ST. PAUL – The state issued a new economic forecast Wednesday, projecting a $616 million surplus through the 2026-27 biennium – a decrease of $1.1 billion from previous estimates – and a significant future shortfall.
The report from Minnesota Management and Budget indicates reductions in income and sales tax revenues combined with higher spending for long-term care and special education result in a growing potential shortfall in the future. It also reveals a deficit of more than $5 billion through the 2028-29 biennium.
House Republican Leader Rep. Lisa Demuth, R-Cold Spring, said this underscores the need for balance after Democrats in St. Paul 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 the budget is stable in this biennium, it’s obvious that spending reductions are needed to prevent a deficit down the road,” Demuth said. “House Republicans are putting state agencies on notice: the times of automatic budget increases and dramatic government employee growth are over, and we expect you to join us in working to find savings and root out waste and fraud.”
An updated February forecast will serve as the official framework for the 2025 session as legislators work to craft a new two-year state budget before adjourning in late May.
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