Minnesota’s current budget

Governor Tim Walz released his FY 2026-2027 biennial budget proposal in January 2025 and gave the state of the state address in March 2025. The FY 2026-2027 budget was enacted in June 2025.

Minnesota enacted its FY 2024-2025 biennial budget in May 2023. Minnesota did not enact a supplemental FY 2024-2025 budget. The budget reported $37.6 billion in general fund spending in FY 2024 and $32.0 billion in FY 2025, and total spending of $61.8 billion in FY 2024 and $59.1 billion in FY 2025. Minnesota approved a package of tax cuts in calendar year 2023, including a new child tax credit and a one-time rebate for residents.

Under the American Rescue Plan, Minnesota received $2.8 billion in direct state fiscal aid and $1.8 billion in local government aid from the federal government. As of January 2025, Minnesota had fully allocated its state ARP. States must spend the funds by Dec. 31, 2026.

According to the National Association of State Budget Officers (NASBO), Minnesota’s total expenditures in fiscal year FY 2025 were $54.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2025 were $2.9 trillion, ranging from $5.4 billion in Wyoming to $413.8 billion in California.

According to NASBO, Minnesota’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2025: $35.6 billion/$72.1 billion
• FY 2024: $25.3 billion/$63.5 billion
• FY 2023: $27.2 billion/$55.9 billion
• FY 2022: $24.7 billion/$54.2 billion
• FY 2021: $23.6 billion/$48.4 billion
• FY 2020: $23.8 billion/$43.0 billion
• FY 2019: $23.1 billion/$40.8 billion

For more on Minnesota’s budget, see

• Minnesota Management and Budget,
  
• the Minnesota House of Representatives Fiscal Analysis Department,
  
• the Minnesota Senate Counsel, Research and Fiscal Analysis,
  
• the Minnesota Legislative Reference Library.

Minnesota’s budget institutions, rules, and constraints

Minnesota uses a biennial budget. The legislature is not required to pass a balanced budget and the governor is not required to sign one. However, the governor must submit a balanced budget, and the state’s own-source revenue and debt allowance must meet or exceed its expenditures. Additionally, deficits cannot be carried over into the following year and there are limits on total authorized debt incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Overview of Minnesota’s state and local expenditure and revenue sources

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Minnesota’s combined state and local direct general expenditures were $72.6 billion in FY 2022 (the most recent year census data were available), or $12,699 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $12,083.

Minnesota’s largest spending areas per capita were public welfare ($3,807) and elementary and secondary education ($2,648). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Minnesota’s combined state and local general revenues were $82.1 billion in FY 2022, or $14,376 per capita. National per capita general revenues were $13,619. Minnesota uses all major state and local taxes. After federal transfers, Minnesota’s largest sources of per capita revenue were individual income taxes ($2,648) and property taxes ($1,916).

Minnesota’s economic trends

Minnesota’s per capita income (per the Bureau of Economic Analysis) was $74,943 in 2024, ranking 13th among the states. It was above both the national average of $72,425 and the Plains regional average of $65,977. The state’s median household income (five-year estimate) was $89,062 in 2024, ranking 13th among the states and above the national average of $80,734. Minnesota’s poverty rate was 9.3 percent in 2024 (five-year estimate), below the national rate of 12.5 percent.

Although Minnesota’s averages tell a story about the entire state, Minnesota is composed of diverse localities. For example, the city of Winona’s median household income was $56,337, and its poverty rate was 23.1 percent; the city of Chanhassen’s median household income was $143,651, and its poverty rate was 2.9 percent.

Minnesota’s unemployment rate has historically been below the national average.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Minnesota, the average unemployment rate in 2024 was 2.8 percent for white residents, 5.6 percent for Black residents, and 4.2 percent for Hispanic or Latino residents.

The major industries that contributed the most to Minnesota’s gross domestic product (GDP) in 2024 were finance, professional services, manufacturing, social services (i.e. health and education), and government. Finance and social services contributed more to Minnesota’s GDP than they did to the nation’s and region’s GDP, while government was less important to Minnesota than it was to the nation and region in 2024.

Looking at more specific industries, among those that accounted for at least 1 percent of Minnesota’s GDP in 2023, management of companies produced far more for the state than for the nation, contributing 3.5 percent to Minnesota’s GDP and 1.8 percent to the nation’s. Other industries that overperformed in Minnesota relative to national averages in 2023 were wholesale trade, insurance carriers, farms, and miscellaneous manufacturing.

Minnesota’s politics

Governor Tim Walz, a Democrat, was elected in 2022 with 52 percent of the vote. The next gubernatorial election is in 2026.

Democrats control both the House of Representatives (67 Democrats to 67 Republicans) and Senate (34 Democrats to 33 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Minnesota. All Minnesota House seats are on the ballot in 2026 because representatives serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. All senators are therefore up for election in 2026.

Minnesota’s demographics

As of July 2024, Minnesota’s population was 5,793,151. That was up 9.1 percent from 2010. The state’s population growth rate was slower than than the nation’s 9.9 percent growth over the same period. The Urban Institute estimates the state’s population will increase 15.6 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
  
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
  
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
  
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
  
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.