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 imbalanced spending ahead that could easily become significant budget deficits.

"We must give credit where it is due: the Trump economy is what's driving Minnesota’s improved budget forecast, not decisions made by Gov. Walz or Democrats in St. Paul,” Senator Eric Lucero said. “The mismanagement of Gov. Walz and Minnesota Democrats is actively working against the strong economy the president has built. State spending is still growing faster than revenue, Minnesota’s structural budget deficit remains in place, fraud continues to run rampant on the Democrats’ watch, and Minnesotans are still massively overtaxed. The only path forward is to follow the Constitution, stand for truth, and prioritize Minnesotans who are here legally, not illegal aliens and criminal fraudsters.”

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)