State's latest budget forecast projects shrinking surplus, 'significant financial headwinds'

The state’s government is expected to have less money than previously predicted for lawmakers to allocate when they return to the Capitol Jan. 14 and begin crafting a budget for the next two fiscal years.

Minnesota Management and Budget officials released the November 2024 Budget and Economic Forecast Wednesday detailing the expected financial future.

It shows a $1.1 billion decrease from the prior estimate in February which had predicted a $1.7 budget billion surplus during the 2026-27 fiscal biennium that begins July 1, 2025. That surplus is now forecast to be $616 million.

The change was largely caused by projected reductions in income and sales tax revenues coupled with increased spending for long-term care and special education, which will contribute to what is expected to be a growing structural imbalance during the budget years to come.