Minnesota’s estimated budget surplus is expected to be about $2.4 billion over the next two years, according to a new state estimate, but a shortfall could be on the horizon.

The Office of Management and Budget on Wednesday said the projected revenue surplus for 2024-2024 has grown by $808 million since the end of the 2023 legislative session — a trend officials said was due in part to higher expected consumer spending and corporate profit growth.

But higher expenses expected down the road on health and human services and educational spending will raise total spending in the years 2024-2027, resulting in a negative structural balance, the agency said Wednesday.

An exact figure for the potential shortfall was not immediately available Wednesday morning, but the Office of Management and Budget is releasing a complete series of its most recent budget and economic forecast Wednesday afternoon.

Minnesota in recent years had a series of record projected surpluses, which reached a record in February of $17.5 billion.

In the 2023 legislative session, newly-elected Democratic Farmer-Labor legislative majorities and DFL Gov. Tim Walz enacted a two-year $72 billion budget that grew spending by nearly 38%. The previous two-year budget was $52 billion.

Part of that new spending was one-time, such as on tax rebate checks, but DFLers also raised taxes and fees to the tune of billions to help fund new programs and spending, including a state-mandated paid family and medical leave program.

OMB is presenting its budget projections at 12:30 p.m. DFL and GOP lawmakers are expected to weigh in following the presentation.

When lawmakers convene for the 2024 legislative session on Feb. 12, they’re expected to tackle capital investment project spending. The Legislature traditionally handles bonding for infrastructure in even-numbered years.

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