A new political shakeup and what it means for Minnesota’s business community

By Doug Loon
President and CEO
Minnesota Chamber of Commerce

Happy New Year to each of you. I hope 2026 is off to a great start for you, your family and your business. As the year begins, Minnesota is already seeing significant political developments that will shape the months ahead.

This week, Governor Tim Walz announced that he will not seek re-election, reversing an earlier decision from the Fall. That announcement marks a major turning point in Minnesota’s political landscape, opening the door for new candidates on the DFL side and potentially triggering a broader reshuffling across statewide and legislative races. It’s something we’ll be watching closely and keeping you updated on as the year unfolds.

This decision also comes amid heightened scrutiny at the Capitol around accountability and the operation of state government, particularly as additional fraud cases tied to state programs continue to emerge. These are taxpayer dollars, and it’s appropriate that Minnesotans are paying close attention. As the governor shifts his focus to the legislative session, it’s clear that 2026 will be a consequential year for policy decisions that directly affect Minnesota employers.

Earlier this week, the Minnesota Reformer published an analysis of Governor Walz’s tenure and the state of Minnesota’s economy. That reporting closely aligns with the data the Chamber released last November at our Economic Summit through the 2026 Business Benchmarks report and our broader initiative, the Economic Imperative for Growth. This isn’t a political campaign – it’s an effort to clearly communicate where Minnesota’s economy stands and what it will take to strengthen it.

The data tell an important story. While Minnesota continues to benefit from relatively high wages and low unemployment, we are trailing the nation in economic growth. GDP growth, job growth and income growth are all falling behind other states. Even in areas where we are performing reasonably well, we are losing ground comparatively. That puts Minnesota at a critical crossroads, especially given our long history as a state known for innovation, investment and economic opportunity.

That reality underscores why a competitive, private-sector-driven economy matters so much as we head into the 2026 legislative session. With a closely divided Legislature, there is still an opportunity to make progress if leaders are willing to work together. Tax policy will be front and center, particularly the need for federal tax conformity following recent changes at the federal level. Provisions like Section 179 expensing, the R&D tax credit, and bonus depreciation are critical for businesses, and failing to act would effectively result in a tax increase, something the business community wants to avoid.

There will also be important conversations around the rollout of paid family and medical leave and whether adjustments to the law are possible as implementation begins. In addition, we want to continue building on bipartisan progress made last year to improve Minnesota’s environmental permitting process so good projects can move forward and our state can remain competitive with others.

All of this makes the Chamber’s upcoming Session Priorities event on February 17 especially timely. It will help frame the policy debates that matter most to employers and provide insight into how the legislative session and the upcoming election cycle will shape Minnesota’s economic future.

As always, stay connected with the Minnesota Chamber and thank you for your continued support. I look forward to catching up with you on next week’s episode of the Minnesota Business Podcast.