 Gov. Tim Walz takes questions following the release of the state's November budget forecast in December 2024. The latest projections show a $456 million surplus in the current budget cycle and a $6 billion deficit longer-term. (House Photography file photo)
It looks as if those calling for less state spending could get their wish, judging from Thursday’s release of the February 2025 Budget and Economic Forecast.
A state surplus for the 2026-27 fiscal biennium that was predicted to be $616 million in November is now at $456 million, meaning that the Legislature and Gov. Tim Walz will not have as much money over which to argue.
But at least it’s better news than found in the long-range forecast, where spending growth is expected to outpace revenue growth through fiscal year 2029. The projected General Fund shortfall for the fiscal 2028-29 biennium that was forecast to be $5.1 billion in November is now seen as just short of $6 billion.
Minnesota Management and Budget said in its initial forecast summary that higher inflation is expected to result in increases in both projected revenues and expenditures. It also said, “Shifting policies at the federal level introduce significant uncertainty to the projections.”
But forecasters said Minnesota’s economy is strong in the near term.
The forecast provides a detailed update of the state's financial health that sets the stage for the upcoming legislative session by providing lawmakers preliminary numbers needed to create Minnesota’s budget for the next two fiscal years.
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