Fresh off VP loss, Tim Walz returns to Minnesota to face a stark new political reality

Gone were the camo hats and crisp blue suits of the vice presidential campaign trail.

Instead of Midwestern dad energy, DFL Gov. Tim Walz’s vibes felt more like a financial planner, using charts and figures to roll out his two-year budget for Minnesota and demonstrate the “long-term drivers” hiking costs. Some of his ideas sounded similar to those state Republicans had pitched for years: tax reform, spending cuts and tackling fraud.

He thought they should like them, too.

“I think there will be big buy-in from them,” Walz said.

Walz’s budget plan and other proposals he’s rolled out represent a shift in tone for the governor, who is facing a new political reality after his failed national campaign. Instead of a DFL trifecta and a state flush with cash, he must now try to hash out a budget with a narrowly divided Legislature and a multibillion-dollar deficit on the horizon.

“A new political invisible fence has been installed around him. The public is fed up with fraud, Republicans wisely won’t raise taxes and Minnesota has an actual balanced budget requirement,” said former Republican Gov. Tim Pawlenty, who also briefly returned to the job after running for national office. “His political roaming area has shrunk significantly.”

Complicating matters is a bitter battle between Republicans and Democrats in the state House, where his party has boycotted the first two weeks of the legislative session to prevent Republicans from taking power for now. The unprecedented situation has forced Walz to wade in, even as it risks damaging his relationship with Republicans.

Following a Friday state Supreme Court ruling that Republicans couldn’t conduct any business without at least one Democrat present in the chamber, Walz said he expected the GOP to “drop their unlawful charade” and return to the negotiating table.

Republicans successfully sued after Walz prematurely called a special election to fill a vacant Roseville-area House seat. In solidarity with the Democratic boycott, Walz ignored calls from Republicans to use the State Patrol to bring in absent members, and his commissioners stayed away from House GOP committee hearings.

“There’s been a number of things that are concerning about the executive branch stepping into the legislative branch,” said House Leader Harry Niska, R-Ramsey.

For the past two years, Walz and DFL allies controlled state government, using a historic $17.6 billion budget surplus to enact a long list of policies and the largest two-year budget in history.

Now the state is projecting a $5.1 billion budget deficit in 2028-29. Republicans have blamed runaway DFL spending, but budget officials point to ballooning costs for special education and waivers for disability services as the main cost drivers.

Walz has pitched to slow that spending growth, an idea that earned pushback from some of his DFL allies who don’t want trims to services for the vulnerable.

“The governor’s biggest challenge is threading the needle of making sure those folks are taken care of and trying to curve the cost there,” said former Democratic state Sen. Jeff Hayden, who added that Walz could be taking a message from the voters last fall that they want to spend less.

“If Minnesotans are telling him this is what we think, then OK. In these situations sometimes you just have to show people the choices they have,” he said.

Walz’s budget isn’t just sending a message to Minnesotans.

A cornerstone of his proposed tax plan is reducing the sales tax rate by 0.075% while broadening it to include things such as brokerage and accounting fees. He framed it as a way to counter potential cost increases that could result from President Donald Trump’s proposed tariffs.

The sales tax pitch and Walz’s outspoken opposition to Trump’s short-lived plan to freeze federal grants and loans on Tuesday offer the first glimpses of how he intends to message in opposition to the administration over the next four years.

Walz hasn’t ruled out seeking a third consecutive term as governor — unprecedented in modern state politics — or another run at national office in four years. Recent polling from the national research firm Morning Consult shows 55% of voters in the state approve of his job, roughly the same as before his run for vice president.

“This legislative session will largely determine his political future, and it won’t be an easy one because of the divide that exists in the House,” said former DFL Party Chair Mike Erlandson. “People are digging in deeper, and it’s becoming more partisan and more nasty.”

Walz and Democrats nationally have been soul-searching since their loss to Trump and seeking a new message that can appeal across party lines.

David Sturrock, a political science professor at Southwest Minnesota State University, said Walz could position himself for another national race off this session if he can cast himself as a uniter.

“If the Democrats in the Legislature give him enough slack to strike some compromises with the Republicans,” Sturrock said, “he could then sell himself to a national audience as a leader who can build coalitions and solve problems.”