Legislature Wraps 2026 Session With Bonding and Tax Agreements

May 19, 2026

The 2026 legislative session concluded May 18, with lawmakers passing bonding, taxes, and other budget bills just before the constitutional deadline on Sunday night.

The 2026 legislative Session ended May 18 with lawmakers by sending a final wave of legislation to the governor’s desk. Key elements included $705 million in assistance for Hennepin County Medical Center and a reduction in license plate tab fees.

Following are high-level summaries of bills containing provisions the League has tracked during the session and are of interest to cities. More information about the outcomes from the regular session will be published in the 2026 Law Summaries in late June or early July.

View a list of bills passed during the 2026 legislative session.

Taxes

The omnibus tax bill, HF 2435, focuses on updating Minnesota’s tax code to align with federal tax changes enacted in 2025 and providing property tax relief. The bill includes a one-time $125 million increase for the property tax refund program. It does not include any local sales tax requests or modifications.

Bonding

The capital investment package was split into two bills that were presented and passed during the final hour of the legislative session. HF 719 includes $1.1835 billion in general obligation bond authorizations and $91.25 million from other funding sources. HF 2484 appropriates $46.465 million in general fund revenue for additional projects.

The package was notable both for the level of funding directed to city infrastructure needs and for the number of projects funded through direct line-item appropriations, often referred to as earmarks.

Allocations of interest to cities include:

$1.8 million for drinking water regionalization planning.
$2 million for Greater Minnesota Business Development Public Infrastructure grants.
$4.5 million for the local road wetland replacement program.
$5 million for metropolitan-area tree planting.
$9 million for flood hazard mitigation grants.
$13 million for city public safety projects.
$15 million for specified city dam, impoundment, and river crossing projects.
$15 million for metropolitan-area inflow and infiltration projects.
$17.5 million for public housing support.
$25 million for local bridge replacement.
$47 million for local road improvements.
$54 million in specified city transportation projects.
$100 million (approximately) for specified city economic development projects.
$137 million for Public Facilities Authority water and sewer programs.
$345 million in specified city water and sewer projects.

View a spreadsheet of all the items included in the combined bonding package (pdf).

Pensions

The Legislature passed an omnibus pension bill that spends $15 million in the current budget and $25 million ongoing. Gov. Tim Walz signed the bill into law on May 16.

The primary use of the funding is to reduce the cost-of-living adjustment waiting period for the PERA (Minnesota Public Employees Retirement Association) Police & Fire Plan from two years to one year. The bill also creates the PERA Local Government Probation Officer and Telecommunicator Retirement Plan, which will affect cities that employ their own dispatchers at the Public Safety Answering Point, a designated 911 call center.

The bill also establishes two new work groups that include representatives appointed by the League of Minnesota Cities.

The Work Group on Duty Disability and the Public Safety Officers Benefit Account will review reforms to the duty disability process and continued health insurance coverage for members of the PERA Police & Fire Plan.
The Work Group on Vesting and Emergency Medical Providers in Fire Relief Associations will develop recommendations to reduce the maximum vesting requirement from 20 years to 10 years and require EMT personnel to be included in fire relief associations.

In addition, effective Jan. 1, 2027, public employers must make a 7.5% PERA contribution for reemployed annuitants — retirees who receive a government pension but return to work. Previously, both employers and employees were exempt from making these contributions.

Housing

The Legislature passed a $165 million housing finance and policy bill, which Gov. Walz signed into law as Chapter 100. The package includes $100 million in housing infrastructure bonds and $40 million for the Family Homeless Prevention and Assistance Program (FHPAP).

In addition, $25 million in fiscal year 2027 is appropriated from Minnesota Housing Finance Agency interest earnings. Of that amount, $14.275 million is allocated to the Workforce Housing Development Program and $4 million to the Manufactured Home Park Infrastructure Grant Program, among other set-asides.

The bill does not include any preemption measures related to city zoning or land use authority.

Cannabis

The 2026 omnibus cannabis bill focuses on streamlining medical and adult-use cannabis supply chains. The legislation includes minor provisions affecting cities.

The legislation clarifies:

How population caps are calculated.
How retailers are licensed across counties when cities delegate authority.
Cities can contract with an entity to operate a municipal cannabis store.
The Office of Cannabis Management may waive the local government certification requirements related to building code compliance.

In addition, the bill adds the new microbusiness license to the cap structure.

What’s next?

Gov. Walz has 14 days, including Sundays, after the Legislature adjourned to sign or veto passed bills. If the governor takes no action within that period, the bill does not become law. Since taking office in 2019, Gov. Walz has vetoed one bill.