Fraud and ICE surge fallout to dominate 2026 session

FOX 9’s preview of the 2026 Minnesota legislative session says lawmakers returning to the St. Paul Capitol next week will open with a fight over the fallout from Operation Metro Surge and the state’s failure to police fraud in social-service programs. DFL leaders Erin Murphy and Zack Stephenson are signaling bills aimed at economic triage in the Twin Cities — including a business recovery fund, a possible eviction moratorium, and laws to make cops and federal agents more clearly identifiable — explicitly tying them to small-business closures and workforce hits from ICE’s crackdown in Minneapolis–St. Paul. On the other side of the aisle, Speaker Lisa Demuth and Senate Minority Leader Mark Johnson are telegraphing a session-long push on fraud and immigration, using the Optum “flash audit” and massive Medicaid/HSS scandals as justification for new guardrails on how billions move from state agencies into nonprofit and provider hands. Hanging over all of it is a bonding bill for infrastructure that both parties say they want but are almost certain to weaponize over which projects — including metro roads, transit and public facilities — get funded. In short, the session is shaping up as a proxy war over who owns the state’s fraud disasters and who pays the bill for a federal immigration surge that has already blown a hole in the Twin Cities’ small-business base.