The state budget forecast presented today revealed a sustained deficit due to runaway spending, unchecked fraud, and slow economic growth hampered by billions in new taxes on Minnesotans.

Senator Andrew Lang (R-Olivia) issued the following statement:

“Affordability is the number one issue for Minnesotans right now,” said Sen. Lang. “The forecast makes it clear that the $10 billion in tax hikes can’t keep up with the out-of-control spending and the rampant fraud we’re seeing. Minnesotans are thinking carefully about their budgets every single day, and the Walz administration needs to do the same. We need to stop the fraud, tighten spending, and put Minnesota families first, not government. The time is now. This is not a kick the can down the road situation.”

The overall forecast reveals the state’s spending is outpacing revenue, despite of $10 billion in new taxes. According to Minnesota Management and Budget, the budget for fiscal year 2026-2027 includes a $2.465 billion surplus, even while spending outpaces revenues. However, looking to 2028-2029, the deficit balloons to $5.4 billion as spending is projected to outpace revenues. Only by not spending the surplus would the 2029 deficit projection reduce to $2.960 billion. This represents nearly a five percent reduction in spending for the next biennium, on top of similar cuts made in the last budget cycle.

Slow economic growth is a major factor in revenue losses. This underscores concerns raised from a Minnesota Chamber of Commerce Business Benchmarks Report released two weeks ago, ranking Minnesota 38th with 1% GDP per capita annual growth, 40th for labor force growth, and 41st in net domestic migration. Between 2019 and 2024, key economic statistics slowed to nearly stagnant or negative levels, reversing previous trends, and impacting the state’s overall economic climate.

Additionally, increased spending on health care pressures revenues. This is notable as Minnesota has seen significant fraud in health care services. Efforts to reduce fraud and verify eligibility will be necessary to ensure these funds are available for those who actually need it.