Minnesota budget surplus shrinks to $1 billion

SAINT PAUL, Minn. (FOX 9) – The balance of Minnesota’s state budget surplus has dropped $492 million since the last outlook in November, down to just over $1 billion.

Minnesota Management and Budget will release its full report later Thursday, but slower projected economic growth and lower tax collections compared to previous estimates resulted in the reduced surplus figure.

The state projects spending to outpace forecast revenue growth into the 2022-2023 budget years.

Since the last budget forecast, Gov. Tim Walz has proposed to increase Minnesota’s gas tax by 20 cents per gallon to pay for road and bridge projects amid a flurry of new spending plans in the Democratic governor’s first budget.

Under Walz’s budget proposal, the state’s gas tax would increase to 48.6 cents from 28.6 cents, a 70 percent jump. That would make Minnesota’s tax the fourth-highest in the U.S., behind only Pennsylvania, California and Washington.

“What Minnesotans do know is if we continue to do the haphazard approaches or just assume that the budget and economy is going to be great, we’re going to fall further behind,” Walz told reporters after presenting his budget. “We are going to have other catastrophes, whether it be bridges, roads or people who are stuck every single day in unacceptable gridlock.”

The governor’s $49.5 billion, two-year spending plan faces an uncertain future in the divided state Legislature, and Republicans who control the Senate have vowed to fight any tax increase. They said Walz’s proposals would make Minnesota a cold-weather version of high-tax California.

“This will make Minnesota absolutely uncompetitive. This is not ‘One Minnesota.’ This is ‘One Expensive Minnesota,’” said House Minority Leader Kurt Daudt, a play on the slogan that Walz has used since his 2018 campaign.

Categories: Minnesota News, Politics / Elections