The office of Minnesota Management and Budget (MMB) on Thursday released its annual November economic forecast, which provides a picture of the state’s budget picture. According to MMB, 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.
“They are calling this budget situation stable, but to me it’s really concerning,” Senator Bill Lieske (R-Lonsdale) said. “A short-term surplus driven by higher tax collections on Minnesotans and a long-term, large structural deficit on the horizon are not healthy. We’re asking taxpayers to shoulder a very heavy burden to keep up with the state’s unsustainable spending problem and out-of-control fraud.
Remember that just two short years ago we had an $18 billion surplus that we could have used to provide people with relief,” Senator Lieske added. “Instead of putting Minnesotans first, Democrats and Gov. Walz used their complete control of government to put their allies and special interests first. They spent the entire surplus, raised $10 billion in taxes, increased spending by a reckless and unsustainable 40%. And fraud is running rampant, with Gov. Walz being unwilling or unable to stop it. We have to get our spending problem under control, provide people with relief, and stop the fraud for good.”
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.