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.

"I hope folks can remember that this short-term surplus exists mainly because of an improved national economy, not because of any turn toward responsible budgeting made by Gov. Walz,” Senator Bill Lieske said. “Budget deficits could still very well be in our future, and the situation only looks as manageable as it does because Republicans ended the Democrats’ total control of government and restored balance at the Capitol. Despite the rosy headline, there is still a lot of work to do. Fraud is still costing us billions, spending is still growing faster than revenues, and Minnesotans are still carrying one of the heaviest tax burdens in the country."

A report from the Tax Foundation on State Competitiveness rankings: 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)