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 state surplus that will be in the headlines exists because President Trump's policies have created a stronger national economy, period,” Senator Steve Drazkowski said. “Minnesota continues to spend more than it takes in, and Democrats blew a giant hole in our state budget when they had full control of government that we are still trying to repair. Democrats continue to attempt to take more and more from the hardworking taxpayers of this state, and the only thing that has slowed the bleeding is the work President Trump has done and the fact that House Republicans restored balance at the Capitol. The next tasks are clear: we must stop the fraud, prosecute the criminals, end the reckless spending, and give the taxpayers of this state some relief.”

A report from the Tax Foundation about state competitiveness rankings found 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 Report ranked 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.

FORECAST DOCUMENTS

** February 2026 Budget and Economic Forecast (PDF)

** February 2026 Budget and Economic Forecast Presentation (PDF)