Minnesota

Minnesota

Budget Cycle
Biennial

Governor Submits Budget
January (4th Tuesday)

Fiscal Year Begins
July 1 

Governor Signs Budget 
May

Budget Links 

FY2026-2027 (enacted)
FY2026-2027 (proposed)
FY2024-2025 (enacted)
FY2022-2023 (enacted)
FY2020-2021
 (enacted)

Enacted Budget – Fiscal Years 2026-2027

On June 14, Minnesota Governor Tim Walz completed signing the bills that comprise the state’s biennium budget for fiscal 2026-2027. The budget calls for $67.0 billion in total expenditures in fiscal 2026 (a 4.0 percent decrease compared to fiscal 2025) and $66.05 billion in total expenditures in fiscal 2027 (a 1.4 percent decrease compared to fiscal 2026). General fund spending is estimated to be $32.99 billion in fiscal 2026 (a 7.1 percent decrease from fiscal 2025) and $33.88 billion in fiscal 2027 (a 2.7 percent increase from fiscal 2026). Total non-dedicated revenues are estimated at $32.22 billion in fiscal 2026 (a 3.4 percent increase from fiscal 2025) and $32.60 billion in fiscal 2027 (a 1.2 percent increase from fiscal 2026). The budgetary balance at the end of the fiscal 2026-2027 biennium is estimated at $1.89 billion, and the Budget Reserve is projected to be $3.18 billion. 

The enacted budget includes the largest reduction in state spending in state history while preserving investments focused on the goal of making Minnesota the best state in the country to raise a child. Priorities in the budget bills include universal school meals, paid family and medical leave, tax cuts for seniors, and investments in childcare and infrastructure. The governor noted the bipartisan budget is the result of hundreds of hours of good-faith, bipartisan debate on the best ways to improve the health, safety, and wellbeing of Minnesotans.


Proposed Budget - Fiscal Years 2026 - 2027

Minnesota Governor Tim Walz released his two-year budget proposal for fiscal 2026 and fiscal 2027 on January 16. The budget calls for $62.02 billion in total expenditures in fiscal 2026, a 5.9 percent decrease from the recommended level for fiscal 2025, and $61.28 billion in fiscal 2027, a 1.2 percent decrease from the recommended level for fiscal 2026. The budget recommends general fund spending of $32.51 billion in fiscal 2026, an 8.1 percent decrease from fiscal 2025, and $33.39 billion in fiscal 2027, a 2.7 percent increase from fiscal 2026. General fund revenues are projected at $31.59 billion in fiscal 2026 (a 2.3 percent increase from fiscal 2025’s estimated level) and $32.27 billion in fiscal 2027 (a 2.2 percent increase from fiscal 2026). The proposal assumes a budget reserve of $3.18 billion and a budgetary balance of $2.12 billion. 

 

Proposed Budget Highlights 
The governor’s two-year budget proposal is focused on fiscal responsibility. The governor noted the plan sets Minnesota up for future success by addressing long-term budget challenges and protecting prior investments to improve lives, including universal meals, paid family and medical leave, and tax cuts for seniors and middle-class families. Highlights of the budget include:

Responsible Cuts and Curbing Growth

  • Includes responsible budget cuts and curbs unsustainable growth in spending in the programs that drive the structural deficit
  • Limits year-over-year growth rates in Medicaid waivers without limiting eligibility for services
  • Cuts state funding to private schools and includes a 5 percent reduction in Special Education transportation reimbursement costs, saving funds while incentivizing schools to create efficiencies in transportation

Lowering Taxes and Closing Loopholes

  • Proposes cutting the statewide sales tax by .075 percent, which would be the first sales tax cut in state history
  • Recommends closing loopholes by expanding the sales tax base to services provided to individuals by investors, bankers, and lawyers
  • Calls for an investment in a new corporate franchise tax division unit to audit complex pass-through entities and close loopholes
  • Proposes an increase in the surcharge currently levied on health maintenance organizations from 0.6 percent to 1.25 percent of total premium revenue

Stopping Fraud

  • Works towards tighter control and greater oversight by strengthening enforcement authority and creating tougher penalties
  • Includes adding nine staff members to the Attorney General’s Medicaid Fraud unit
  • Increases the criminal penalty for stealing public funds by 20 percent

Targeted Investments 

  • Makes targeted investments to support Minnesota’s economic growth
  • Expands the Research and Development tax credit
  • Increases the Sustainable Aviation Fuel tax credit
  • Contains permitting efficiency measures to shorten the time it takes businesses to obtain the permits they need to safely operate in Minnesota