Latest state budget forecast released: short-term surplus of $616m, long-term deficit of $1.1b

(KSTP) – Gov. Tim Walz is joining other state leaders to present Minnesota’s latest budget forecast on Wednesday.

The new forecast is the last one before the start of the legislative session next month. Keep in mind, 2025 is a budget year, meaning lawmakers will have to pass funding for several key departments and programs.

According to the state budget office, as of Wednesday morning – there is now a short-term surplus of $616 million through 2026-2027 – that’s $1.1 billion less than previously estimated. The state is projecting revenue cuts and higher spending on things like long-term care and special education.

In addition, the office is now projecting a deficit of $5.1 billion for 2028-2029. However, the 2024-25 biennium is now expected to finish with a surplus of $3.75 billion, which is $461 million higher than projected.

Passing the next budget will come with challenges since control of the state house is evenly split between parties. That said, party leaders have pledged to work together.

Last year, Walz signed a $72 billion state budget into law, the largest in state history and $7 billion higher than his proposal.

“We will get an opportunity then to see what the incoming administration will do in mid-January and then we will get the opportunity to put our budget and then a revised budget when the numbers actually come in,” Walz previously said.