Friends and neighbors,
Minnesota's Office of Management and Budget released its February budget forecast on Friday, showing a $3.7 billion surplus in the current two-year budget cycle. The forecast continued to predict structural imbalances ahead that could easily become significant budget deficits.
The forecast was clear that an improved economic outlook is what drove the projections, so thank President Trump's economy for our short-term surplus. Stronger markets and rising incomes are driving more revenue into our state, and we desperately need it after the Democrats turned our $18 billion surplus into projected deficits. Democrats ran up the tab, and nothing was slowing down until our House Republican friends ended the Democrats’ single party control of government and restored balance at the Capitol.
We still have bright red warning lights: The structural deficit is still there. Spending continues to outpace revenues. Fraud is running rampant. Minnesotans are overtaxed, and business and schools are being crushed by mandates.
Two other items I wanted you to read as it pertains to our economic picture:
- A report from the Tax Foundation on State Competitiveness rankings: Minnesota ranks 44th out of 50 for tax competitiveness. The state's top income tax rate of 9.85% is among the highest in the country. Sales taxes average over 8%, property taxes are high, and the corporate tax rate of 9.8% is also near the top nationally. Minnesota stacks tax on top of tax, and it's costing the state its competitive edge.
- A Minnesota Chamber of Commerce Business Benchmarks Reportranked 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.
If you want to read the forecast documents, you can do so here: https://mn.gov/mmb/forecast/forecast/
Thank you for staying involved. If you have any questions, please reach out.
God Bless,