In February 2023, Minnesota Management & Budget (MMB) forecast a state government budget surplus of $17 billion for the 2024-2025 biennium. In that “historic” session, the DFL trifecta spent every penny of that surplus and, between 2019 and 2024, Minnesota’s state government spending per person and adjusted for inflation increased by 23%.
That “historic” trifecta also hiked taxes and fees by $10 billion, but even this wasn’t enough to cover the explosion in state government spending, and, in November 2024, MMB forecast a state government budget deficit of $3.5 billion in the 2028-2029 biennium, or $5.1 billion if you account for inflation.
This deficit — the result of gross fiscal mismanagement by the state government over the last two years — is the central fact of state government finance.
I have testified to this effect in St. Paul three times this year, only two of those occasions with DFL Representatives in attendance. In the first of those two, one of the DFLers, Rep. Ginny Klevorn, responded by waving copies of our organization’s 990 forms around and demanding to know where our donations come from. In the second, another DFLer, Rep. Erin Koegel, responded by reading something our organization’s president had written in a personal capacity about crime.
What none of the DFLers did on either occasion was engage with that central fact of state government finance: A forecast state government budget deficit of $3.5 billion in the 2028-2029 biennium, or $5.1 billion if you account for inflation.
Today, we learned that that Minnesota’s fiscal situation had deteriorated yet further. The forecast budget surplus for the 2026-2027 biennium is down $160 million — from $616 million in November to $456 million — and that the forecast deficit for the 2028-2029 biennium is up to $4.0 billion, or $6.0 billion if you account for inflation.
Figure 1 shows how we got here.
The solid lines show the actual spending figures for 2022, 2023, and 2024. What is most striking here is the 43% increase in state government spending from 2022 to 2024 while revenues didn’t increase at all.*
The lightly dashed lines show the forecasts for 2025 to 2029 from the November forecast. We see that spending was forecast to fall back from its peak in 2025, so that, in 2029, it would only be 2% above the level of 2024. Revenues, meanwhile, were forecast to rise by 12% from 2024 to 2029. Nevertheless, they were forecast to be lower than spending in each year, accounting for that deficit.
The heavily dashed lines show the forecasts for 2025 to 2029 from today. We see that revenues are forecast to be 0.4% higher in 2029 than they were in November, but spending is forecast to be be 1.0% higher. This accounts for the increased forecast deficit.
Figure 1: Minnesota General Fund Spending and Revenues, billions
Source: Minnesota Management and Budget and Center of the American Experiment
This central fact of state government finance — a forecast state government budget deficit of $4.0 billion in the 2028-2029 biennium, or $6.0 billion if you account for inflation — will not be remedied by examining our organization’s 990s or trawling the internet for spicy quotes on other topics. It is time for the DFL Representatives to get real and engage with this problem, and we have less time to do so thanks to their taking a three week taxpayer funded vacation at the start of this session. Screeching at our organization or its members will not close the budget deficit their fiscal incontinence landed Minnesotans with. We look forward to working with them.
*These are nominal numbers, not accounting for inflation, to make it easier to reconcile our work here with the budget documents. The figures for spending are “Total Expenditures & Transfers” in MMB’s documents and the figures for revenues are “Subtotal Current Resources.”