March 24, 2026
This prior week's legislative activities were impacted by both weather and time off for Eid. The scheduling changes this week led to a very compressed week where most of the legislative work was compressed into Tuesday and Wednesday, and somewhat on Thursday.
The Governor released his supplemental budget recommendations on Tuesday. In the economic development space, his recommendations include:
- A policy change for the IBDPI program that would provide a 10-year sunset of development restrictions.
- Codifying language for the Pathways to Prosperity program and Drive for Five.
- $10 million Operation Metro Surge response – partially forgivable loans.
- Additional appropriation from the Workforce Development Fund of $3.5 million for the Service to Success program.
- Social media tax on tech companies with over 100,000 monthly users in Minnesota. Revenue generated by this tax is dedicated to a DEED account in the special revenue fund that supports workforce development initiatives targeted at workers who experience job loss due to artificial intelligence. Revenue is projected to be $46.6 million in FY27 and $194.2 million in the FY28-29 biennium.
- No cuts to programs based on the state’s improved revenue forecast.
In tax recommendations, notably the Governor recommended:
- A significant increase to the Child and Dependent Care Credit included that both increases the amount a family would receive for a child under 5 by an additional $3,000 and increases the income threshold at which the credit begins to phase out and increases the percentage of expenses taken in to account for the credit.
- Conformity with most federal tax changes included in HF1. A notable exception was his recommendation to not adopt changes to allow full expensing of domestic research and experimental expenditures or tax benefits for investments in newly designated Opportunity Zones.
In response to the Governor’s supplemental budget recommendations, Rep. Demuth has already said that the social media tax is off the table.
Also notable this week, many bills in the House failed to make it out of Committee based on party-line votes. Some of those bills needed to be referred to other committees for consideration and some of those bills were headed to the floor. A list of bills that failed to get out of House committees includes bills around elections, fireworks, child care video camera bills, changes to Paid Leave requirements, and a new way to recommend appropriations from the workforce development fund.
Significant Happenings Last Week
Monday 3/17/26
Senate Local Government Committee – Heard two key bills we are monitoring:
- SF4296 (Maye Quade) Requires public hearings and disclosures prior to approval of data centers.
- Multiple constituents testified in favor of this bill from projects around Monticello, Hermantown and Rosemount citing their opposition to data centers and desire for more extensive public notification when the development of a data center is proposed. Senator Johnson-Stewart shared her support for more public input in local projects and shared she is not opposed to data centers but opposed to NDAs. Senator Koran shared his concerns about this bill and cited local concerns around solar gardens and similar projects and explained that there is sometimes the need for early conversations to be nonpublic. Senator Matthew also shared the need for NDAs for business discussions and shared the work his community has done to find revenue replacements for a power plant that is closing. Senator Drazkowski shared his concerns with both bills. The bill was passed to the Senate general orders as amended 8-2.
- SF4379 (Maye Quade) Prohibits municipalities from entering nondisclosure agreements. Senator Koran flagged that state agencies are allowed to use NDAs, and asked how this would be reconciled with this bill. The Committee adopted the A-1 amendment which changes the enactment date of the bill. The Minnesota Chamber testified with concerns about the expansive nature of the bill which could chill early business conversations with local governments. The Sierra club testified about the environmental challenges from data centers and their concerns about the large social media companies behind them. The bill was tabled as there was not enough time for member discussion. The bill will be discussed at another hearing.
Wednesday 3/18/26
House Workforce, Labor and Economic Development Committee – Heard two key bills we’re monitoring:
- HF3843 (Baker) – Report to the legislature recommending appropriations from the workforce development fund. Rep. Greenman and Pinto both expressed their appreciation for the structural changes that this bill includes but expressed their opinions that the bill doesn’t seem fully fleshed out yet. Rep. Baker expressed that doing something in this way is one of his top priorities and he will continue to work to refine it. The bill failed to move out of committee and was laid over.
- HF3597 (Mueller) – Certain S Corporations exempted from paid leave law. The bill was tabled, the motion to move the bill out of committee failed.
Thursday 3/19/26
Senate State and Local Government Committee – Held additional discussion about a key bill we are monitoring:
- SF4379 (Maye Quade) Municipalities prohibition from entering into nondisclosure agreements. The Committee adopted two amendments to the bill, the A-1 (adopted in the prior hearing) and A-2. The A-2 amendment narrows the application of the bill to economic development projects financed in whole or part with the municipality’s tax revenues, financial obligations or taxing powers. This amendment also expands the application of the bill to include school districts, housing and redevelopment authority, economic development authority and port authorities. The bill author expressed a willingness to continue to refine the bill. Senator Matthews offered an A-3 amendment that would apply this prohibition to all of state government. The A-3 amendment failed. Senator Matthews raised concerns about the bill. Senator Gustafson expressed a willingness to consider additional adjustments to the bill. Senator Koran also shared concerns about the bill and shared how NDAs are an important tool in early economic development conversations. The bill was sent to the Judiciary Committee.
- scs4379a-1.pdf
- scs4379a-2.pdf
Significant Upcoming Hearings
Monday 3/23/26
Senate Jobs Committee 12:30 – 2:30 pm
- SF4527 (Pha) Small businesses negatively impacted by federal enforcement activity relief program establishment and appropriation
- SF4535 (Champion) Minnesota business recovery loan program establishment and appropriation
House Elections Finance and Government Operations
HF3895 (Igo)The zoning and land use preemption bill will be heard but committee support for the bill is unclear.
House Workforce, Labor and Economic Development Finance and Policy Committee
HF4097 (Frazier) Money transferred for emerging entrepreneur loan program.
Additional hearings are likely to be posted throughout the week.
Key Bills We’re Watching
-
SF3695 (Port) Federal immigration enforcement operation economic impact study requirement provision and appropriation.
- SF3608 (Rest) Requirements modification for return of excess tax increments
- HF3663
(Jones) State Building Code; funding provided for competitive grants to
assist municipalities with streamlining State Energy Code compliance
report required, and money appropriated.
- SF3664 (Champion) – Agency policy bill
- HF3843/SF4427 (Baker/Housley) Requires a sub-committee of the Workforce Development Board to make recommendations for appropriations from the Workforce Development Fund.
- SF3839 (Port) Housing infrastructure bond issue and appropriation
- HF3600 (Perryman) – Competitive selection processes modified for certain housing development programs.
- SF4123/HF3895 (Port/Igo) Zoning authority of local governments over certain housing types limited.
- SF4158 (Jasinski) BDPI bond issue and appropriation
- HF4077/SF4379 (Greenman/Maye Quade) Municipalities prohibition from entering into nondisclosure agreements. This bill was sent to the General Register in the House and Judiciary Committee in the Senate.
- HF4097 (Frazier) Adds $2 million in additional funding for the Emerging Entrepreneur Loan Program.