Federal cuts could make MN budget forecast, looming deficit even worse

A dismal budget forecast announced Thursday can still get worse depending on what kinds of federal funding cuts we see out of Washington.

“You’ve got a number of policy actions that again sort of change day by day. Then you’ve got the federal funding reductions, and I think the risk has to be high just based on the value of those resources to the state budget,” said Minnesota Management and Budget Commissioner Erin Campbell.

The Budget Forecast calls for a surplus of $456 million for 2026-27, and a $6 billion deficit by the decade’s end.

“We need to get a budget done. We need to get a responsible budget done. We need to look to 28-29 to curb some of the increasing costs while at the same time continue to invest in the type of things that help Minnesota grow,” said Govenor Tim Walz.

Republican House Speaker Lisa Demuth is encouraging her fellow lawmakers to work together but she also sounded critical of lawmakers on the other side of the aisle about the looming deficit.

“My expectation is that Democrats are going to meet with us. They’re going to meet together, and we will come to the table with both tax saving cuts and absolutely no tax increases. We’ve got to come together to fix the mess we find ourselves in today,” said Demuth.

Medicaid and education funding are two of the biggest pieces of the state budget leading to speculation cuts could be coming in those two areas.