The state budget forecast presented yesterday revealed continuing deficits due to runaway spending, unchecked fraud, and slow economic growth hampered by billions in new taxes on Minnesotans.

“This forecast confirms exactly what Senate Republicans have been sounding the alarm on for years: $10 billion in tax hikes will cover spending increases for now, but it is not a long-term solution that our state can afford,” said Senator Karin Housley (R-Stillwater). “We are still facing a large, looming deficit because spending is outpacing our revenue – it is unsustainable. Increased taxes combined with unchecked fraud and runaway spending have become the ‘new normal’ in Minnesota, and it is not a reality Minnesota families can afford.”

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 38^th with 1%  GDP per capita annual growth, 40^th for labor force growth, and 41^st 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.