The November budget forecast presented on Thursday, Dec. 4, revealed a sustained deficit due to runaway spending, unchecked fraud, and slow economic growth made worse by billions in new taxes on Minnesotans.

“Under one-party control, Governor Walz and Democrats depleted the entire $19 billion surplus, raised $10 billion in taxes, and pushed numerous unfunded mandates upon counties, cities, and school districts, all of which rely on property taxes for day-to-day operations,” said Sen. Cal Bahr (R-East Bethel). “The results are higher taxes on income, sales, vehicle tabs, and property tax on your home. Not to mention the BILLION+ lost to fraud. Now is the time to rein in bureaucracy and restore fiscal sanity.”

The state’s spending is projected to outpace revenue, even with $10 billion in new taxes. For fiscal year 2026–2027, Minnesota Management and Budget projects a $2.465 billion surplus. Looking ahead to 2028–2029, the deficit could rise to $2.960 billion if the current surplus remains unspent. If it is fully spent, the deficit could balloon to $5.4 billion.

MMB notes that “slow economic growth” is a major factor in revenue losses. According to the Minnesota Chamber of Commerce’s 2026 Business Benchmarks Report, “Minnesota’s economy is no longer keeping pace with the nation.” From 2019 to 2024, the state ranked 38th with 1% annual GDP per capita growth and 40th in labor force growth. Minnesota also ranks 41st in net domestic migration, meaning more people are leaving the state than moving in.

Additionally, increased spending on health care puts pressure on state 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 need them.

Click here to read the full MMB November Budget and Economic Forecast.