Dear friends, I hope you are getting a chance to enjoy the warmer temperatures we are experiencing. Spring is on the horizon and we’re gaining more light every day. This week, I wanted to give you an update on the primary responsibility of the Legislature this year: passing a two-year budget for Minnesota. In my new role as co-chair of the Ways and Means Committee, I am deeply involved in the budget setting process. Minnesota entered 2025 in a strong financial position. Our current state budget (which runs through June 30) is projected to conclude with a $3.7 billion surplus and the next budget (covering July 1, 2025 through June 30, 2027) has a projected surplus of $600 million. We also have a fully funded budget reserve of $3.5 billion and a perfect credit rating. But there are storm clouds on the horizon. In particular, unchecked growth in the cost of long-term care has the potential to drive Minnesota into a deficit by 2028-29. More immediately, federal policies pushed by the Trump Administration, along with the chaotic economic shifts caused by figures like Elon Musk, are expected to ramp up inflation and slow down economic growth. As a result, the upcoming forecast will probably show a smaller surplus, or even a deficit, as the fallout from these decisions takes its toll. On top of that, the proposed federal budget resolution that passed the U.S. House this week would result in $1-3 billion less in federal funding per year for Minnesota if it becomes law.  A Deeper Dive into Minnesota’s Budget Minnesota’s revenue primarily comes from three main sources: - individual income taxes
- sales taxes
- federal funds
Individual income taxes are the largest source of tax dollars from Minnesotans, followed by our sales tax. What often doesn’t get attention is that Minnesota also receives a substantial portion of its budget from federal grants, which are earmarked for specific programs such as healthcare, education, and more. In fact, federal grants supply more funding for Minnesota state government than any one tax levied by the state, as you can see from this chart, which shows where Minnesota receives its funding over a two year budget period:  Minnesota’s general fund is the primary operating fund for the state, which is allocated to a variety of essential services. Education is the largest expenditure from the general fund, with funding directed to both K-12 schools and higher education institutions. This investment ensures that the state’s residents have access to quality education, which is key to the state’s economic growth. The second largest expenditure is on health and human services like Medicaid and other health-related programs. Public safety, including law enforcement and corrections, and transportation infrastructure are also significant areas of spending. These are all vital investments in the future of Minnesota. The state budget also focuses on economic development and workforce readiness, such as job training, workforce development programs, and others critical to ensuring Minnesota's long-term prosperity. Additionally, environmental protection, housing, and local government aid are supported through the state budget, ensuring that both urban and rural communities have the resources they need to thrive. The chart below is a breakdown of Minnesota’s General Fund spending, giving you a good sense of how Minnesota spends your tax dollars. Note that this chart does not reflect federal funding, which doesn’t flow through the General Fund. The chart also doesn’t reflect state spending on roads, bridges, and other transportation projects, because those areas have dedicated revenue funds. For example, the Minnesota Constitution requires that every penny raised by the gas tax be spent on roads and bridges.  As we learn more next week, I’ll update you on the forecast-specifics. Extreme Risk Protection Orders are Saving Lives During the 2023 legislative session, we took bold action to protect our communities against gun violence. One of the measures lawmakers enacted allows for Extreme Risk Protection Orders (ERPOs), also known as a “red flag” law. This tool helps prevent tragedies by allowing law enforcement and family members to request court orders temporarily removing firearms from individuals who pose an imminent risk of harming themselves or others. After one year after its passage, the evidence is clear: Extreme Risk Protection Orders (ERPO) are protecting Minnesotans from senseless gun violence. The Star Tribune recently published an op-ed spotlighting the impact of this important law, which you can read here. So far, 135 ERPO cases have been filed, with law enforcement initiating the vast majority of the petitions. The red flag law is saving lives, particularly in situations involving domestic violence or when individuals are experiencing mental health crises. Keep in TouchPlease continue to reach out anytime if you need assistance or have questions at rep.zack.stephenson@house.mn.gov or 651-296-5513. It’s an honor to represent our Coon Rapids and Anoka families in St. Paul. Sincerely, Rep. Zack Stephenson Minnesota House of Representatives |