A new economic forecast for Minnesota’s state budget predicts a $616 million surplus through the 2026-2027 biennial budget. This is a decrease of $1.1 billion compared to previous estimates.
Lawmakers were initially expected to have $1.7 billion available during the 2026-2027 biennium. The $1.1 billion deficit raises concerns about the state’s financial spending and long-term stability.
“While the budget has been stable over the past two years, it is clear that cuts are necessary to avoid a future deficit,” Minnesota House Republican Leader Lisa Demuth, R-Cold Spring, said in a news release .
State lawmakers are grappling with financial problems after a new estimate gives politicians $1.1 billion less in potential funds.
Demuth’s release told government agencies they needed to be aware, and it points to a desire to keep government employees within reason.
“The days of automatic budget increases and dramatic growth in the number of government employees are over, and we expect you to work with us to find savings and root out waste and fraud,” Demuth said.
Wednesday’s report said inflation could play a role in Minnesota’s budget future. If things continue at this rate, the report says there could be a $5.1 billion deficit in the 2028-2029 biennium. This prediction comes as the consumer price index is expected to reach 2.2% in 2026 and 2.7% in 2027.
Inflation would account for roughly $2.2 billion of the difference between ages 28 and 29, forcing the state into a budget deficit. The report states that out-of-revenue expenses could contribute roughly $3.5 billion.
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Minnesota DFLers say while there is some uncertainty, lawmakers have experience crafting budgets.
“While the long-term budget projections show reasons for concern, the governor and Legislature’s job over the next two years is to balance the short term and prepare for the long term,” wrote Melissa Hortman, leader of the House DFL in a statement.
Hortman said the DFL party will continue its commitment to Minnesota workers, students and seniors.
“We will do what we have always done, which is make responsible and sustainable commitments to Minnesotans, from preschoolers to nursing home residents.”
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On Wednesday, Minnesota Sen. Heather Gustafson, DFL-Vadnais Heights, announced her intention to introduce a bill to create an Office of Inspector General.
In a news release, Gustafson said the independent agency would work to conduct audits on both public and private organizations that receive state dollars. The proposed agency would ensure that government agencies meet ethical and financial standards by investigating fraud and corruption while exploring opportunities to reduce waste.
“With the Office of Inspector General, Minnesota would promote good government and strengthen our fiscal responsibility,” Gustafson wrote in a news release. “It is time to take meaningful action this session to safeguard our shared resources and safeguard trust in public institutions.”
Corey Schmidt covers politics and courts for the St. Cloud Times. He can be reached at cschmidt@gannett.com.
This article originally appeared on St. Cloud Times: Minnesota lawmakers struggle to balance a potential deficit
