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 low.
State spending growth outpaces revenue growth through projections for fiscal year 2029, MMB indicates. House Speaker Rep. Lisa Demuth, R-Cold Spring, 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.
“House Republicans warned that the out-of-control spending increases and tax hikes passed by one-party control in the last biennium would wreak havoc on our state budget,” Demuth said. “While revenue continues to grow, spending is growing even faster. We cannot – and will not – raise taxes to fill this gap, especially after Democrats raised taxes on Minnesota families by more than $10 billion over the last two years.”
The 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.
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