Minnesota Surplus Rises, Shortfall Shrinks in Latest Budget Forecast

St. Paul, MN (MinnesotaNow)- Minnesota’s projected budget surplus is on the rise while a forecasted budget shortfall has shrunk. 

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That’s according to a statement released on Thursday morning by the Minnesota Office of Management and Budget (MMB). 

The agency put out a brief statement saying the state’s economic and budget outlook “remains stable” and also said “structural budget challenges remain.” 

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MN Budget Surplus Forecasted at Nearly $2.5 Billion in 26-27, $3 Billion Deficit Projected for End of Decade

MMB says their latest forecast projects a $2.465 billion budget surplus for the 2026-27 biennium. That’s up from the $456 million surplus projected this past February. 

The increased surplus is being credited on “a better-than-expected fiscal year close and higher near-term revenue collections, partially offset by increased spending estimates,” the MMB statement says. 

Thursday morning’s statement also indicated the projected budget deficit for the 2028-29 biennium has been cut in half.

MMB is now forecasting the state will face a $2.960 billion shortfall by the end of the decade. That’s down from the $5.995 billion surplus projected this past February. 

The agency cited higher healthcare costs and slow economic growth as causes for the end-of-decade budget shortfall. 

MMB also said the state’s general fund reserves “remain strong” at  $3.771 billion. 

The 2026 Minnesota Legislative Session is scheduled to being on February 27. The DFL and GOP each hold 67 seats in the Minnesota House of Representatives and the DFL has a one-seat majority in the Minnesota Senate.