State lawmakers return from a weeklong break on Monday with a two-year budget still in the works and the clock ticking down on the legislative session.

With about a month left before they’re supposed to adjourn, they’ll hit the gas on a raft of budget bills, moving them from committees to the House and Senate floors, then into conference committees. There, legislators will iron out differences and reach final products that can pass both chambers and get the governor’s signature.

At the same time, top legislative leaders and the governor will meet in a series of closed-door negotiations to finalize a blueprint for the budget. 

“We will begin the work with the administration and with the House to reconcile our spreadsheets, to understand one another’s goals,” Senate Majority Leader Erin Murphy, DFL-St. Paul, said after a town hall meeting in Ely. “We will start those, what should be very challenging negotiations.”

It’ll be a bumpy ride in the narrowly divided Capitol but one that leaders say they’re optimistic they can wrap up before May 19. They acknowledge that federal officials could derail their final product and force lawmakers to return for a special legislative session later this year.

Here are a few things to watch as lawmakers return to the Capitol.

Sticking points remain in education, health and human services

While committees completed many areas of the budget ahead of the break, a couple had to work overtime to negotiate agreements for E-12 education and health and human services.

Co-chairs in the House split over what should be included in the spending plans. Republicans pushed to remove changes passed under DFL control at the Capitol over the last two years that would add more requirements for school districts and allow undocumented people to receive health insurance under the Medical Assistance program, Minnesota’s Medicaid program.

GOP lawmakers said new programs providing universal school meals for students and introducing various new curriculum changes were too costly for school districts already facing budget cuts. They also said state programs should focus on legal residents.

Democrats defended the programs, especially the universal school meals plan, and said the changes benefited students. With an evenly split House, committees have even representation and shared leadership. They are expected to hold funding for schools flat under House budget targets, and cut $350 million in health and human services programs.

Another factor playing into budget talks is the prospect of significant federal spending cuts. The GOP-led Congress has approved a budget framework that would trim $880 billion in spending to help pay for an extension of 2017 tax cuts.

Democrats in St. Paul have suggested new tax measures for social media companies or wealthy Minnesotans to bridge the potential gap if Medicaid gets cut. Meanwhile, Republicans have said any new taxes are a non-starter.

Rep. Robert Bierman, DFL-Apple Valley, co-chairs the House Health Finance and Policy Committee and said he and Republican co-chair Rep. Jeff Backer are writing their budget based off of the budget forecast from March. But many are anticipating it could be demolished by cuts at the federal level.

“It’s extremely difficult, but we fundamentally have to just kind of work with what is in front of us right now, and despite the storm clouds above us at the federal level, our job is to get a budget done based on where we’re at in present circumstances,” Bierman said. 

Republicans agree that the focus should be on what lawmakers know now. They said lawmakers could return to tweak if federal funding changes throw off the balance of Minnesota’s spending plan. 

“If any federal changes would cause a change going forward, after we seal up this session with a budget, then, of course, if the governor calls us back, we would come back,” House Speaker Lisa Demuth said ahead of the legislative recess. “But right now, we have to go with the dollars and the data that we have in order to finish up this legislative budget.”

Walz to encourage bipartisan work, push back on Trump in speech

Gov. Tim Walz will deliver his sixth State of the State address on Wednesday from the House chambers. After spending months on the road campaigning for the Democratic presidential ticket – and more recently deploying out to congressional districts represented by Republicans to host town halls – he said he’ll call on lawmakers to come together on a budget.

The second-term DFL governor said he’ll also highlight changes posed by the Trump administration that could shake up Minnesota’s budget and impact services.

“I think the state of Minnesota is still in a solid spot, but I don’t think any of us should kid ourselves. We’re in very precarious territory,” Walz told reporters last week. “We’ve decided to pick trade wars with our allies. We’ve isolated and turned allies against us. We’ve forced many folks into the Chinese sphere of influence, on a broader scale, and states are under threat for programs just like this. So I think to try and articulate we’ve got some real decisions to make.”

The late-in-session address is unlikely to pose significant shifts in policy.

Senate president faces ethics probe

The Senate Subcommittee on Ethics is scheduled to meet twice to weigh a complaint against Senate President Bobby Joe Champion.

Champion represented Rev. Jerry McAffee on a pro bono basis in his capacity as an attorney in 2022, then helped McAffee’s nonprofit 21 Days of Peace receive state grant funds in an economic development bill that he spearheaded in 2023. 

Online news site The Minnesota Reformer first reported the possible conflict of interest. The Star Tribune has since reported on other legal clients of Champion’s whose organizations have also received state funding.

Republicans raised the complaint saying Champion failed to report the possible conflict of interest, potentially violating Senate rules.

Champion said it wasn’t a conflict of interest since it took place prior to the legislative session and he wasn’t paid for representing McAffee. Out of “an abundance of caution” Champion requested an advisory opinion from the ethics panel and stepped down as its chair.

The subcommittee, now chaired by DFL Sen. Sandy Pappas, could take up both the request for an advisory opinion and the ethics complaint this week.

MPR News reporters Catharine Richert, Clay Masters and Dan Kraker contributed to this report from Rochester, Plymouth and Ely, Minn.