Crafting and passing a bipartisan budget with narrow margins in the Legislature isn’t for the faint of heart.

It wasn’t always pretty, but the Minnesota Legislature managed to do just that, holding a special session June 9-10 to sign off on a state budget, a few weeks after the session formally adjourned. Lawmakers had their work cut out for them during a 21-hour special session, debating and passing 14 key bills before the deadline to avoid a partial July 1 government shutdown. With a tied House (67 Republicans, 67 Democrats) and a one-seat Democratic majority in the Senate, negotiations were particularly sensitive, requiring bipartisan cooperation.

Despite the partisan gridlock, lawmakers ultimately reached a compromise, passing a $66 billion budget that significantly cut a projected $6 billion deficit for future years. While the budget addressed immediate financial concerns, it also set the stage for ongoing debates over health care, taxation and economic policy in the 2026 Minnesota Legislative Session before the November 2026 elections.

The passage of the bills Monday caps a year that started with a power struggle and Democratic boycott in the House, and ended with missed deadlines that necessitated the Legislature needing to return to the Capitol to finish the job.

The Minnesota Soybean Growers Association celebrated legislative wins, including protecting crop inputs, but lamented missed policy opportunities that could’ve boosted a struggling ag economy.

“This session was a bit of a mixed bag,” said Joe Smentek, MSGA executive director. “We’re frustrated by the inability for lawmakers to work together to better the environment for Minnesota soybean farmers. However, we were pleased to see many of our priorities included in the ag bill and we extend our appreciation to Ag Committee leaders on both sides of the aisle for working in good faith to help farmers, who contribute to one of Minnesota’s top economic industries.”

Special session takeaways

Environmental and Natural Resources Omnibus Bill (2025 Legislative Special Session)

Following a strong advocacy push throughout the session by MSGA and fellow ag groups, the 2025 Minnesota legislative special session did not include any new restrictions or bans on pesticides, fertilizers or seeds, despite discussions on environmental policy. While some lawmakers pushed for stronger regulations on pesticide-treated seeds and groundwater contamination, the final bill maintained existing agricultural policies without imposing additional limitations.

The session focused primarily on budget negotiations, tax adjustments and infrastructure funding, leaving agricultural regulations unchanged. This decision reflects a balance between environmental concerns and industry interests, ensuring farmers can continue using current agricultural practices without new legislative hurdles.

“We’re very pleased to see that our advocacy efforts to protect those tools were successful,” said Darin Johnson, who delivered a “State of Soy” report to the Senate Ag Committee early in the session.

Bonding (2025 Legislative Special Session)

The agreements, which focused on transportation and water infrastructure, would fund those projects and more with about a net $700 million, including more than $646 million in proceeds from bond sales, $73 million from the transportation fund and $6.5 million in cash. Cancellations from previous appropriations help lower the overall total.

• $44 million for natural resources purposes, including $33 million for asset preservation and $9 million for flood hazard mitigation

• $60 million in asset preservation for both Minnesota State and the University of Minnesota

The Legislature last passed a bonding bill in 2023 to the tune of $2.6 billion. The House approved a $71 million cash-only bill in 2024, but the Senate did not.

Tax Bill (2025 Legislative Special Session): MSGA earns partial SAF win

One of the top priorities in the biofuels space for MSGA during the 2025 legislative session, including during Hill Visits, was the sustainable aviation fuel (SAF) tax incentive program, which would boost demand for Minnesota soybeans. Executive Director Joe Smentek testified in multiple hearings about not only the need to extend and expand the program, but even more importantly, get the details right on how SAF is incentivized to be produced.

MSGA and others helped build a strong bipartisan coalition of supporters, including Gov. Walz, Senate Tax Chair Ann Rest, House GOP Tax Co-Chair Greg Davids and all four legislative caucus leaders. This work showed in the release of the Senate Omnibus Tax Bill, which included the following SAF-related provisions:

• Modifies the definition of SAF to further specify how biomass must be produced

• Moves the effective date of the previous funding for SAF

• Allows qualifying taxpayers to claim a supplemental tax credit equal to 2 cents per gallon for each additional whole percentage of carbon intensity reduction beyond 50 percent, up to 50 cents per gallon

• Increased the allocation limits for credit certificates in fiscal years 2026 and 2027 from $2.1 million to $7.4 million and extends the credit through 2035

• Allows unallocated funds from each fiscal year to be available in the following fiscal year

• Extends the expiration date from 2030 to 2035

As budget negotiations continued, opposition in the House DFL caucus meant that the majority of these provisions had to be taken out. In the initial leadership agreement, every SAF tax provision was removed. MSGA and others worked hard to at least get the carry forward of the previous appropriation included in the final special session deal. While we are disappointed that we did not get any of the expanded language that Joe Smentek and others worked so hard to negotiate, getting the carry forward language saved the program and allows us to fight another day.

The bills now await Gov. Walz’s signature. With the special session completed, MSGA and its lobbying team will continue engaging with lawmakers and agency leaders on our policy priorities.

“We look forward to meeting at Farmfest with lawmakers and candidates to continue promoting our priorities, from SAF to tax reform to diversifying our markets,” Johnson said.

The 2026 session begins Tuesday, Feb. 17, 2026.