With just hours remaining in the regular 2025 legislative session on Monday, Minnesota lawmakers still hadn’t granted final passage to major pieces of the upcoming two-year state budget, including bills on taxes, education and health care spending.

A special session will be required to enact last week’s $66 billion or so budget framework agreement reached by Gov. Tim Walz, the Democratic-Farmer-Labor majority Senate, and DFL and Republican leadership of the 67-67 tied House.

As of Monday afternoon, only a handful of the 20 or so bills that compose the budget had made it through both the Senate and House and were headed to Walz’s desk to be signed into law.

Around two-thirds of the general fund budget — human health and human services and K-12 education — remain up in the air, and there are still unresolved questions about support for the budget deal.

Walz told reporters Monday afternoon that he wasn’t worried about getting the budget done before the June 30 deadline, and that the biggest pieces often come last. He added that he would call lawmakers back to the Capitol for a special session “when the work’s done” on final bills and that he hopes it will only be for one day.

If the Legislature doesn’t pass a budget by the end of the two-year fiscal period, the state government will shut down on July 1. Layoff notices start going out to state workers on June 1 if there is no deal by then. Lawmakers and the governor said they hope to wrap up the budget before the end of May.

What’s the holdup?

Despite leaders calling it a “deal,” it’s only an agreement between top lawmakers and the governor and some of it is still up for intense debate. Parties to the deal have not provided any documents on details other than an overall list of budget targets.

Walz, Senate Majority Leader Erin Murphy, House DFL Leader Melissa Hortman, and Republican House Speaker Lisa Demuth signed off, but one part has put off many DFLers: a proposal to end state-funded MinnesotaCare insurance coverage for adults in the U.S. illegally.

If adopted, it would preserve coverage for children but would end it for around 15,000 adults at the end of 2025. DFL-controlled state government created the benefit in 2023.

Ending those state insurance benefits was a GOP priority in negotiations, and DFL leaders say they agreed to it because they wanted to avert a government shutdown — which would interrupt a significant range of services in the state. The last time that happened was 2011.

Many DFLers say they won’t support the proposal, describing it as “cruel” since it will cut off state insurance for people receiving cancer treatment and dialysis. It isn’t just the party’s progressive wing, either: self-described moderate DFL Sen. Judy Seeberger of Afton on Saturday said she opposed the change.

Senate Republican Minority Leader Mark Johnson, who didn’t sign off on the deal, said the state appropriated about $200 million for immigrant care, and that the money could instead be used to support struggling nursing homes in Minnesota.

“Most of our members are ready to engage with Democrats both in the House and Senate, so if there are items that we can get in and help improve, we are there and we are going to be doing that,” he said, later adding: “We didn’t sign that agreement, so we are going to fight to the very end.”

Another area where there could be continued debate is over a DFL proposal to cut state funding for non-public schools, which Republicans oppose. Demuth said cuts to private schools were off the table when she and other leaders announced the deal last Thursday. Hortman told reporters Monday that cuts were “unlikely” but remain on the table.

DFLers have accused Republicans of trying to make late changes to the deal, like creating more rollbacks for the state paid family and medical leave program and a paid sick time requirement the DFL-controlled government created in 2023.

“Republicans keep moving the goalposts. None of the GOP demands are necessary to pass the state budget bill,” said House Floor Leader Jaime Long, DFL-Minneapolis.

Republicans estimate that immigrant care could cost three times as much as originally planned because enrollment was three times higher than expected since benefits began last year. DFLers and state officials dispute that.

Demuth blamed the late budget bills on a weekslong House DFL boycott at the beginning of session that delayed business as the tied chamber’s power struggle worked its way through court cases.

“As I’ve talked about from the very start … I believed that we could have gotten this done on time,” she said. “Our Democrat colleagues didn’t show up for work and we ended up doing that 23 days in a row.”

However, special sessions become the norm for passing a budget under divided government. The last time a divided government passed a budget without going into overtime was 2007.

The Senate DFL has a one-seat advantage over Republicans, though despite opposition from members of her caucus, Majority Leader Murphy said she had a path to pass a budget under the current deal.

“I don’t think that it is right to say that the deal is coming undone,” she told reporters earlier Monday. “What I’m concerned about is the commitment to finish the work.”

What has passed?

As of 10 p.m. Monday, lawmakers had passed a number of smaller pieces of the budget. One big part of the budget deal that got some pushback was the closure of the aging Stillwater state prison, though the House and Senate approved that change in a judiciary and public safety budget bill over the weekend.

Besides that, budget bills on agriculture, housing and Legacy Amendment funds for outdoors, parks and the arts are also on the way to Walz.

A veterans budget bill on its way for a signature provides about $365 million in the next two years and increases spending by about $50 million in large part to help fund state veterans homes.

Money goes toward veteran suicide prevention and a pension credit for National Guard members deployed for state active duty, such as in natural disasters. It also recognizes Southeast Asian special guerrilla units that fought for the U.S. during the Vietnam War.

Changes to public employee pensions headed to becoming law, as part of a bill passed by the Senate Monday will help insulate State Patrol and other state public safety pensions against inflation with cost-of-living adjustments. It also loosens the early retirement penalty for teachers’ pensions.

The state Senate this weekend also passed a final version of a bill to strengthen the state’s laws on people who repeatedly drink and drive by expanding the use of ignition interlock devices. Walz is expected to sign it into law.

What remains?

Most of what makes up the budget hasn’t made it to the finish line. A health bill that carries the cut to MinnesotaCare benefits for adults in the U.S. illegally has not made it to a vote in either chamber.

A tax bill has not yet materialized, though as part of the budget deal, the state plans to raise the tax on some cannabis products. Republicans got DFLers to agree to cut the maximum rate for a payroll tax for the new paid family and medical leave program from 1.2% to 1.1%. The current rate would remain 0.88% and would be shared between employers and employees to help pay for the benefit when it starts in 2026.

Walz’s proposed reduction of the overall state sales tax rate and the creation of a new tax on services like accounting and legal advice did not make it to the final deal. Nor did a Senate DFL proposed first-in-the-nation tax on social media platforms for user data collection.

A pre-K-12 education budget bill that holds the state spending level to inflation for the next two years still hasn’t made it through. A GOP push to eliminate unemployment insurance for hourly school workers is also headed for the dustbin as a result of the budget deal, DFLers said.

The education budget makes up around one-third of the current $71 billion two-year state budget’s general fund spending. Health and human services make up another third, according to the Minnesota Department of Management and Budget.

As the midnight deadline to pass bills approached Monday, higher education, transportation and human services also remained unfinished.

A Senate proposal to centralize government fraud-fighting efforts in a state office of inspector general remains in limbo after passing in that chamber earlier this month. Efforts to address government fraud had the spotlight earlier in the session, but the focus has faded as budget deadlines draw nearer.

A public works borrowing package, also known as a bonding bill, has not seen much movement either. The Legislature hasn’t passed one since 2023, and many local governments say they need state help to pay for projects like water treatment plants.