to the administration of Medicaid pharmacy benefits. Additional details on these items can be found in a letter MFU submitted to the HHS Committee last month.

Over in the House, the Health Finance and Policy Committee co-chairs—Rep. Jeff Backer, R-Browns Valley, and Rep. Robert Bierman, DFL-Apple Valley,—released the language of its omnibus bill just this Tuesday. That bill (HF2435) was then heard in the health committee and Ways and Means Committee, setting up floor action in the coming days. The House legislation includes versions of some of the Senate provisions MFU has supported, including the Medicaid rate increase for ambulance services and the pharmacy funding and reforms, although the House includes a much lower dispensing fee than the Senate ($1.84 per prescription compared to $4.50).

Missing from the House bill, but expected in a future deal, is funding for MinnesotaCare, which is held up due to Republican demands that the legislature take action to roll back healthcare coverage for eligible undocumented immigrants. Related to MinnesotaCare, the House bill does include a repeal of part of the MinnesotaCare public option legislation MFU advocated for in 2023. That language authorizes the Minnesota Department of Commerce to seek the necessary federal waiver to establish a MinnesotaCare public option. This is in part a reflection of the fact that a Trump Administration was unlikely to support a federal waiver to expand federal funding for MinnesotaCare. Instead—and with talks of federal cuts to state’s who expanded Medicaid—our focus has turned to defending healthcare coverage so that we can expand it in the future.

Speaking of federal cuts, a delegation of MFU members were in Washington this week, urging lawmakers to act on a new farm bill. You can read all about NFU’s week of action here at: www.nfu.org/forfarmerssake/.

As always, this is just a snapshot of MFU’s legislative work. If you have questions, thoughts, or concerns, please reach out to Stu at (320) 232-3047 (C) or stu@mfu.org.