Minnesota state officials recently announced that the projected budget surplus for the next two years is $456 million, which is $160 million lower than previously expected. This adjustment reflects “economic uncertainty,” according to the state’s budget and management office. The state also predicts a nearly $6 billion deficit in the general fund due to spending growth outpacing revenue growth through 2029. The rise in inflation, federal funding uncertainty, and changes in tariffs are major factors contributing to the revised forecast.
Governor Tim Walz expressed concern about the impact of federal policy changes, particularly actions taken by former President Donald Trump. Republican House Speaker Lisa Demuth blamed Democrats for the deficit and called for budget savings instead of tax increases. The state legislature will need to work together to address the deficit, with proposals to reduce special education reimbursements and slow down the growth of waivers for people with disabilities.
State officials stress the importance of federal funding, with over one-third of Minnesota’s budget coming from federal sources. The economic outlook remains uncertain, with state economist Dr. Anthony Becker highlighting the need for caution in relying on forecasts due to potential deviations in economic outcomes. The state’s budget projection also addresses education, health, and human services spending, as well as an increase in weight-loss drug use.
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