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 reveals 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. Walter Hudson, R-Albertville, 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.
“This is what the Democrats’ reckless spending and unnecessary tax increases get you,” Hudson said. “They shouldn’t have gone on a spending spree. You didn’t need to be Nostradamus to see this coming. All you needed is a grasp of basic math to understand blowing a historic surplus to increase the state budget by 40 percent isn’t going to add up on the bottom line.
“Now we’re staring at a growing shortfall and we are going to have to make some tough decisions to not only balance our budget, but to make our state sustainable for the long term. Good thing House Republicans broke up the Democrats’ stranglehold they had on Minnesotans and our state government the last two years so we can get our state back on track.”
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.
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