Minnesota’s Improving Budget Brings Optimism But Holds Risks

ST. PAUL (WJON News) -- Minnesota’s budget forecast is improving.

Minnesota Management and Budget Commissioner Erin Campbell says the surplus for the next two years is now expected to be higher than the numbers that were released in November.

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She says, “We now project to end fiscal year 2026-27 with a surplus of 3.7 billion dollars, which is 1.3 billion more than forecasted in November. Left unspent, that surplus will carry forward to fiscal years 2028-29.”

The November Forecast also showed a three billion dollar deficit for the years 2028-29, but Campbell says that has improved, too. Right now, the state is looking at a surplus of 377 million dollars, but that does not include any future federal cuts from Washington.

Though the budget forecast now shows a higher surplus for the next two years, State Economist Dr. Anthony Becker says they’re seeing signs of consumer stress, “with higher delinquency rates in certain loans, credit cards, auto loans, and student loans with delinquency rates now reaching levels comparable to those of the Great Recession.”

Becker also says Minnesota’s unemployment rate is still under the national average. Loss of jobs could cost the state more revenue and impact the budget forecast numbers.

Governor Tim Walz’s message to lawmakers is to be “fiscally conservative” and to “focus on the things that make a difference.”

Republican House Speaker Lisa Demuth says tax increases on families and more government spending “should be off the table,” with a focus on lowering costs on family budgets.

Democrats are concerned that more federal cuts could erase the surplus and force the state to find other ways to save budget money.