NORTH MANKATO — Minnesotans will be facing difficult times, including a very real threat of rising property taxes and reduced government services, in the years ahead, a bipartisan group of state lawmakers said Thursday.
The disagreements arose when assigning blame for the approaching fiscal storm.
Republicans pointed fingers at Gov. Tim Walz and legislative Democrats for their big spending when they had complete control of the state Capitol in 2023, for negligent administration of government programs that’s allowed multi-million fraud schemes to flourish and for excessive regulations that are harming businesses and residents alike.
Republican Sen. Rich Draheim of Madison Lake said Walz and the DFL made the business climate much worse with tax and fee hikes
“Anything they could find, they raised in the last two years,” Draheim said, adding that budgets and policies enacted by President Donald Trump and congressional Republicans could offset the damage. “I do have some excitement with some of the things happening at the federal level.”
Rep. Erica Schwartz, R-Nicollet, told attendees at the Greater Mankato Growth event that she suspects taxes would have gone higher still if Republican candidates hadn’t eked out a 67-67 tie in the state House after six years of Democratic control.
“I honestly felt they could have taxed anything that wasn’t stapled down into the ground,” Schwartz said.
Rep. Paul Torkelson, R-Lake Hanska, criticized the Walz administration’s failure to stop fraudulent use of tax dollars targeted at food, housing and drug-dependency programs.
“We just can’t afford to be wasting hundreds of millions of dollars just due to lax oversight,” Torkelson said.
Democrats said the bigger threat comes from the massive budget bill approved on partisan votes by the Republican-controlled U.S. House and Senate and signed into law by President Donald Trump on July 4. Dubbed the Big Beautiful Bill Act, the legislation will prompt a huge increase in the national debt, painful reductions in food aid and health care for the poor and inevitable burdens on local governments and the property owners those governments rely on, according to local DFLers.
Rep. Luke Frederick of Mankato called the legislation — which included Trump’s priorities for tax cuts and spending, coupled with reduced eligibility for safety-net programs and a large bump in the federal debt limit — “the largest redistribution of wealth from the poorest among us to the wealthiest among us.”
Frederick predicted big shifts in costs to states, counties, cities and schools.
“If you want alliteration, call it ‘The Big Budget Bomb,’” he said. “… They are investing in billionaires over people, and we’re going to feel that as a state.”
Sen. Nick Frentz, DFL-North Mankato, said the cuts to Medicaid and the Supplemental Nutrition Assistance Program won’t eliminate sickness or hunger. Instead, it shifts to state and local governments the cost of providing medical care and food for the poor. And the federal tax cuts will place an even larger financial burden on future generations already saddled with a national debt that has soared past $30 trillion.
“Our take is that this is going to cause our property taxes to go up,” Frentz said. “… And our kids and grandkids are going to have $3 trillion (in additional national debt) to pay off.”
The discussion at South Central College Thursday afternoon was officially GMG’s Post-Session Legislative Forum, which was originally scheduled as a lunch meeting on May 29. That plan was scuttled by a very unique and very lengthy legislative session that could have easily provided enough fodder for the 90-minute panel discussion led by Andy Wilke, vice president of Minnesota’s fifth largest chamber of commerce.
After all, there was the incredibly close outcome of the 2024 election, the apparent tie in the House between Republicans and Democrats, the temporary Republican edge at the start of the 2025 legislative session when a Democratic seat was vacated, a Democratic boycott of House sessions through much of January and early February, a return to the 67-67 tie after a DFLer won a special election, a hard-fought power-sharing agreement in the House and the not-so-surprising struggles to reach agreement on a new two-year state budget.
Only about 10% of the budget had been passed by the mid-May deadline for adjournment under Minnesota’s Constitution, which required extensive negotiations in late May and early June, a marathon one-day special session on June 9 and a seven-week delay in GMG’s post-session forum.
“It was something,” the freshman Schwartz said of her initial taste of legislating. “We went from a late start to a special session. I got to experience the whole thing.”
The House members participating in Thursday’s event — Republicans and Democrat alike — tended to portray the session’s outcome as a mix of positives and negatives, possibly because of the shared responsibility that came with shared power.
“You don’t get everything you want,” Torkelson said of split governance. “You don’t even get close, to be honest with you.”
Torkelson highlighted the reduction in the overall size of the state budget for 2026-27 compared to the previous biennium and the success in reducing projected red ink by about half in fiscal years 2028-29.
He and Frederick both applauded efforts to increase the number of state hospital beds, which will allow for the transfer of jail inmates in need of secure mental health services. Torkelson said some incremental progress was made on streamlining the process for obtaining government permits. Schwartz noted that state aid to cities and counties was spared from cuts. Frederick talked of additional tools provided to state agencies to enhance oversight and reduce fraud.
Frentz, as part of the narrow 34-33 DFL majority in the Senate, also emphasized instances of bipartisanship during the session, noting that the biennial budget was cut from about $71 billion to about $67 billion.
He also called attention to annual contributions for home weatherization programs that new data centers will be required to make and to some minor concessions to businesses dealing with newly required sick time benefits for employees.
Draheim, who had a lesser role in the outcome as part of the Republican minority in the Senate, was largely critical of the session.
“The average family is not better off,” he said, adding the same could be said for counties and nursing homes. “I could go on and on.”
Draheim, who is not seeking reelection in 2026 and quipped “I have one year left in my sentence,” was not only the panelist most explicit in criticizing the 2025 Legislature, he was most vociferous in praising the work of the Trump administration.
“We’ll meet next year and see what the feds have done,” he said. “Some of it is fantastic. Some of it probably isn’t. But we’ll adjust.”
Although Draheim conceded that some of the burden of financing the social safety net will shift from the federal government to counties and their property taxes, he said much of the reduction in Medicaid and food assistance costs will come from incentivizing recipients to get jobs: “These programs weren’t intended to be a lifestyle.”
Schwartz, who with her husband operates a Nicollet convenience store, said she also hopes the provisions of the federal bill will boost the number of people in the labor market.
“I’m cautiously optimistic about the Big Beautiful Bill,” she said. “… I’m looking forward to seeing if we can get more staff.”
Frentz said he worries about financially fragile rural hospitals being forced to provide care for people no longer covered by Medicaid: “People are not going to stop being sick.”
He’s also concerned that Trump’s affection for tariffs could undermine the regional economy: “I’m certainly worried about agriculture.”
While the next legislative session isn’t set to begin until February, Torkelson said it’s crucial that lawmakers spend those seven months doing their homework — a big part of which is studying how the monumental changes in federal policy and budgets will impact Minnesota.
“There’s huge potential to impact property taxes — I agree with that,” he said, adding that state leaders need to be creative in filling the gaps as efficiently as possible. “We can’t be overly generous. We can’t afford to be.”