Thursday's release of the February economic forecast by the Minnesota Department of Budget is likely to create more tension between state lawmakers in St. Paul.
The new Minnesota budget forecast shows a $456 million surplus for 2026-2027. That number is $160 million lower than November forecast. The November forecast showed a $616 million surplus for ‘26-27 with a $5.1 billion deficit in ‘28-29.
Additionally the department says the projected general fund shortfall for the 2028-29 biennium is nearly $6 billion or $852 million worse than November estimates.
House Speaker Lisa Demuth (R- Cold Spring) says Democrats will have to work with Republicans and come with responsible cuts in order to get a new budget to the finish line this session.
"The Democrat deficit continues to grow as a result of the irresponsible and unaffordable policies from the past two years," Demuth said on social media. "We need to get spending under control, and my expectation is Democrats will come to the table with savings and cuts—not tax hikes—to fix the mess they made."
Minnesota DFL lawmakers are putting a positive spin on the latest numbers with Minnesota House Speaker Emerita Melissa Hortman (Brooklyn Park) adding the federal government's decision to slash funding across multiple agencies is adding to the pressure on state government.
“Thanks to responsible DFL budgeting, the November forecast showed a $3.7 billion surplus in the current biennium, and today’s forecast shows a $456 million positive balance in the upcoming budget cycle," Hortman says in a statement. "The state continues to have our highest budget reserve fund ever. But when the federal government walks away from its obligations, the state has to step in, and we simply won’t have the resources to keep up. This will have dire consequences for the people of Minnesota and our state budget."
But Rep. Patti Anderson (R- Dellwood) says blaming the federal government for Minnesota's budget issues in the future won't work.
"While Democrats will continue to try and blame the Trump Administration and Federal cuts, these numbers are predicted before those cuts even have gone into effect. We have a lot of work to do to get the state back on track."
WCCO Radio political analyst Blois Olson tells Vineeta Sawkar on the WCCO Morning News that there will be ramped up pressure on lawmakers to find a way forward.
"The budgeting, and the pressure on budgeting, is going to be as tense as ever, especially when you think that the legislature is basically a virtual tie and the governor is going to have to negotiate this with Republicans at the table, which he hasn't had to do for two years," Olson explained.
Back in December the economic forecast projected Minnesota would have a $616 million surplus at the end of the next budget cycle, down $1.1 billion from the prior report.
"Agreeing on a budget is going to take months, and they have to get it done by June 30th to avoid a state government shutdown, which we have seen before," says Olson. "So I just think the tension is going to be very high and growing in the coming weeks."