
How tight is Minnesota’s upcoming budget? Thursday’s forecast will set stage for negotiations
State lawmakers know Minnesota will have less money to work with in the upcoming two-year budget, but on Thursday they’ll get a closer look at just how tight things will be.
Minnesota’s Department of Management and Budget will is releasing its February economic forecast, a key point as lawmakers craft the state budget.
December’s forecast found the state was poised to have a $616 million surplus in 2026-2027, but officials projected a $5.1 billion deficit for the two following years. The surplus had dropped $1.1 billion from what the state previously expected.
To address those future shortfalls, Gov. Tim Walz proposed cuts to home disability care and other services in his January budget recommendations. The Legislature will craft the budget and must do so by June 30 or risk a government shutdown.
It’s a much different picture at the Capitol this year than it was in 2023, when the Democratic-Farmer-Labor Party controlled the House, Senate and governor’s office.
They still have the Senate and governor’s office, but Republicans currently have a majority in the House. That could become a 67-67 tie again after a special election, but regardless of the outcome, the DFL must now compromise with Republicans in order to pass a budget.
There’s also a lot less money to work with. In March 2023, MMB found the state had an $18 billion budget surplus. That year, DFL-controlled state government passed a more than $70 billion state budget that grew spending by nearly 40%.
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