Gov. Tim Walz and Minnesota lawmakers reached a bipartisan budget agreement late Wednesday that paves the way for the conclusion of the Minnesota Legislature’s session. The deal includes support for a key Minneapolis hospital, cuts to vehicle registration fees and property tax relief for homeowners.
The pact between Gov. Tim Walz and top lawmakers will still need some massaging before bills are ready for final votes, which must take place by midnight on Sunday.
In the final weekend of the legislative session, lawmakers still need to resolve several major budget items. One of these items includes hundreds of millions of dollars in funding for HCMC, the state’s busiest Level 1 trauma center.
HCMC has struggled with budget constraints for years and is expected to incur $1.7 billion in losses over the next decade due to rising uninsured rates and changes to federal policy, including Medicaid cuts.
Operated by Hennepin Healthcare, the safety-net hospital serves more low-income and uninsured patients than any other facility in Minnesota.
The Minnesota Nurses Association hailed the new state funding agreement as a victory for both the hospital and its patients.
“When nurses leave the bedside, patients lose access. This keeps care in place for Minnesotans who depend on this hospital,” said Janell Johnson Thiele, RN and HCMC Tri-Chair. “We must continue to seek permanent funding solutions.”
DFL Senate Majority Leader Erin Murphy said the caucus supported healthcare throughout the session, calling the negotiations “hard-fought.”
Immediate state support
Lawmakers are finalizing the agreement’s details, but they plan to direct $205 million from the state's general fund to stabilize HCMC for this year.
Rep. Esther Agbaje, DFL-Minneapolis and co-lead author of the bill, said in an interview with MPR News that there was broad consensus on the importance of the hospital.
“We must save it,” Agbaje said. “While it took some time to get people to understand the gravity of the situation and understand the meaningfulness of our response, I'm glad we got there.”
The deal also allocates $500 million over five years for healthcare systems and hospitals at risk of closure. An additional $30 million will be set aside for distressed hospitals across Minnesota. During a press conference, Agbaje said that healthcare facilities must meet certain criteria to receive state funding, including the amount of medical assistance provided as well as the amount spent on uncompensated care for patients who are unable to pay for services.
HCMC accounts for 20 percent of all uncompensated care in Minnesota, according to Hennepin Healthcare. Agbaje said that while the $30 million is insufficient, she assured that lawmakers are committed to addressing hospital funding needs
“We want to come back in future legislatures to make sure that we're providing the resources that hospitals, not only HCMC, need to really survive in this coming era,” she said.
Hennepin Healthcare Board Chair Jeffrey Lunde said in a statement that the agreement represents progress in stabilizing the hospital and safeguarding access to services for years to come.
Lawmakers emphasize oversight
Leaders from both political parties have agreed to establish a working group focused on financial oversight and creating a new governance structure for HCMC. Agbaje noted that the county board will transition to a professional board tasked with overseeing the hospital. Board members will have expertise in finance, public health and administration, all critical for managing a hospital she said.
Agbaje also said that hospitals will need to fulfill reporting requirements for the public funds they seek, and lawmakers will receive updates on how the initial $205 million is spent. At the same time, a legislative committee will determine whether to distribute additional funds from reserves in upcoming years.
On Wednesday evening, Minnesota Attorney General Keith Ellison held a public forum about the future of HCMC. Community members in attendance asked about the oversight measures in place.
"It's not that the hospital needs oversight because they haven't done what their job is; they have," Ellison said. "When you get more resources, you're going to get more oversight. That's totally appropriate.”
Ballpark tax debate ends
Bipartisan proposals to support HCMC included increasing Hennepin County sales tax revenue to fund the hospital. One plan suggested repurposing the county’s existing 0.15 percent sales tax, which is used to pay off bonds for Target Field’s construction, into a 1 percent sales tax. The change could have generated about $340 million annually for HCMC, with the remaining funds allocated for ballpark-related investments.
Hennepin County requires legislative approval to reallocate these funds as a healthcare tax to cover ongoing expenses. Instead, Wednesday’s agreement uses money from the state’s general fund.
Agbaje said that legislators were reluctant to use tax dollars for the hospital. GOP House Speaker Lisa Demuth added that the agreement was reached without extending the Hennepin County ballpark tax or increasing Minnesotans taxes.
“Our caucus has fought all session long for car tab relief, property tax cuts, and meaningful anti-fraud measures,” Demuth said. “This budget delivers that, along with help for rural and critical access hospitals across the state and relief for our counties.”
Walz described the HCMC agreement as a “historic, bipartisan investment”. “I'm proud of what we did, but I want to be very cautious on this,” he said. “This is only the beginning of the health and the hospital crisis across the country.”
Lawmakers anticipate that healthcare and hospitals will be a major focus during the 2027 legislative session. But attention now turns to finalizing the bill language related to Wednesday night’s budget deal and to advance the measures through both chambers before the session ends on May 18.
MPR News political correspondent Dana Ferguson contributed to this story.
