No more tax hikes

Two years ago, Minnesota Management and Budget (MMB) forecast a state government budget surplus of $18 billion for the 2024-2025 biennium. In the event, not only was every penny of that surplus spent, but the DFL trifecta actually raised taxes and fees by a further $10 billion on top of that. Indeed, the budget passed in May 2023 would grow state government spending by 33% by 2027.

The nature and scale of this fiscal incontinence soon became apparent. One year ago, MMB forecast a deficit of $2.3 billion for the 2026-2027 biennium, mainly, as the Star Tribune reported, “due to higher-than-anticipated spending for health and human services and education.”

The deterioration of Minnesota’s fiscal position continues. Yesterday, MMB released its forecasts for the 2024-2025, 2026-2027, and 2028-2029 bienniums. Some of the headlines read:

• Minnesota Reformer: Minnesota’s budget outlook: Smaller surplus, deficits down the road, as much as $5 billion

• Star Tribune: Modest budget surplus overshadowed as Minnesota projects $5 billion deficit down the line

• Minn Post: State economists project a modest budget surplus, but future deficits loom

• Bring Me the News: Latest state budget forecast shrinks projected surplus by $1.1B

• Detroit Lakes Online: Minnesota budget projections show looming $5 billion deficit

• Axios: Minnesota’s projected budget surplus shrinks to $616 million

• WCCO: Minnesota budget surplus forecasted at $616 million, but warning signs linger

In short, at the end of the last legislative session, the state government was forecast to close the 2026-2027 biennium with a surplus of $1.7 billion. That is now forecast to be just $616 billion if, as Minn Post‘s Peter Callaghan notes, “lawmakers stay with current taxes — a likelihood with a politically divided state House — and add only the required spending increases in health programs and education…”

And, looking ahead to the 2028-2029 biennium, MMB forecasts a hefty deficit of $5.1 billion.

As my colleague Bill Glahn noted yesterday, “state budgets must balance from period-to-period.” When legislators get to balancing the books for 2028-2029, the path forward is clear: it cannot be done with further hikes in Minnesota’s state taxes. After years of ever-increasing state government spending, it is time to bring that under control.

Balancing the state budget is likely to be the big battle in St. Paul for the next few years. Who would have thought that two years ago, when we had an $18 billion surplus?