Gov. Tim Walz Releases 2026 Capital Investment Plan

The package seeks to fill asset preservation and local project funding gaps left after the 2025 bonding bill.

On Jan. 15, Gov. Tim Walz announced his 2026 capital budget for the upcoming legislative session.

The governor’s proposed spending package would borrow $700 million in general obligation bonds, with an additional $207 million from other sources, including appropriation bonds, user-financed bonds, general fund cash, and trunk highway bonds and cash. Major targets of the proposal include Capitol security, asset preservation, and corrections.

Other proposed investments include:

• Water and wastewater systems and transportation: $113.15 million for water and wastewater infrastructure, including $106 million to support grants and low-interest loans, and $2.15 million to help remove contaminants like PFAS (perfluoroalkyl and polyfluoroalkyl substances) from drinking water.
• Economic development: $5 million for various types of public infrastructure related to economic development.
• Public safety: $195 million for public safety and corrections projects, including expanding laboratory and investigatory capacity for the Bureau of Criminal Apprehension and planning for a Minnesota State Patrol headquarters.
• Housing: $10 million in general obligation bonds for public housing rehabilitation, along with $50 million in housing infrastructure bonds.
• Transportation: $50 million in trunk highway bonds for high-priority pavement projects. The plan would also provide $5 million for the Local Road Wetland Replacement Program.
• Other infrastructure: $35 million for unspecified local government projects.

View the fill list of Gov. Walz’s 2026 capital investment recommendations (pdf).

A starting point

The governor’s proposal is the opening step in what is expected to be a lengthy process to produce a 2026 capital investment bill. Both the House and Senate are likely to release their own bonding packages, and differences with the governor’s plan will need to be negotiated. The final agreement could be higher or lower than the proposed totals and structured very differently.

Uphill climb

Bonding bills require a three-fifths majority (60%) to pass the Legislature, meaning leaders will need bipartisan support to reach final passage of a capital investment borrowing package. That challenge is often amplified in a big election year. Final negotiations are expected to extend to the end of the 2026 session, as capital investment bills are typically among the last measures approved before adjournment.

Advocating for city specific projects

While the League does not weigh in on individual city bonding provisions, its intergovernmental relations (IGR) team is here to help city officials navigate the advocacy process at the Capitol.

City officials planning a visit to St. Paul to advocate for bonding requests are encouraged to use the League’s free parking. Visitors should check in at the reception desk upon arrival.

For questions about logistics or how to engage with legislators, contact a member of the League’s IGR staff before your visit or when you arrive.

Connect with IGR staff.

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