Minnesota’s Budget Forecast Reveals Surplus and Reduced Deficit

Minnesota’s bi-annual budget forecast, released on December 4, 2023, indicates a significant improvement in the state’s financial outlook. The forecast shows a reduction in the projected budget deficit for the 2028-29 fiscal years, decreasing from an anticipated $6 billion to approximately $2.96 billion. In the near term, the state is expected to operate with a surplus of $2.57 billion for the 2026-27 fiscal period.

Officials from the Minnesota Management and Budget (MMB) plan to provide additional details regarding the factors influencing these estimates during a press conference later today. The latest forecast also highlights that Minnesota’s budget reserve, commonly referred to as the “Rainy Day Fund,” has reached a record high of $3.7 billion.

Budget Negotiations and Historical Context

The recent budget discussions have marked a notable shift compared to the previous session. In May 2023, lawmakers and Governor Tim Walz engaged in bipartisan negotiations aimed at reducing the projected $6 billion budget deficit by approximately 45%. This effort included $2 billion in net cuts as well as $5 billion in reductions from the previous budget, culminating in a total budget of around $67 billion.

During the 2023 budget crafting session, Minnesota lawmakers had the advantage of a substantial surplus, amounting to $18 billion. This allowed them to pass the largest state budget in history, totaling $72 million. The stark contrast between the surpluses of 2023 and the current deficits underscores the volatility of state finances.

Impact on Human Services and Health Care

As part of the budget adjustments, significant cuts have been made to various sectors, particularly human services. The reductions include $270 million for the 2026-27 period and $820 million for 2028-29. Health and Human Services also faced cuts, with reductions totaling $98 million in 2026-27 and $298 million in 2028-29.

These changes reflect the ongoing challenges facing Minnesota’s fiscal landscape and the need for careful financial management. As the state navigates these budgetary hurdles, the focus remains on balancing immediate fiscal responsibility with the long-term needs of its residents.

With today’s forecast and upcoming discussions, Minnesota’s leaders aim to ensure that the state’s financial health remains stable while addressing essential services for its citizens.