Minnesota budget forecast shows 'improved' budget outlook

ST. PAUL, Minn. (FOX 9) - Minnesota's February 2026 budget and economic forecast shows an improved projected balance than previous estimates.

The full news conference can be viewed above. 

Minnesota budget and economic forecast

By the numbers:

The 2026-2027 fiscal year balance is now projected at $3.7 billion, $1.3 billion higher than what was estimated in November.

The summary also states "A slightly improved economic outlook drives a higher revenue forecast largely driven by more volatile sources of revenue. Spending growth outpaces revenue growth through projections for FY 2029."

The report says the projected general fund balance for the 2028-2029 biennium is now $377 million, but adds that "a significant structural imbalance remains."

State officials say the overall outlook is an improvement "amid significant near-term economic and fiscal uncertainty."

The report also cites "Shifting policies at the federal level and missing or incomplete data due to recent federal government shutdowns" as factors of uncertainty in the projections. 

Minnesota House GOP response 

Local perspective:

House Speaker Lisa Demuth (R-Cold Spring) shared the following statement on the latest budget forecast:

"Today’s forecast gives us the chance to pass a bipartisan tax conformity bill that helps workers through common-sense policies, like no tax on tips and no tax on overtime, and helps our Main Street businesses continue to be the job creators that keep our state strong. Tax increases on Minnesota families and more government spending should be off the table, and our focus should remain on lowering costs on family budgets."

House Republican Floor Leader Rep. Harry Niska (R-Ramsey) added the following statement:

"This forecast demonstrates that pro-business economic policies and economic growth are the real solution to the fiscal disaster created by Minnesota Democrats. We need to reverse the policies that are holding our state economy back if we’re going to participate in the national economic rebound."

Minnesota House DFL response

The other side:

House DFL Caucus Leader Zack Stephenson shared the following statement:

"This is not a normal forecast day. This forecast comes with the biggest asterisk ever. All of the improvement we see in the forecast today - in fact more than all of it - would be offset by just the cuts to Minnesota’s Medicaid funding that were announced by the Trump Administration earlier this week, to say nothing of the other cuts Trump has promised. 

"Unless Donald Trump’s retaliatory campaign against Minnesota is stopped, these surpluses are actually deficits. The chaos and uncertainty Trump has caused will make it very challenging for legislators to make budget decisions going forward, and real Minnesotans will be worse off because of it.

"The people of Minnesota deserve better than that. DFLers will continue to stand up for Minnesotans, and we’ll continue working to build a future where hard work is actually rewarded, families have a real chance to get ahead, and communities can thrive." 

House DFL Floor Leader Jamie Long gave the following statement on the budget forecast:

"Donald Trump and his Republican allies continue to be a disaster for our economy and for working families. Minnesotans were already struggling with high costs, and now the impacts of ICE’s operation are reverberating across our economy with widespread workforce disruptions, difficulty for folks to pay rent or a mortgage, and a massive strain on small businesses. Now, a whopping $259 million Medicaid cut is set to come from the White House, which will not only blow a hole in our budget, but also do unthinkable harm to our most vulnerable people. It’s completely irresponsible for the GOP to dismiss the damage coming from Trump and D.C., and DFLers will continue focusing on making life more affordable for the middle class." 

Minnesota Chamber of Commerce response

What they're saying:

President and CEO of the Minnesota Chamber of Commerce Doug Loon shared the following statement on the budget forecast:

"Today’s forecast is a reminder that when our economy grows, the state’s budget outlook improves and creates more opportunities for all Minnesotans. It’s concerning that spending growth continues to outpace revenue growth. Enacting policies that grow our economy can help eliminate this gap and reduce pressure on taxpayers."

Governor Walz statement on budget forecast

Dig deeper:

Minnesota Governor TIm Walz shared the following statement on the Minnesota Management and Budget forecast:

"Minnesota is in a strong financial position. Our economy is one of the most resilient and diverse in the country and today’s budget forecast reflects improvements in both the short and long term, despite the Trump Administration’s tumultuous campaign of retribution. 

"Yet the implications of federal actions cannot be underestimated. Minnesota continues to weather economic blows from Operation Metro Surge and faces unprecedented threats to the federal funding we rely on, including potentially devastating cuts to Medicaid.  

"Our goal is to keep Minnesota on solid financial footing and ready to handle whatever comes our way. Together we’ve worked to make responsible cuts and scale growth in spending to put Minnesota in a strong spot for years to come. Our disciplined, responsible budgeting has helped protected Minnesotans and I look forward to releasing a thoughtful, measured supplemental budget to keep us on that path." 

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