Walz proposes $907 million 2026 infrastructure plan, prioritizing asset preservation and water projects

ST. PAUL — The governor’s proposed 2026 infrastructure package would direct $907,000,000 in funding toward state and local capital needs, with a large share reserved for repairing and maintaining existing state facilities, Minnesota Management and Budget Commissioner Erin Campbell told the House Capital Investment Committee on Feb. 19.

"The governor recommends a total of $907,000,000 in funding from all sources," Campbell said, outlining the administration’s plan and explaining the capital budget process MMB administers. She said the governor recommends $316,000,000 in asset preservation investments — about 45% of the general obligation bonds in the bill — to address an increasing backlog of deferred maintenance.

The presentation laid out several program-level priorities: $113,000,000 for water infrastructure programs (wastewater, safe drinking water, lead service-line replacement and emerging contaminants), $50,000,000 for high-priority trunk-highway pavement projects, $47,000,000 for renovation and expansion of the Bureau of Criminal Apprehension’s Bemidji regional office and forensic lab, and continued emphasis on housing infrastructure with $50,000,000 in housing bonds and $10,000,000 in public housing rehabilitation grants. Campbell cited an MPCA estimate of $2.7 billion in water and wastewater needs and said more than 1,000,000 Minnesotans live in communities with high-priority water projects.

Campbell framed the asset-preservation emphasis as a response to growing deferred maintenance: "It is this growing issue of deferred maintenance that drives much of the governor's recommendations being devoted to asset preservation," she said, and noted agency backlogs across state government. The administration said the state’s facilities backlog and the age of state buildings are among the reasons to prioritize repairs and accessibility upgrades rather than new construction.

Committee members pressed for more detail on how the state will pay debt service on the bonding package. One representative asked, "Where are we coming up with the debt service for this bonding bill? Where does the governor plan on taking the money from?" Campbell said that deeper budget details will be released in the governor’s supplemental budget after the next fiscal forecast and that MMB will track debt-service costs against the general fund bottom line.

The administration also included several facility-specific proposals: $19,000,000 for demolition of the Centennial Office Building (the presentation said renovation estimates ranged from $175,000,000 to $250,000,000), $5,500,000 for maintenance on the New State Capitol Building (exterior window work), and targeted investments for corrections and direct-care facilities. Campbell said a portion of the overall package includes user-financed bonds and other non-GO sources as part of the $907,000,000 total.

The committee received the overview as a high-level briefing; agency partners were expected to appear in subsequent hearings to provide project-level detail and to answer follow-up questions about allocations and cost assumptions. The committee approved routine minutes and then proceeded to the Administration presentation later in the hearing.