ST PAUL, Minn. — After officials announced earlier this year that the state's economic forecast looked even better than they thought, Gov. Tim Walz, Lt. Gov. Peggy Flanagan and the state's fiscal experts met in front of reporters Monday to announce their administration's supplemental budget proposal for 2024.
"We know that Minnesota's economy is strong and healthy and it's through thoughtful, specific budgeting like we're presenting today that we will keep it that way," Flanagan said. "The supplemental budget invests in core services to ensure Minnesotans can live safer, healthier and better lives."
Entering a so-called bonding year as opposed to a budget year, Walz said the state plans to "meet this moment" with a "smaller, intentional" supplemental budget that addresses statewide needs, adding, "It is time to triage our most pressing issues."
Among the proposal's funding highlights are:
- Public safety and emergency services with wider access for residents in Greater Minnesota
- Child care and child protection focused on modernizing the state’s child welfare and social services reporting system
- Water quality and infrastructure funding for in-home water treatment, well replacement, and other services for contaminated wells
"Last year, we made generational, historic investments in Minnesotans," said Walz. "Whether it be the ability to provide meals to all of our children; a historic child tax credit reducing childhood poverty by a third; meeting matching dollars for all of the federal money that will continue to make, as it was announced this week, Minnesota's roads the best of the 50 states in the country as we build toward the future."
In February, Minnesota's fiscal experts predicted a $3.7 billion surplus for the two-year cycle now underway, up from the $2.4 billion surplus predicted just months before in November. Experts said the upgraded figure is a result of a rosier long-term economic outlook and tax revenues outpacing initial expectations.
"Minnesota remains on very sound fiscal footing and projected growth in the national economy and the state revenues picture is cause for celebration," Minnesota Management and Budget Commissioner (MMB) Erin Campbell told reporters in February.
But current surplus aside, Campbell warned against spending frivolously in the months ahead.
"In order to protect the investments that are made in programs that serve Minnesotans, it will be important that policymakers exercise caution in enacting additional ongoing spending this legislative session," Campbell said last month.
According to the state, the surplus is expected to fall to $2.2 billion in FY 2026-2027, as they predict the state will take in less money than it spends — also called a "structural imbalance."
While any spending during the current cycle will lower the surplus, it will also cut into the next budget's bottom line. Experts said higher demand for state services could also cut into that surplus.
In response to the Democrats' more optimistic outlook for Minnesota's economy, some state Republicans referred to the long-term forecast as a "looming deficit" caused by Democrats.
"So, despite a continued growing economy there still isn’t enough tax revenue to meet the DFL’s spending demands," House Minority Leader Lisa Demuth of Cold Spring told reporters in February. "This goes to show we have a spending problem in Minnesota, not a revenue problem."
Walz went on to defend Democrats' 2023 spending, touting the legislature's ability to pass and implement new programs like free school meals and middle class tax cuts, among and other investments.
The state also has nearly $3 billion in reserve funds, essentially a rainy-day savings account that doesn't show up in the forecast.
"We have surpluses as far as the eye can see," House Speaker Melissa Hortman of Brooklyn Park said in February.
Unlike the federal government, the state can't legally incur an operating deficit. The forecast serves as a guide to lawmakers to prevent them from taking the state into the red.
To see the state's full supplemental budget proposal, visit the Minnesota Department of Management and Budget's website.
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