Lawmakers owe Minnesotans serious discussion on budget deficit

This article originally appeared in the Duluth News Tribune on March 11, 2025.

The release of the February budget forecast last week started a second round of blame games. A new candidate, President Donald Trump’s chaotic policymaking, is seemingly now in the middle.

At some point, however, Minnesota lawmakers must pass a balanced budget. And if legislators are serious about resolving the budget deficit, and ensuring a sustainable budget in the future, they need to have a serious conversation on what the facts regarding the numbers are and how we got here.

So, let’s recap.

Minnesota ended the 2022-23 budgeting cycle with more than $12 billion in leftover funds, largely because the federal government pumped trillions into the economy during the coronavirus pandemic. To maintain the 2022-23 service level, Minnesota Management and Budget estimated in February 2023 that the state government would need to spend $55 billion in the 2024-25 biennium. This included inflation and left another $5 billion on the table. In total, the then DFL-controlled Legislature had a $17.5 billion surplus to work with at the beginning of the 2023 legislative session.

Looking a little further into the future, the picture was also more than positive. In February 2023, Minnesota Management and Budget pegged spending for the 2026-27 cycle at $59 billion, after including inflation. Revenues to be collected in that period were $64 billion — over $5 billion higher than estimated spending.

The light started flashing red at the end of the 2023 session when the budget was raised from $52 billion to $70 billion. Minnesota Management and Budget data published that July showed spending exceeding revenues every year between 2024 and 2027, with the historic surplus masking this unsustainable trend. The November 2023 forecast showed the same thing as the February 2024 forecast, that Minnesota was spending above its means.

The November forecast and the February forecast were merely a culmination of spending decisions made two years ago, signs of which were already there.

Trump’s tariffs, high expected inflation, and uncertainty over federal policy certainly muddy the waters. But if everyone remembers very well, Minnesota had a $5.1 billion deficit three months ago before Trump was sworn into office. What was the culprit then?

Mainly, it was high and growing spending on Health and Human Services and E-12 education, the state’s two biggest expenditures. In the 2023 session, lawmakers dedicated over $12 billion of new funding to these two categories, with most of the new money allocated to accelerating growth in programs already expected to grow, such as Long-term Care Waivers under the Medical Assistance program. Health and Human Services spending for the 2024-25 biennium grew from an $18 billion baseline in February 2023 to $21 billion by the end of the 2023 session. E-12 education also grew by about $3 billion between February and May 2023.

Trends that are expected to put ongoing and growing pressure on state resources have been underway for decades and are expected to continue long after Trump leaves office. The Minnesota Budget Trends Study Commission, for instance, warned of changing demographics as far back as 2008. Minnesota’s lagging and slowing economy has been a consistent theme for at least the last decade.

With or without Trump, Minnesota would be dealing with a multibillion-dollar budget deficit. Pretending otherwise is irresponsible and prevents fruitful discussions around what’s driving Minnesota’s fiscal problem: out-of-control Health and Human Services and E-12 education spending. These two are both the biggest and fastest-growing expenditures and are expected to consume over three-quarters of the entire state budget by 2029.

Discussions surrounding the budget should start there.