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.
State Rep. Jeff Dotseth, R-Silver Township, 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.
“It’s good that our economic outlook is solid for the near future, but that can’t distract us from the fact our long-term outlook appears shaky if we don’t make some necessary adjustments this upcoming session,” Dotseth said. “Some of our current budget was propped up by one-time dollars, which could leave us at a shortfall down the road if we don’t act.
“Minnesota taxpayers already suffered a major tax increase when the current budget was set, and we can’t just keep taking more from families and businesses that are feeling the weight of price increases the last few years. Republicans have gained equal power in the House, which will ensure we take a balanced approach as we set a new state budget. I look forward to tackling this issue as we work toward a bipartisan solution to a new budget that serves all Minnesotans well.”
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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