Minnesota Budget Forecast Reveals $2.57B Surplus, $3B Deficit

UPDATE: Minnesota’s latest budget forecast, released on December 4, 2025, shows a significant $2.57 billion surplus for the 2026-27 fiscal years, while also revealing a projected budget deficit of $2.96 billion for 2028-29, down from an earlier estimate of $6 billion. This urgent update from the Minnesota Management and Budget (MMB) is set to have immediate implications for state funding and services.

The forecast highlights a dramatic shift in the state’s financial landscape. Lawmakers and MMB officials are scheduled to provide further details on the contributing factors during a presentation at noon today. With the state’s budget reserve, known as the “Rainy Day Fund,” currently at an all-time high of $3.7 billion, there is a strong foundation for upcoming budget discussions.

In a marked contrast to the previous budget session, where state lawmakers faced an $18 billion surplus and passed a historic budget of $72 billion, the current negotiations have shifted focus towards managing a deficit. The bipartisan agreement reached in May aimed to cut down the anticipated deficit by 45%, implementing $2 billion in net cuts alongside $5 billion in reductions from earlier budgets.

The latest forecast reveals that human services will take significant hits, with reductions of $270 million in 2026-27 and $820 million in 2028-29. Additionally, the Health and Human Services budget will also be affected, facing cuts of $98 million in 2026-27 and $298 million in 2028-29.

As the state prepares for ongoing discussions, the implications of these budget changes will resonate across Minnesota, impacting public services and the lives of residents.

With lawmakers poised to address these developments, the financial future of Minnesota remains uncertain but is being closely monitored. Stay tuned for more updates on this evolving situation. This forecast not only affects the state’s budget priorities but also highlights the need for strategic planning amid fluctuating economic conditions.