The legislature did not balance the budget; here’s a look at the numbers
On Monday, June 9, legislators held a special session to finalize the budget. The global targets were already agreed upon in May before the regular session adjourned. However, as American Experiment has documented, healthcare for illegal immigrants held up final agreements. Small working groups continued budget discussions, which culminated in Monday’s short special session.
The good news: the legislature passed a budget.
Unfortunately, the state budget remains unbalanced and savings are inflated. Budget deficits will persist, and grow, especially if spending cuts are enacted at the federal level.
Inflating savings
Back in February, Minnesota Management and Budget (MMB) estimated that the state government would need to spend nearly $66.6 billion in the 2026-27 biennium to maintain current services — $68 billion after including discretionary inflation. This session, lawmakers have set a $66.8 billion budget.
To achieve the seemingly large savings, particularly in the 2024-25 biennium, the legislature has zeroed out discretionary inflation, taking out an estimated $1.1 billion from the budget. Applying the same tactic to the next biennium also yields $1.6 billion less spending.
Figure 1: General Fund Budget, February 2025 Forecast vs. 2025 End of Session
However, by law, discretionary inflation is not officially part of the budget, unless those funds are specifically appropriated by the legislature. So, in a way, the legislature is inflating savings.
In fact, after excluding inflation, the newly passed budget is higher than what MMB estimated in February ($66.6 billion vs. $66.8 billion). For the next biennium, savings amount to $1.3 billion.
Figure 2: General Fund Budget after Excluding Inflation, February 2025 Forecast Vs. End of Session Estimates
The budget remains unbalanced
Even with inflated savings, the budget remains unbalanced. Spending will continue to outpace revenues in the next four years, meaning there is no long-term cushion for any unexpected crises.
Figure 3: General Fund Spending vs. Current Revenues
Minnesota’s projected $6 billion deficit for the 2028-29 biennium is down to $1.2 billion (with inflation) and $289 million (after excluding inflation). The structural balance for the 2028-29 biennium, however, is $2.2 billion (without inflation) and $3.1 billion (with inflation).
Kicking the can down the road
Assuming the Legislature automatically includes inflation in the budget going forward, Minnesota will spend approximately $5,327 per person in general funds in FY 2026. This is down from 2024 and 2025, mainly due to one-time spending enacted in the 2024-25 biennium. However, it is still more than 10 percent higher than what Minnesota spent in 2023.
Per capita spending during 2024–2029 is higher than in any year before 2024. Spending will also pick up pace in the 2027 fiscal year and likely continue to grow from there, especially considering changing demographics.
Figure 4: Actual and Projected General Fund Spending per capita, End of Session Estimates
Putting it simply, the legislature did not address Minnesota’s long-term budget problem. They merely kicked the can down the road. As spending continues to rise, especially amid potential federal spending cuts, persistent budget deficits are virtually guaranteed.