Walz Announces Revised Budget, Legislative Deadlines Next Week

March 19, 2026

On March 17, Gov. Tim Walz released his revised budget for the 2026 legislative session, which includes a reduction of $370 million. 

In February, state officials announced a short-term $3.7 billion budget surplus, and a long-term surplus of $377 million. This was an improvement from the previous forecast, which noted a long-term budget deficit of $3 billion. In their February announcement, state officials noted economic uncertainty and unpredictable federal funding, following the withholding of $259 million in quarterly federal Medicaid support to Minnesota due to fraud allegations from federal officials. 

The governor’s proposal includes fraud prevention measures, including the establishment of a Statewide Office of Inspector General, and added capacity for fraud prevention at the Attorney General’s Medicaid Fraud Unit. 

To further the prevention of fraud and the reduction of state costs, the governor has proposed to eliminate the use of Managed Care Organizations (MCOs) in Medical Assistance, Minnesota’s Medicaid program. Currently, 45% of Medicaid spending and roughly 80% of basic care services are administered through MCOs. Under the governor’s proposal, Minnesota would move to a single statewide Administrative Service Organization (ASO), which the governor suggests would strengthen program consistency, controls, and cost-efficiencies.  

Walz’s proposal also includes MMA legislative priorities to ban assault weapons and high-capacity magazine statewide. In addition, it increases school-based and other mental health resources. The budget also notably shifts state funds to expand the Dependent Care Tax Credit, and raises allowable expenses by $3,000 for one child and $6,000 for two or more children under five. 

In a press event regarding the proposal on March 17, Walz said he intended to develop legislation to preserve Hennepin Healthcare’s Hennepin County Medical Center (HCMC). The administration announced that former Minnesota Department of Health Commissioner Jan Malcolm will lead the effort, coordinating with stakeholders to address financial challenges facing providers and developing long-term policy recommendations. 

The proposals will be discussed in the coming weeks, as legislators face their first legislative deadline on March 27. By this time, committees must act favorably on bills in the committee of origin, so they can begin compiling omnibus bills. Those omnibus bills must be acted on by April 17. 

The Legislature adjourns no later than May 18.