Minnesota’s budget and economic forecast shows current surplus with a looming deficit

ST. PAUL, Minn. (KVRR/KFGO) — Minnesota’s budget and economic outlook remains stable in the current biennium.

State officials are predicting a surplus of nearly $2.5 billion in the current biennium, but a $2.96 billion deficit for the 2028-29 budget.

The Minnesota Management and Budget Office says a better-than-expected fiscal year close and higher near-term revenue collections, partially offset by increased spending estimates, result in a projected surplus.

The report says higher healthcare costs and slow economic growth drive an increased structural imbalance in a couple of years.

Some Republican lawmakers criticizing the state’s spending that it continues to outpace revenue.

Sen. Jordan Rasmusson, a Republican from Fergus Falls, says, “The state of Minnesota’s spending continues to outpace revenue, creating a structural deficit. Under one-party control, Minnesota Democrats drained the $18 billion surplus and pushed the state budget to unprecedented and unsustainable levels. Their reckless overspending created a $10 billion tax increase that now impacts every Minnesotan.”

Governor Tim Walz says, “Today’s snapshot does show uncertainty. I don’t think that’s any surprise to Minnesotans who have seen impacts on their own family budgets: It’s no surprise to anyone who has looked at their health care premiums for next year. It’s no surprise to anyone who has gone out to buy anything from a new car to a cup of coffee and seen a new tariff reflected on their bill.

“But in Minnesota, we know how to balance a budget. It’s what we’ve done for the last seven years, and it’s what we’ll continue to do. We’re standing on a solid foundation, and we have the tools to continue managing a budget that makes Minnesota a great place to live.”

Lawmakers will use this forecast to shape policy for the next legislative session.