Gov. Tim Walz joined many state leaders to present Minnesota’s latest budget forecast on Wednesday.

The new forecast is the last one before the start of the legislative session next month. Keep in mind, 2025 is a budget year, meaning lawmakers will have to pass funding for several key departments and programs.

According to the state budget office, as of Wednesday morning – there is now a short-term surplus of $616 million through 2026-2027 – that’s $1.1 billion less than previously estimated. The state is projecting revenue cuts and higher spending on things like long-term care and special education.

In addition, the office is now projecting a deficit of $5.1 billion for 2028-2029. However, the 2024-25 biennium is now expected to finish with a surplus of $3.75 billion, which is $461 million higher than projected.

Lisa Demuth (R-Cold Spring) and the House GOP Speaker Designate, issued the following statement on Wednesday regarding the forecast:

“While the budget is stable in this biennium, it’s obvious that spending reductions are needed to prevent a deficit down the road. House Republicans are putting state agencies on notice: the times of automatic budget increases and dramatic government employee growth are over, and we expect you to join us in working to find savings and root out waste and fraud.”

However, passing the next budget will come with challenges since control of the state house is evenly split between parties. That said, party leaders have pledged to work together.

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Last year, Walz signed a $72 billion state budget into law, the largest in state history and $7 billion higher than his proposal.

“We will get an opportunity then to see what the incoming administration will do in mid-January and then we will get the opportunity to put our budget and then a revised budget when the numbers actually come in,” Walz previously said.

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