Minnesota’s budget outlook has improved according the latest report issued by the state's Management and Budget office.
Minnesota’s latest budget forecast reverses its deficit with a $377 million surplus projection. Amid significant near-term economic and fiscal uncertainty, the fiscal year 2026-27 projected balance is now $3.7 billion. That is $1.3 billion higher than their November estimates.
Governor Tim Walz hailed the news as a testament to "smart policy" and what he called disciplined budgeting.
"Our goal is to keep Minnesota on solid financial footing ready to handle whatever comes," said Walz. "We've worked to do the things that were necessary and it's not easy. And I said I'm going to be putting out a very, I think measured, supplemental budget in the next month."
Also at the budget address was Republican House Speaker Lisa Demuth, who countered that Minnesotans remain "overtaxed" and called for the offsetting any new spending with immediate reductions. The new projections still call for a budget deficit down the road.
“Today’s forecast gives us the chance to pass a bipartisan tax conformity bill that helps workers through common-sense policies, like no tax on tips and no tax on overtime, and helps our Main Street businesses continue to be the job creators that keep our state strong,” said Minnesota GOP House Speaker Lisa Demuth. “Tax increases on Minnesota families and more government spending should be off the table, and our focus should remain on lowering costs on family budgets.”
Walz had a different take on the numbers.
"Good news today in Minnesota. From school meals, to paid family leave, and a nation-leading child tax credit, we’ve proven we can invest to make Minnesota the best place to raise a family while keeping our state‘s finances strong," Walz wrote on social media.
The savings are helped by a $133 million medical assistance audit. Walz calls these healthcare cuts "disciplined," but warned that those same changes might actually cost Minnesota $31 million in extra federal funding.
Demuth dismissed the savings as a "bare minimum" first step.
"We need to act," she said. "House Republicans stand ready in three ways federal tax conformity. We're also looking to take the pressure off of family budgets, and we want to stop fraud."
The speaker says right now aggressive spending cuts are the only way to protect taxpayers.
"It's good, I guess, that finally in the eighth year of this governor's administration he's implemented some bare measures that have slowed down the avalanche of fraud that's been allowed under his administration," says GOP House Floor Leader Harry Niska. "But imagine what we would have saved if he had taken Republicans seriously."
The projected general fund balance for the FY 2028-29 biennium is now $377 million, however a significant structural imbalance remains.
The budget office also noted that shifting policies at the federal level and missing or incomplete data due to recent federal government shutdowns introduced some significant uncertainty to their projections.