A new state budget forecast shows Minnesota’s finances are improving, and the national economy is projected to grow more than previously estimated. However, spending issues are still on the horizon for Minnesota’s state budget.
Last December, Minnesota Management (MMB) announced that Minnesota had a projected $2.46 billion surplus for the current two-year budget cycle that runs through June of 2027. Despite this, MMB’s December forecast also said the state faced a $3 billion deficit in the following 2028-29 budget cycle even after the $2.465 billion surplus was applied.
Today, MMB released its latest state budget figures.
According to MMB, the surplus in the current two-year budget cycle has increased from $2.46 billion to $3.7 billion, a $1.3 billion increase. Additionally, the deficit in the 2028-29 budget cycle has turned into a $377 million surplus, but only after the $3.7 billion surplus in the previous two-year window is applied.
Regarding spending issues, MMB noted that “spending growth outpaces revenue growth through projections for FY 2029,” and “a significant structural imbalance remains.” In short, Minnesota has moved in the right direction, but spending is still too high.
“The reality is that we are spending more than we take in,” GOP Senate Minority Leader Mark Johnson said. “Short-term surpluses are not enough to cover long-term obligations, and that is a direct result of Democrats’ reckless spending in 2023 and 2024.”
During the 2023 legislative session, Democrats in control of state government passed a $72 billion two-year state budget, the largest budget in Minnesota history. To pass this record-setting budget, Democrats tapped into a $17.5 billion budget surplus.
Republicans have consistently criticized Democrats for draining the $17.5 billion surplus and growing the state budget by almost 40% in just a few short years.
After the DFL spending spree, Minnesota’s budget projections began to worsen. The low point was a $6 billion projected deficit for the 2028-29 budget cycle.
In 2024, the DFL’s control of state government was broken by Republicans in the Minnesota House of Representatives. As such, the House GOP helped author the terms of the current state budget. The result? A two-year, $66 billion budget.
Since then, Minnesota’s state budget forecasts have consistently improved. At a press conference announcing the new forecast, MMB Commissioner Erin Campbell said the 2025 budget enacted by Republicans and Democrats has helped the state budget improve.
House GOP Floor Leader Harry Niska reacted to the new forecast in a statement, saying, “This forecast demonstrates that pro-business economic policies and economic growth are the real solution to the fiscal disaster created by Minnesota Democrats.”
In documents published Friday, MMB also noted that America’s economic outlook has improved since the previous forecast in December of 2025. According to MMB, growth in U.S. GDP is expected to be higher in 2026 than previously estimated.
Campbell noted that Minnesota’s improved budget situation was also because of “a slightly improved national economic outlook which drives an increase in forecast revenues.”
This is a developing story.
Luke Sprinkel
Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.
