Minnesota Management and Budget (MMB) released the budget forecast Thursday showing a $2.4 billion surplus in the current biennium (2026-27) and a $2.9 billion deficit in the next biennium (2028-29). After the budget presentation, the politicians each took turns offering their spin, I mean, analysis. Here are five quick takeaways from today’s announcement.
Structural imbalance persists
Even though there is enough cash in the bank to support a current surplus, the structural deficit between spending and revenues persists. When the dust settles, Minnesota is projected to take in $66.262 billion and spend $68.440, a difference of $2.178 billion. The structural deficit will grow to $4.490 in the next biennium if nothing is done to align spending with projected revenue.
Gov. Walz and the Democrats in Minnesota Blame Trump
Walz began his remarks Thursday by denouncing President Trump for calling Minnesota a “hell hole” and Somalis “garbage.” He said very little about the state budget, claiming it was “responsible” and “solid,” despite being structurally imbalanced. Blaming Trump became the theme for Walz and his Democratic colleagues in the legislature. Every answer to the state budget problems now begins in Washington, D.C. according to Minnesota Democrats. They are sticking to the blame Trump script even though budget officials had to walk back their rhetoric from the February forecast, admitting they exaggerated the impact of federal budget changes on Minnesota. Blame Trump is all they got.
The cost of fraud is not baked into the budget forecast
State budget officials had to answer several questions about how they are accounting for fraud in the budget forecast. Their answer was they’re not. “We don’t budget for fraud.” It would be pretty alarming if your state budget office projected a certain percentage of fraud in the upcoming budget, but maybe that’s where we are in Minnesota today. Most of the money stolen from fraud was allocated in previous bienniums so it’s already gone. They did note that savings from shutting down the fraud-ridden Housing Stabilization program is baked into the budget forecast.
Outside audit of scope of fraud due in late January
Walz challenged public estimates that the fraud in Minnesota has reached billions of dollars. He accused Republicans of making up the numbers, even though the most quoted source is former acting U.S. Attorney Joe Thompson. He made a little news when he announced that outside auditors are working on a number and will be releasing a report in late January, just before the 2026 session begins. Stay tuned!
The capitol press corps is turning on Walz
Governor Tim Walz is used to a very friendly press corps in Minnesota. This explains how surprised the rest of the country appears when they hear about some of his exploits (stolen valor, visits to China, fraud). But if Thursday’s press conference is any indication, the friendliness might be gone. The press asked Walz repeatedly about the fraud issue today and even yelled some questions at him when his handlers cut off the press conference. I don’t think that has happened in his six years as governor.
