Minnesota Budget Bites

Governor Tim Walz reached an agreement with House Speaker Melissa Hortman and Senate Majority Leader Erin Murphy on budget targets on March 22. The agreement outlines targets of $478 million in net general budget changes, including increased spending or reduced revenues, for FY 2024-25 and $63 million for FY 2026-27. The joint budget targets also set the parameters for final budget negotiations between the House, Senate, and the governor.

Governor Tim Walz released his governor’s supplemental budget proposal. The administration described the priorities for his budget as safe communities, clean drinking water, and support for children and families. At the Minnesota Budget Project, we were thrilled that one of our top priorities was included in the governor’s supplemental budget: resources to implement advance periodic payments of the Child Tax Credit. In total, Walz proposed $200 million in net general fund spending increases and revenue reductions in FY 2024-25 and $27 million in FY 2026-27.

Minnesota’s new Child Tax Credit (CTC) will help families achieve their goals and invest in a better future for themselves and their children. Earlier this session, members of the House Tax Committee heard a brief overview of the state’s Child Tax Credit, which was created in the 2023 tax bill, and an update on its implementation.

The latest Minnesota budget and economic forecast shows an overall improved state budget picture. The forecast predicts a $3.7 billion general fund surplus projected for the current two-year budget cycle, followed by a $2.2 billion projected positive balance at the end of FY 2026-27. The improved outlook is largely the result of higher projected tax revenues estimated to come into the state. In this blog, we share our takes on the recent forecast and what comes next, which will provide policymakers, advocates, and the public with information to guide upcoming budget decisions in the 2024 Legislative Session.