Minnesota’s budget agency, Minnesota Management and Budget MMB, shared its latest financial forecast. It predicts that by the fiscal year 2028, the state could face a $5.1 billion budget deficit.
Earlier this year, Minnesota expected a $1.7 billion surplus for 2026-27. However, that surplus is now projected to shrink to $616 million. Despite these challenges, the state is required to balance its budget, meaning lawmakers will need to address this issue.
MMB says the deficit is due to lower revenue estimates and rising costs for certain state programs. Deputy Commissioner Ahna Minge explained that expenses for disability waivers, which help people with disabilities access services, have grown because more people are using them, and the average cost per person has increased. Spending on special education is also rising significantly.
The forecast doesn’t include any potential economic changes from a new presidential administration.
This financial outlook sets the stage for the upcoming legislative session. While lawmakers will focus on the current budget, discussions about long-term solutions are already beginning.
Republican Speaker-Designate Lisa Demuth said her party wants to work with Democrats to reduce spending. She mentioned examining state agencies to find savings, such as cutting unfilled job positions.
Democrats, however, are being cautious. Governor Tim Walz said the rising costs are related to an aging population and increased demand for services, especially for conditions like autism. While the situation is serious, Walz stressed it’s not an immediate crisis and can be managed with thoughtful planning.