Minnesota projects short-term budget surplus, long-term deficit as health, education spending hikes kick in
$2.4B surplus projected for 2-year budget period running through June 2025
{{#rendered}} {{/rendered}}Minnesota's budget picture remains stable in the near term but there are clouds on the horizon, officials announced Wednesday.
An updated forecast from Minnesota Management and Budget projects a surplus of $2.4 billion in the two-year budget period that runs through June of 2025. That's up $808 million from the estimate at the end of the legislative session in May. The bigger surplus still accounts for just a fraction of the budget of $72 billion.
{{#rendered}} {{/rendered}}Higher expectations for consumer spending and corporate profit growth are expected to raise tax revenues above the previous forecast. Budget officials say that's because the near-term U.S. economic outlook has improved since February, driven by stronger than expected consumer spending, business investment, and employment.
Minnesota Governor Tim Walz speaks during a press conference about public safety as the Derek Chauvin murder trial goes to jury deliberations on April 19, 2021 in St. Paul, Minnesota. (Stephen Maturen/Getty Images)
But budget officials also warned of potential problems for the next two-year budget period, which begins in July of 2025. Higher estimates for health and human services spending, and education spending, are expected to result in a projected deficit.
The updated projection means that lawmakers will have a little more money to work with when they reconvene in February for the 2024 legislative session. Their options will include spending it, banking it or cutting taxes.
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Officials plan to release more details later Wednesday. Gov. Tim Walz and legislative leaders from both parties plan to provide reaction.