Minnesota’s financial officials released a report highlighting a shrinking fiscal cushion and increasing potential deficit, with a mere $456 million left for the budget and a projected $6 billion shortfall within four years. The situation may worsen due to impending federal cuts, sparking concerns among lawmakers. This data will inform discussions on the upcoming budget but does not factor in yet-to-be-implemented federal changes.
Spending on education and public health is driving cost increases, and if no changes are made, expenditures are set to rise by $790 million over the next two years. The projected deficit for 2028-29 could reach $5.1 billion. Lawmakers are considering potential measures, including tapping into the state’s $3.5 billion rainy day fund to address budget shortfalls.
While Republican and Democratic lawmakers agree on the necessity of spending reductions, they differ on whether to utilize the reserve fund. The Trump administration’s federal actions, such as tariffs and Medicaid cuts, could significantly impact Minnesota’s budget outlook. Despite economic uncertainties due to potential federal changes, officials emphasize the need to address existing financial challenges without relying solely on federal funding. The report sets the stage for intensive budget discussions ahead of the June 30 deadline to avoid a government shutdown.
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