Gov. Walz's revised budget cuts hundreds of millions with deficit looming
Weeks after budget forecasters predicted a precipitous drop in Minnesota's surplus, Gov. Tim Walz has released a revised budget that his office says cuts hundreds of millions of dollars in spending in the coming years to fend off an impending deficit.
The budget revision, which is a legally required annual move, cuts $162 million from the 2026-2027 budget and about $247 million from 2028-2029. The cuts come from several state grants and programs, with some of the larger reductions coming from charter schools, payments to counties to offset tax loss and transit funding in greater Minnesota.
New spending in the budget, according to Walz, includes money for law enforcement training and bird flu response.
The revised budget maintains pillars of Walz's original proposal, including cutting the statewide sales tax by .075% while expanding the sales tax base, an anti-fraud package and increased accountability for health insurers. It also keeps cuts to special education, state funding for private schools, Medicaid programs and more.
If approved by the Legislature, the budget would keep more than $2.3 billion on the bottom line for the next two-year budget.
"The revised budget curtails spending growth while maintaining key services that improve Minnesotans' lives," Minnesota Management and Budget Commissioner Erin Campbell said. "This budget is fiscally responsible and recognizes the need to take action now to address the imbalance in revenues and spending long-term."
More details about the revised budget can be found on Minnesota Management and Budget's website.
Earlier this month, Minnesota Management and Budget forecast a $456 million surplus for fiscal years 2026 and 2027, a reduction of $160 million from the previous forecast. The office cited state spending and "shifting policies at the federal level" as reasons for the shrinkage. Additionally, the office said if the state continues to outspend its revenue growth, there will be a deficit of nearly $6 billion in future years, an increase from the $5.1 billion deficit previously predicted.
The Legislature will have to agree on a budget by the last day of session, which is May 19. If they don't, lawmakers will have to go into special session. Without a budget, the state government would shut down starting July 1.
