MINNEAPOLIS — Gov. Tim Walz and legislative leaders struck a budget deal Thursday that rolls back health care coverage for undocumented immigrant adults, closes the Stillwater prison and makes other notable spending cuts.

After about two weeks of closed-door negotiations, Walz and leaders of the tied House and DFL-controlled Senate will emerge with an agreement that is unlikely to fully satisfy either political party.

“Amid partisanship and division in Washington, Republicans and Democrats are proving that here in Minnesota we can still work together to get things done,” Walz said in a statement. “This agreement will ensure Minnesota continues to be the best place in the country to raise a child, while responsibly addressing long-term structural budget challenges.”

Budget targets released by the governor’s office show their deal reduces a projected $6 billion budget deficit in a future budget, but it doesn’t completely wipe out the imbalance.

With only days left before the Legislature’s May 19 adjournment deadline, lawmakers will almost certainly need a short special session to pass the bills.

“While we began this session by navigating a tie in the House and the most closely divided Legislature in state history, we’ve been able to come to an agreement that improves the lives of Minnesotans and addresses the budget issues in coming years,” said Republican House Speaker Lisa Demuth. “We still have work to do, and I look forward to finishing this session strong.”

Before they reached the agreement, Walz and the legislative leaders had struggled to break through differences about whether to raise taxes or fees and tweak some laws passed by Democrats in 2023, including a health care program for undocumented immigrants.

“This wasn’t easy, and that’s a good thing. Legislative leaders and Governor Walz have worked through our differences and met our obligation to get to this point. I’m proud of that,” Senate Majority Leader Erin Murphy said.

The new budget is expected to be slimmer than the one passed by Democrats in 2023, when the state had a massive $17.6 billion surplus. A projected multibillion-dollar deficit forced Walz and the leaders to make cuts and roll back some initiatives.

“Minnesotans expect us to balance the budget and keep our state moving forward, and we are on track,” said DFL House Leader Melissa Hortman. “While this agreement doesn’t include everything we would have liked, we worked together to find a compromise.”

Not everyone was happy with the deal shortly after it was announced. Republican Senate Minority Leader Mark Johnson was not at the news conference and released a statement that said the agreement fell short in stopping the “harmful progressive policies hurting small businesses and working families.”

“We still have a lot of work before the end of the session and Senate Republicans will continue to fight for the needs of Minnesotan families, businesses, and communities until the very end,” he said.

State Sen. Zaynab Mohamed, a progressive Democrat from Minneapolis, posted on X that “the way the Senate got steamrolled today — you’d think we were in the minority. Heartbreaking day for immigrants, communities of color, and our base."

----------

©2025 The Minnesota Star Tribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.