Minnesota’s Positive Budgetary Balance Grows to $9.25 Billion

February 28, 2022

The state’s continued strong economic showing provides city officials with budget certainty over the next 16 months.

The new state budget forecast projects the state will end the biennium with a record-setting $9.253 billion surplus.

According to the February Budget and Economic Forecast, released by Minnesota Management and Budget (MMB) today (Feb. 28), the state will now end the current biennium on June 30, 2023, with a positive balance that is $1.5 billion higher than the previously projected surplus of $7.745 billion. In addition, the state has more than $1 billion in remaining federal funds from the COVID-19 recovery packages enacted in 2020 and 2021.

With the continued strong showing of the state budget, city officials can be relatively confident in the continuity of the state’s city aid programs.

Access the full Budget and Economic Forecast

The positive budget news continues into the fiscal year (FY) 2024-2025 biennium, with a projected surplus of $15.287 billion, although the forecast also notes that inflation will likely add as much as $1.1 billion to state expenditures in that biennium.

About $1.25 billion of the surplus is due to actual and projected increased revenue collections for the balance of the current biennium. Expenditure estimates were revised downward by $270 million.

MMB added numerous cautions to the forecast, noting that inflation and energy prices, geopolitical conflict, supply chain issues, labor force participation, and the trajectory of the pandemic all add uncertainty. The forecast projects the status of the state’s general fund budget for the remaining 16 months of the current biennium.

The revised budget forecast will set the stage for the Legislature and Gov. Tim Walz to negotiate adjustments to the state’s biennial budget. Over the past few weeks, the governor and legislators have discussed proposals to reduce or rebate taxes and modify state programs to address priorities. The record positive budgetary balance will add to the challenges of reaching an agreement on the use of the budget surplus.

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