Apple Valley Chamber of Commerce's State Legislative Session 2026 Expectations

Business Impact Report

Navigating state mandates and defending South Metro interests in a divided legislature.

Paid Family & Medical Leave (PFML) Payroll Tax

0.88%

Live Jan 1, 2026

%

New Meal Break

30m

Per 6hr Shift

Projected Deficit

$2.2B

FY 2028-29

State Legislative Risks

Click for more information about each issue »

➤
Operational Disruption Immediate rollout of Paid Family & Medical Leave (PFML) benefits & stricter break mandates.
➤
Corporate Tax Exposure Proposed hike to 12.45% to plug the deficit.
➤
South Metro Funding Raid Dakota County sales tax dollars at risk ($14M).
➤
Missing Middle Housing The "Missing Middle" bill (HF 4009) and its impact on Apple Valley zoning.

⚖️ Balance of Power

"Divided government in St. Paul means gridlock is our defense against new taxes, but a hurdle for fixing technical glitches."

Governor

Tim Walz (DFL)

Can veto any bill passed by leg.

Veto Pen

Senate

DFL Majority (34-33)

Controls which bills get hearings.

Agendas

House

Republican/Split

Must approve all budget bills.

Spending

Legislative Issue Drill-Down

Click on any card below to view the comprehensive legislative briefing on State Legislature proposals.

Mandates

Labor

PFML implementation, ESST revisions, and new break rules effective Jan 1.

View Regulations →

Fiscal Policy

Taxes & Deficit

Structural deficit projections ($2.2B) and the fight over the "5th Tier" tax.

View Forecast →

Infrastructure

Transport

Protecting Dakota County sales tax funds and securing Red Line improvements.

View Projects →

Zoning

Local Control

The "Missing Middle" bill (HF 4009) and its impact on Apple Valley zoning.

View Bill Details →

2026 Legislative Forecast

Predictive modeling based on divided legislative control.

Updated: Nov 19, 2025

Bonding Bill ($1B+)

Prediction: Likely (75%)

High Probability

The Bonding Bill is the primary vehicle for capital investment in state infrastructure. Crucially, bonding bills require a 60% supermajority vote to pass.

With the House currently in a 67-67 Tie, the GOP caucus has equal control over the agenda. They will likely demand heavy investment in roads and bridges (benefiting suburban/rural areas) in exchange for passing the DFL's urban priorities. Apple Valley is well-positioned to secure Cedar Avenue funding in this "trade-off" environment.

PFML "Fix-It" Bill

Prediction: Gridlock Risk (High)

Uncertain

With the Jan 1, 2026 launch approaching for both benefit payouts and the 0.88% payroll tax, a legislative fix is stalled.

The DFL-controlled Senate seeks only minor technical corrections. However, the tied House (67-67) is deadlocked; the GOP caucus is demanding substantive exemptions for small businesses or implementation delays.

The Risk: Without a compromise (likely requiring a Special Session), the law goes into effect "as-is." This leaves businesses exposed to immediate compliance penalties without a "Safe Harbor" provision.

Corporate Tax Hikes

Prediction: Dead on Arrival (<5%)

Unlikely

The Situation: In 2025, a proposal to raise the corporate tax rate to 12.45% (currently 9.8%) and create a "5th Tier" income tax was adopted in committee but stripped from the final bill. We anticipate these proposals will return in 2026 to address the structural deficit.

The Firewall: With the House of Representatives locked in a 67-67 tie, these tax hikes face an insurmountable blockade. The GOP caucus has drawn a hard line against any rate increases. Without bipartisan support, these revenue raisers cannot reach the Governor's desk, forcing the state to look at spending cuts or reserves instead.

Contact Your Legislators

The most effective way to influence state policy is direct communication with your elected officials in St. Paul.

📍

Find Your Representative

Not sure who represents you in St. Paul? Use the official GIS tool to find your House Representative and Senator.

Launch District Finder