Minnesota's budget forecast has improved over the last few months.
Officials with the Office of Management and Budget now project that the state will have a surplus of $3.7 billion. That's an increase of $1.3 billion from the last forecast put out in November.
“The near-term economic outlook has improved, with growth expected to persist through 2027,” the budget office said, citing higher tax collections. Corporate tax revenues are showing the largest gains due to higher-than-expected corporate profits.
"For all the doom and gloom of November, it took us three months to grow our surpluses by about a third," Governor Tim Walz explained. "And to have our long term projections, as I remind everybody in this room many states do not do this, we project out the next biennium. And we even take into account inflation."
Republicans in Minnesota are already blasting the report as proof of the Democrats "runaway spending". House Minority Leader Lisa Demuth (R- Cold Spring) in a written statement says the looming deficit, "is proof of the irresponsibility of the Democrats spending spree last session."
"It's time to cut spending and budget responsibly, instead of trying to maintain the reckless spending of last session," says Demuth.
Spending estimates are largely unchanged from November. However, state officials caution that a revenue deficit is projected down the road due to the state's current spending levels.
"The forecast doesn't change our focus for this session," says Walz at a Thursday morning press conference. "We're focused on implementation and infrastructure. 2024 is a bonding year, that's going to be our focus. Now is the time to keep our eye on an economy that is steadily growing. We're moving steady, and responsibly."
The budget office is forecasting a smaller potential deficit in the 2026-27 budget cycle. Spending is still projected to exceed revenue, but only by $1.5 billion instead of the $2.3 billion previously forecast.
"We've got to have some folks quit rooting against Minnesota," said Walz. "This is positive, this is good. There's never been these forecasts where the long term doesn't fluctuate a bit. But this has improved dramatically."
Minnesota is coming off a legislative session in 2023 that saw a record $18 billion surplus. Part of that money was sent back to taxpayers in a rebate check, but the DFL-controlled House, Senate and Governor Tim Walz (D) also passed an historic list of progressive spending adding up to $72 billion over two years. It's the largest budget in state history. Republican lawmakers had been calling for further cuts to spending.