Latest budget forecast projects nearly $2.5 billion surplus, but red ink down the road

Three weeks before Christmas, state budget officials provided some merriment to Minnesotans. However, Grinch-like transformations lurk.

Released Thursday, the November 2025 Budget and Economic Forecast shows the state's expected budget surplus is almost $2.47 billion for the current 2026-27 biennium. But a $2.96 billion deficit looms in the next.

Largely due to higher income tax collections, the current picture has some rosiness; however, higher health care costs and slower economic growth are keys to the projected 2028-29 biennium shortfall.

“Last month was open enrollment and all across Minnesota, in fact all across the country, working people saw the cost of their health insurance skyrocket. The single biggest takeaway from this budget forecast is that the same health care cost increases that are hitting family budgets are now impacting the state budget,” said House DFL Caucus Leader Zack Stephenson (DFL-Coon Rapids).