Can you navigate the budget-making process? Take our quiz

The complicated process of crafting a budget to fund state departments and agencies in the 2026-27 biennium had its unofficial kick off in November 2024 when the state’s economic forecast was released.

Or maybe it began when the governor made his budget recommendations to the Legislature in January.

In any case, the Legislature is now in full-on budget mode and trying to wrap up its omnibus budget bills without a special session.

How much do you know about constructing a state budget? And what happens if the process is derailed?

Take our 10-question quiz to find out. We’ll start you out with an easy question, but they’ll get tougher!

1. The state’s fiscal year begins on:

A. January 1

B. June 1

C. July 1

D. October 1

Answer: C

The state has a biennial budget, consisting of two fiscal years, beginning July 1 of each odd-numbered year and ending June 30 of the next odd-numbered year.

If there’s no budget in place by July 1 of a budget year, there will be a partial or full government shutdown and only essential state employees will report to work. (What determines whether a state employee is essential or not? There’s a statute for that.)

2. The Minnesota Constitution requires biennial budgets to be balanced.

A. True

B. False

Answer: A

Although a balanced budget requirement is not stated explicitly in the state constitution, it derives from limits to the state’s borrowing powers outlined in Article XI, Section 5.

That section says the state may issue debt only for specified purposes. Borrowing money to pay for a deficit at the end of the biennium is not one of those purposes. Thus, the budget must be in balance at the end of the biennium.

3. Which state entity produces forecasts of revenues and expenditures used in the budget-making process?

A. Department of Commerce

B. Minnesota Management and Budget

C. Department of Administration

D. Legislative Budget Office

Answer: B

MMB takes the lead in creating budget and economic forecasts in February and November based on the most recent information about the national and state economic outlook as well as caseload, enrollment, and cost projections.

4. What are the three main elements of the MMB’s economic forecasts?

A. Revenue and expenditure forecast, updated fund balances, and price of government report

B. Revenue and expenditure forecast, debt capacity forecast, and a price of government report

C. Revenue and debt capacity forecast, updated fund balances, and long-term inflation calculations

D. Revenue and expenditure forecast, debt capacity forecast, and long-term inflation calculations

Answer: B

What the heck is the price of government report? (It’s a measure of the cost of all general government services statewide. It answers the question: How much do Minnesotans pay to state and local governments in total?)

5. What requires the state to establish a budget reserve (“rainy day fund”) each budget cycle?

A. The state constitution

B. The governor, through executive orders

C. Legislation enacted in the first year of a budget cycle

D. State statutes

Answer: D, specifically 16A.152

The state constitution is silent on the topic of a rainy day fund, but a 1981 law created a budget reserve account funded by regular transfers.

6. What power does the governor have to adjust a budget that has already been enacted?

A. Line-item veto

B. Unallotment

C. Executive orders raising taxes and/or fees

D. Short-term borrowing

Answer: B

After a budget is enacted, the governor can “unallot” (take back) funds appropriated to state agencies and departments, but only if the enacted budget is found to be out of balance, such as when lower-than-expected revenue leads to shortfalls. Unallotment cannot be used until all funds in the budget reserve and cash flow accounts have been spent.

The governor has line-item veto powers to reduce appropriations in budget bills, but only before signing the bills. Options C and D are not allowed by the state constitution.

7. If an economic forecast predicts a General Fund surplus, is the entire surplus amount available to the Legislature to construct an upcoming biennial budget?

A. Yes, with no restrictions

B. No, only a part of the surplus can be spent as determined by MMB economists

C. No, only a part of the surplus can be spent as outlined in state law

D. No, the available amount is reduced by the amount of money needed to cancel any existing general obligation long-term debt owed by the state

Answer: C

Minnesota statute 16A.152 requires MMB to first distribute anticipated surplus monies to the state’s cash flow account until it reaches $350 million, then fund the budget reserve account until it reaches $2.85 billion, then restore aid to school districts using a mandated formula.

8. Any bill having a fiscal effect on a state department or agency must have a “fiscal note” attached. A fiscal note:

A. predicts the effect of future economic activity on state revenue and expenditure

B. sets the maximum amount of money that can be allotted to a state agency or department

C. authorizes spending a specified amount of money from a specific state fund

D. estimates the fiscal ramifications of a legislative proposal on state government operations

Answer: D

Fiscal notes estimate how much it would cost to implement proposed legislation, which must be accounted for when crafting the budgets of departments and agencies. Fiscal notes are produced under the supervision of the nonpartisan Legislative Budget Office.

9. What happens to any budget money appropriated to a state department or agency that is unspent at the end of the second year of the biennium?

A. It is returned to the fund from which the appropriation was made

B. It can be carried forward and used in the upcoming biennium

C. It is deposited in the state’s budget reserve account

D. It is deposited into the General Fund

Answer: A

As outlined in Minnesota statute 16A.28, carrying forward unspent appropriations for a department’s or agency’s operating expenses is only allowed from the first year of a biennium into the second year of a biennium, and then only with the approval of MMB.

10. The state can also sell bonds to generate money for departments and agencies, but the funds must be spent on capital projects as outlined in the state constitution. Which one of the following uses is NOT allowed?

A. establishing and maintaining highways

B. stringing or burying cable or fiber optic wire on public land

C. constructing, improving and operating airports and other air navigation facilities

D. repelling invasion or suppressing insurrection

Answer: B

Surprisingly, at least to some, Article XI, Section 5(b) of the Minnesota Constitution allows the state to sell bonds to repel invasion or suppress insurrection. Since bonds sell based on their being backed by the state’s full faith and credit, it’s likely bonds of a state actively repelling invasion or suppressing invasion wouldn’t attract many buyers!