CapWatch:
May 12, 2025

Minnesota State CapWatch 

Countdown is on at the Capitol

With just a week remaining in the 2025 legislative session, lawmakers remain focused on the state budget, and many have been meeting in conference committee to discuss the differences between each chamber’s budget proposals while they wait for legislative leadership and Gov. Tim Walz to agree on global budget targets. Time is running out for legislators and Gov. Walz to come to an agreement and pass a complete budget prior to the May 19^th deadline to adjourn.

Omnibus Finance Proposals

As legislative leaders and the governor negotiate the overarching budget framework, legislators continue to review, debate, and pass omnibus finance bills through the committee and conference committee process. Points of contention are plentiful, particularly with the House of Representatives evenly split and governed by a bipartisan power-sharing agreement. The agreement requires that co-chairs must agree on the content of the bills prior to their passage from committee. As a result, some bills are quite limited and function more as a “lights on” proposal than a more substantial piece of legislation.

One example is the House of Representative’s version of the omnibus energy finance and policy bill (H.F. 2442), which funds ongoing programs withing the Public Utilities Commission (PUC) and the Department of Commerce but contains very few other initiatives. Similarly, the House of Representatives’ omnibus environment finance bill (H.F. 2439) was stripped of all policy provisions and focuses on ongoing funding for the Minnesota Department of Natural Resources (DNR), the Minnesota Pollution Control Agency (MPCA), and the Board of Water and Soil Resources. These proposals will be discussed in conference committee but will need to be negotiated in a way that they will receive enough votes from each body to pass for a final time.

House Fraud Committee Continues its Work

While lawmakers are trying to wrap up the legislative session, the House Fraud Prevention and State Agency Oversight Policy Committee continues to meet and consider legislation. Two bills considered by the committee last week were aimed at reducing fraud related to state funds. The first, H.F. 2891, sponsored by Rep Kristin Robbins (R-Maple Grove), would require the Department of Administration to create an exam and continuing education requirements for employees seeking to be certified to oversee state grants. State agencies then could only assign grant management responsibilities to employees with that certification.

The second, H.F. 3043, also sponsored by Rep. Robbins, would seek to add grant administration to the anti-kickback prohibitions advancing this session.  These two proposals are still being discussed and could be part of a larger fraud proposal or included in one of the health-related omnibus bills.

Sen. Heintzeman Sworn In

On Tuesday, May 6^th Sen. Keri Heintzeman (R-Nisswa) was sworn in as the 67^th member of the Minnesota State Senate, replacing Justin Eichorn who resigned earlier in the session. While Republicans retain the seat, the DFL continues to hold a one vote majority in the Minnesota Senate.

Important Dates to Remember

May 19, 2025                           Constitutional Deadline to adjourn the legislative session

Federal CapWatch

The Big Picture

We’re heading into one of the most consequential weeks yet for House Republicans and their reconciliation package packed with President Trump’s domestic policy priorities. With just eight legislative days remaining before the Memorial Day recess, Speaker Mike Johnson is pushing hard to get the reconciliation bill through the House. His goal: deliver a final package to President Trump’s desk by July 4, with a debt-limit increase needed by mid-July.\

House Republicans are betting heavily on reconciliation. They’re pressing ahead with deep cuts to Medicaid, SNAP, and clean energy incentives while doubling down on tax cuts. Vulnerable members are taking serious political risks with no assurance the Senate will take up the package — much less pass it. And with internal divisions on SALT, Medicaid, and energy policy, GOP leadership has a narrow path forward.

What’s Ahead This Week

Tuesday:

• The House Rules Committee meets to begin floor prep on multiple bills.
• House committees begin reconciliation markups.
• The Senate Commerce Committee considers nominations, including for Federal Railroad Administration and the Amtrak Board.

Wednesday:

• DHS Secretary Kristi Noem testifies before the House Homeland Security Committee.
• House Appropriations will hear from HHS Secretary Robert F. Kennedy Jr., Transportation Secretary Sean Duffy, and Acting ICE Administrator Todd Lyons.
• Senate Appropriations hosts EPA Administrator Lee Zeldin, Capitol Police Chief Thomas Manger, and Senate Sergeant at Arms Jennifer Hemingway.
• Kennedy will also appear before the Senate HELP Committee, and the Senate Commerce Committee will examine FAA reauthorization one year after passage.

Thursday:

• House Appropriations continues with testimony from Zeldin (EPA), VA Secretary Doug Collins, Labor Secretary Lori Chavez-DeRemer, Acting CBP Commissioner Pete Flores, and FTC Chair Andrew Ferguson.

Key Policy Developments

Ways and Means Committee released the draft tax title Friday night, with a more complete version expected today. The proposal includes:

• Repeal of certain clean energy tax credits from the Inflation Reduction Act, particularly targeting electric vehicle credits as of December 31.
• A remittance tax on international money transfers aimed at funding border security.
• Limits on transferability of energy credits and sourcing restrictions for components tied to foreign adversaries.
• Notably, the bill is not expected to raise the stock buyback tax, despite some internal discussions.
• At 10:00 a.m. today, Johnson will meet with blue-state Republicans and Ways and Means members to discuss the state-and-local tax (SALT) deduction cap.
• On Tuesday night, Agriculture will propose further shifts in SNAP (food stamps) costs to the states and fold elements of the farm bill into reconciliation. Some moderates had resisted this move, but several are now falling in line.