Early agreement on state budget targets outline use of the surplus

Clark Goldenrod
Mar 23, 2023
On Tuesday, the Minnesota House and Senate leadership and Governor Tim Walz released joint budget targets that lay out their agreed-upon priorities for use of the state’s projected budget surpluses. For FY 2023-25, the three largest targets in dollar terms are for tax reductions and aids to local governments, K-12 Education, and funding for an infrastructure (bonding) bill.  

Budget targets set the size of each omnibus budget bill, as well as the tax and bonding bills. They describe the net changes to state general fund spending in each budget area; in addition to changes in spending, they could also reflect revenue changes or transfers between funds. In most years, each legislative body sets their own targets to guide development of their budget bills, and reach agreement on targets later in the spring. However, this year, the governor and House and Senate leadership expedited the process by negotiating an agreement on global targets before omnibus bills in the House and Senate are released.  

The agreement also sets targets for several bills that are travelling separately from the omnibus budget bills. These include bills to start a statewide Paid Family and Medical Leave program and Earned Safe and Sick Time. 

Since the budget targets are only dollar figures – meaning that they set the size but not the content of the budget bills – they can produce more questions than answers. What specific items are included will become clear as the House and Senate release their omnibus budget bills over the next couple of weeks. Stay tuned to our Minnesota Budget Bites blog for more in-depth analyses as they are released.  

Global targets (by Senate committee jurisdiction)       FY 2023-25      FY 2026-27
Tax reductions and aids to local governments    $3.0 billion       $1.3 billion 
Education Finance    $2.5 billion (includes $300 million for children and families)      $3.3 billion 
Debt Service and cash for bonding     $2.3 billion       $0
Health and Human Services     $1.6 billion (includes $875 million for children and families)      $1.4 billion
Health Care Access Fund (HCAF) financing    -$622 million       -$586 million
Human Services    $1.3 billion     $1.6 billion
Transportation    $1.1 billion       $130 million 
Housing and Homelessness Prevention    $1.0 billion       $50 million 
Jobs and Economic Development    $990 million (includes $500 million federal match)       $33 million 
Judiciary and Public Safety    $880 million        $710 million 
Education, Climate, and Legacy    $670 million       $90 million 
Higher Education    $650 million        $450 million 
State, Local Government and Veterans    $528 million       $265 million 
Energy, Utilities, Environment, and Climate    $255 million        $10 million 
Agriculture, Broadband, Rural Development    $148 million (includes $100 million for broadband)      $40 million 
Commerce and Consumer Protection    $10 million       -$266 million 
Elections    $10 million        $7.0 million 
Labor    $8.0 million        $6.5 million 
Other bills        
Paid Family and Medical Leave    $668 million        $6.1 million 
Pensions    $600 million        $0
Lead lines    $240 million       $0
Disaster relief    $40 million        $0
Earned Safe and Sick Time    $4.8 million        $4.7 million
Claims bill    $1.5 million       $0
Stadium (includes reserve impact)   -$341 million        -$398 million 
Other items    $310 million        $98 million 
Total    $17.9 billion       $8.2 billion