Minnesota’s new budget forecast shows a $160M drop; Future deficit grows larger

ST. PAUL, Minn. (KFGO/WCCO) – Thursday’s release of the February economic forecast by the Minnesota Department of Budget is likely to create more tension between state lawmakers in St. Paul.

The new state budget forecast shows a $456 million surplus for 2026-2027. That number is $160 million lower than an earlier forecast which showed a $616 million surplus for ‘26-27 with a $5.1 billion deficit in ‘28-29.

Additionally, the department says the projected general fund shortfall for the 2028-29 biennium is nearly $6 billion or $852 million worse than those earlier estimates.

Republican House Speaker Lisa Demuth says Democrats will have to work with Republicans and come with responsible cuts in order to get a new budget to the finish line this session.

“The Democrat deficit continues to grow as a result of the irresponsible and unaffordable policies from the past two years,” Demuth said. “We need to get spending under control, and my expectation is Democrats will come to the table with savings and cuts—not tax hikes—to fix the mess they made.”

Minnesota DFL lawmakers are putting a positive spin on the latest numbers with House Speaker Emerita Melissa Hortman adding the federal government’s decision to slash funding across multiple agencies is adding to the pressure on state government.

“Thanks to responsible DFL budgeting, the November forecast showed a $3.7 billion surplus in the current biennium, and today’s forecast shows a $456 million positive balance in the upcoming budget cycle,” Hortman says. “The state continues to have our highest budget reserve fund ever. But when the federal government walks away from its obligations, the state has to step in, and we simply won’t have the resources to keep up. This will have dire consequences for the people of Minnesota and our state budget.”

But Rep. Patti Anderson says blaming the federal government for Minnesota’s budget issues in the future won’t work.

“While Democrats will continue to try and blame the Trump Administration and Federal cuts, these numbers are predicted before those cuts even have gone into effect. We have a lot of work to do to get the state back on track.”