Minnesota Management and Budget (MMB) presented the state’s budget forecast today. The forecast revealed a short-term surplus with a future deficit due to runaway spending, unchecked fraud, and slow economic growth hampered by billions in new taxes. According to MMB, although state spending outpaces revenues, the budget for fiscal year 2026 –2027 includes a $2.465 billion surplus. However, in 2028 – 2029, the state is projected to have a $2.96 billion deficit.
“Minnesota’s budget forecast reveals the cost of fiscal irresponsibility,” said Senator Gary Dahms (R – Redwood Falls), Republican lead of the Senate Commerce Committee. “Governor Walz and the Democratic majority increased taxes on Minnesotans and raised state spending to unprecedented levels. Years of unchecked spending and mismanagement and misuse of taxpayer dollars have fueled a future deficit.”
MMB notes “slow economic growth” as 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 in per capita GDP 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 actually need it.
“Our state has now lost billions in taxpayer dollars to waste, fraud, and abuse. The 2026 legislative session must be about holding government accountable and putting Minnesotans first,” Senator Dahms concluded.
Click here to read the full MMB November Budget and Economic Forecast.
Senator Dahms is in his fifth term representing Senate District 15 which includes communities in Blue Earth, Brown, Chippewa, Lac qui Parle, Lyon, Redwood, and Yellow Medicine counties. He also serves as Co-Chair of the Senate Commerce and Consumer Protection Committee and is a member of the Agriculture, Veterans, Broadband, and Rural Development Committee; Finance Committee; and Rules Committee.