DNR outlines FY26-27 budget with new gas permitting program, fee increases and park operating request

The Minnesota Department of Natural Resources presented the governor's FY26-27 budget recommendations to the Senate Committee on Environment, Climate and Legacy on Feb. 27, detailing new regulatory staff for gas development, one-time legal and public-safety supplements, and fee increases intended to shore up long-running program shortfalls.

Commissioner Sarah Stromman said the package “reflects the broader theme of his overall budget, which is a need to balance the state budget during a time of fiscal constraint while providing critical investments that contribute to a high quality of life in Minnesota.” She told the committee the DNR's proposed biennial budget covers roughly $1.5 billion across all DNR funds and focuses limited new spending on critical priorities.

Why it matters: The request would create new regulatory capacity to implement temporary and permanent frameworks for onshore gas extraction, add staff to address rising legal and emergency response costs, and raise certain fees that now subsidize general-fund spending in areas such as aquatic invasive species (AIS) response and groundwater permitting.

Key proposals and details - Gas permitting and leasing: Following recommendations from the Gas Resources Technical Advisory Committee (GTAC) and legislative direction from February 2024, DNR proposes a permitting program and a separate leasing program. The permitting request is $1.3 million from the general fund to fund four permitting positions for resource development permits, environmental review and financial assurance work. The leasing proposal is $660,000 to fund two positions, including one attorney and one production-site inspector, to handle title research, exploration-plan review and drill-site inspections. - One-time legal and public-safety supplements: DNR asked for one-time general-fund supplements to cover rising legal costs tied to highly contested natural-resources decisions and to fund training and equipment for conservation officers to assist in public-safety responses. The public-safety request includes $840,000 and one ongoing FTE, the agency said, because dedicated accounts cannot legally be used for some public-safety deployments. - Operating adjustments: DNR requested $5.4 million from the general fund and $11.5 million from other funds to partly cover inflation-driven increases in employer-paid benefits, utilities, vehicles and other operating costs. - Fee proposals: Three fee changes are proposed to reduce general-fund pressure and increase program capacity: - Aquatic invasive species surcharge: Move from a flat $10.60 surcharge on the three-year watercraft registration to a sliding scale tied to boat size; DNR used a $25 three‑year fee for pleasure craft under 17 feet as an example. Revenue from the increase would expand grants to lake associations, tribal nations and local governments, increase DNR capacity for vegetation management and support the Minnesota Aquatic Invasive Species Research Center at the University of Minnesota. DNR said the surcharge increase would generate about $5.7 million in revenue and allow a $660,000 reduction in general-fund support to the AIS program. - Groundwater permits: Move to a tiered fee tied to annual water use. DNR gave an example: the lowest tier (up to 50 million gallons/year), currently $140, would rise to $200; 85% of agricultural irrigation permits fall in that tier. DNR said the change should generate revenue that reduces general-fund obligations to the groundwater program by about $3.6 million. - State park vehicle permits: Raise the daily vehicle permit from $7 to $10 and the annual permit from $35 to $45 to generate roughly $850,000 for the Natural Resources Fund. The agency warned a fee increase would be needed to avoid service reductions. - Legacy fund requests: DNR briefed the committee on one-time proposals using Parks and Trails Legacy Fund and Clean Water Fund dollars for park improvements, access programs and watershed-based clean-water work. The DNR reiterated that legacy funds are intended to supplement but not supplant core funding.

Committee questions and follow-up: Senators pressed DNR officials for detailed account balances and historical comparisons of revenue. Assistant Commissioner Bob Meyer said the DNR can provide a table showing account balances and noted the Natural Resources Fund contains more than 50 subaccounts. Meyer also described an unallotment proposal to return nearly $4 million of a prior drought-seedling appropriation after program needs proved smaller than expected; combined with other adjustments, Meyer said the budget includes roughly $8 million in general-fund reductions.

Context and next steps: The committee did not act on the recommendations at the hearing. DNR officials said they will provide supplemental spreadsheets that break down fund balances, account-level revenue and prior-year comparisons.

Sources: Commissioner Sarah Stromman; Assistant Commissioner Bob Meyer (Minnesota Department of Natural Resources), Senate Committee transcript Feb. 27, 2025.