ST. PAUL – State officials issued an updated economic forecast Thursday and it shows Minnesota’s bottom line continues to decline, with a smaller short-term surplus and a growing deficit on the horizon.
The report from Minnesota Management & Budget calls for a $456 million projected balance for 2026-27, down $160 million from previous estimates. The projected general fund shortfall for the 2028-29 biennium is now $6 billion – $852 million worse than November estimates and nearly a state-record deficit.
State spending growth outpaces revenue growth through projections for fiscal year 2029, MMB indicates. State Rep. Paul Anderson, R-Starbuck, said this is a dose of reality after Democrats in full control of the Capitol last biennium spent the state’s $18 billion surplus, raised taxes by $10 billion and increased the state budget by 40 percent with the budget they set in 2023.
“While it is good we aren't facing an immediate shortfall as we prepare to set a new budget this session, it is important to acknowledge the budget that was set last biennium is unsustainable,” Anderson said. “Steps need to be taken to prevent a major shortfall arriving in the future, starting with a balanced approach and common-sense decisions that serve the best interests of all Minnesotans. It will be interesting to see how this plays out over the next couple of months with House Republicans providing more balance after two years of one-party control in St. Paul.”
The forecast figures will serve as the official framework as legislators work to construct a new two-year state budget before they are scheduled to adjourn in late May.
-30-