Governor Tim Walz reached an agreement with House Speaker Melissa Hortman and Senate Majority Leader Erin Murphy on budget targets on March 22. These “global” targets determine how much money is available for changes in each area of the budget and for some specific legislative actions.
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. These targets anticipate funding more initiatives than are outlined in the governor’s supplemental budget.
For context in understanding the budget targets, Minnesota operates on a two-year state budget cycle. This means that any budget changes that are enacted this year are building on the two-year budget passed in the 2023 Legislative Session.
Minnesota’s budget picture improved in the February forecast compared to November; the February forecast projects a $3.7 billion general fund surplus in FY 2024-25 that contributes to a $2.2 billion positive balance at the end of FY 2026-27. One-time dollars raised in prior budget cycles continue to play a big role in funding public services. A substantial portion of the improved budget picture is relying on future revenues, which is a source of uncertainty in the forecast.
Here are the joint budget targets, allocated to the budget categories used in the Minnesota House.
|
Joint Budget Targets | FY 2024-25 | FY 2026-27 |
| Agriculture | $4.5 million | $2.6 million |
| Capital Investment | $40 million | $0 |
| Children & Families | $34 million | $25 million |
| Climate & Energy | $1 million | $0 |
| Commerce | -$5.5 million | $1.7 million |
| Economic Development | $1 million | $0 |
| Education | $43 million | $18 million |
| Elections | $500,000 | $200,000 |
| Environment & Natural Resources | $17 million | $0 |
| Health | $4.5 million | $5 million |
| Higher Education | $500,000 | $0 |
| Housing | $10 million | $1 million |
| Human Services | $42 million | $15 million |
| Judiciary | $36 million | $3 million |
| Labor & Industry | $1 million | $0 |
| Legacy | $0 | $0 |
| Public Safety | $18 million | $14 million |
| State & Local Government | $2.5 million | $0 |
| Tax Aids & Credits | $53 million | $5.2 million |
| Transportation | $2 million | $0 |
| Veterans & Military Affairs | $0 | $0 |
| Workforce Development | $0 | -$4 million |
| Other Items | ||
| Claims Bill | $200,000 | $0 |
| Educator Pensions | $31 million | $0 |
| Emergency Medical Services | $16 million | $0 |
| Net Operating Loss- House File 3769 (revenue reduction) | $15 million | $0 |
| School Safety Center- Laws 2024, Chapter 78 | $640,000 | $980,000 |
| Tyler Settlement | $109 million | -$27 million |
| Inflation Estimate | $0 | $1.8 million |
| Total Net Changes | $478 million | $63 million |
The joint targets differ from the governor’s supplemental budget proposal primarily by describing larger one-time spending in the current biennium. The FY 2024-25 changes are $478 million in the global targets, while the governor’s proposed supplemental budget included $200 million in net general fund budget changes.
The budget targets divide up the pie into different categories than the Walz’s supplemental budget, making it difficult to make a precise comparison between the two. The biggest difference is the inclusion of funding for what’s called the “Tyler Settlement.” This is the largest single item in the targets at a cost of $109 million in FY 2024-25. These represent dollars to comply with a U.S. Supreme Court ruling that ruled that Hennepin County incorrectly violated a woman’s rights by selling her home for more than she owed in unpaid taxes, fees, and interest, and then keeping the surplus. This practice is part of state forfeiture law, so this amount is meant to address similar claims across Minnesota.
Budget and tax committees in the House and Senate will now work on crafting budget bills that fit within these targets. The joint budget targets also set the parameters for final budget negotiations between the House, Senate, and the governor.