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.
“The forecast is a mixed bag,” Senator Carla Nelson (R-Rochester) said. “The short-term surplus is better than a deficit, but it was driven by high tax collections. What I am really worried about is the large structural budget deficit that is in front of us yet again. What frustrates me most is this is a situation of our own making: when Democrats had complete control of government, they spent the entirety of our historic $18 billion surplus, raised taxes $10 billion, and increased spending by a totally unsustainable 40%, and for years Gov. Walz has refused to clean up the state’s fraud problem. Minnesotans are tired of watching government spending grow at this furious pace while their own paychecks are barely keeping up with the rising taxes and the high cost of living here, while the fraud problem continues to worsen without an end in sight.
“Clearly, we have a lot of work to do,” Sen. Nelson continued. “We need to return some budget discipline, we need strong oversight of public programs, and we need to start putting the needs of working Minnesotans at the front of our decisions.”
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.
FORECAST DOCUMENTS
November 2025 Budget and Economic Forecast (PDF)
November 2025 Budget and Economic Forecast Presentation (PDF)