Minnesota budget surplus forecast at $2.4 billion heading into 2024

Minnesota’s projected budget remains at a surplus of more than $2 billion, according to a forecast analysis provided by state officials on Wednesday.

The current Fiscal Year (FY) 2024-25 surplus is projected to be $2.4 billion, an increase of $808 million from previous projections, but a decrease from a historic $17.6 billion surplus previously held.

"Today’s economic forecast shows that Democrats are growing the economy in Minnesota, and that the policies we’ve enacted are supporting Minnesota’s workers, reducing costs for families, and growing the labor force," said Speaker of the House Melissa Hortman (DFL-Brooklyn Park) in a statement on Wednesday. "At the same time, as our economy continues to do well and corporate profits continue to soar, we know there are Minnesotans who aren’t doing as well in their family budgets. You’ll see Democrats continuing to focus on growing the middle class, lowering costs, and reducing stress in people’s lives. We will continue working to build a Minnesota that works better for everyone and reflects the values that we all share."

Every two years, Minnesota politicians create a state budget, known as a biennium.

"Minnesota’s budget and economic outlook remains stable in the current biennium, but a significant structural imbalance constrains the budget outlook in FY 2026-27," according to an announcement from the Minnesota Management and Budget (MMB) Office.

Higher expected consumer spending and corporate profit growth raise the FY 2024-25 tax revenue forecast. However, higher expense estimates in Health and Human Services (HHS) and education funding raises total spending in FY 2024-2027, resulting in a negative structural balance in the next biennium, according to MMB.

The projected budget surplus will allow Democrats to continue to shape state priorities as the party deems necessary, having control of the House, Senate, and governor's office for the first time in more than a decade.

"We started the year with a record $17.5 billion surplus, giving Democrats the chance to pass meaningful tax relief and help make Minnesotans’ lives more affordable. Instead, Democrats squandered the unique opportunity they had to address the economic pressures Minnesotans are facing and, in turn, are now leading the state off a fiscal cliff," House Minority Leader Lisa Demuth (R-Cold Spring), said in a statement on Wednesday. "Democrats’ reckless spending has now set us on the path to have a budget deficit in the coming years. This could have been avoided if Democrats had even an ounce of fiscal responsibility. Democrats put their insatiable appetite for spending ahead of the needs of Minnesotans and we will all be paying for their fiscal insanity for years to come."

Bigger surplus, financial warning signs in new MN budget forecast

New forecasts are in and Minnesota will have a bigger budget surplus than expected. But the state may need every penny of that surplus to prevent a deficit by 2027.

It’s a $2.4 billion surplus forecast for the next fiscal year, but also a warning because the state is expected to start spending a lot more than it’s taking in.

The latest Minnesota budget forecast starts with positive news — a 50% larger than expected surplus. But it includes warning signs for the next biennium.

"With increasing spending this year, policymakers should exercise caution when making budget decisions," said Minnesota Management and Budget (MMB) commissioner Erin Campbell.

Between now and 2027, MMB expects the state to spend $317 million more on education than previously forecast. That’s mostly above-expected costs for English learners and free school meals.

And the forecast now is for an extra $1 billion in health and human services spending, largely because of increasing costs for disability care waivers.

Gov. Tim Walz emphasized the state will be spending less money going forward and should have a budget surplus in the next year, but admitted he sees a flashing yellow light in the distance.

So FOX 9 asked him where he’d be willing to make cuts.

"I'll tell you what I'm not willing to do," he said. "I'm not going to give billionaires tax cuts to do this. And I'm certainly not going to take food out of the mouths of children."

Republicans at the Capitol pushed for tax cuts in the last session, but they admit now the idea seems less palatable.

They say the DFL squandered that opportunity when they chose to spend most of the record $17 billion surplus last session.

"There are so many examples of exorbitant spending, of not setting priorities, of not prioritizing Minnesota families who really are struggling," said Rep. Kristin Robbins (R-Maple Grove).

Even though there is a surplus coming up, people in the governor’s office tell us he wants to save all of it or most of it because, by 2027, the state is projected to spend more than it takes in by almost the same exact amount.