The state budget forecast presented today revealed continuing deficits due to runaway spending, unchecked fraud, and slow economic growth hampered by billions in new taxes on Minnesotans.
“Uncontrolled spending leads to long-term deficits that even $10 billion in tax increases cannot offset – Minnesota families should be appalled by this mismanagement of their tax dollars,” said Senator Jeff Howe (R-Rockville). “We are facing a looming $5.4 billion deficit if we don’t get our state’s finances back in order – that is unacceptable. Federal prosecutors have also recently stated fraud totals in Minnesota amount to over $1 billion, but that was a preliminary number that seemingly continues to balloon every week. Without that fraud occurring, our budget would be in a much better place.
“We need to step up for families in our state, and that means getting our budget under control, stopping the billions in fraud, and making life affordable. Minnesota families should not be forced to bear the financial burden of runaway spending by the Walz Administration and Democrats.”
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.
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 puts pressure 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.