Governor Tim Walz and legislative leaders announced targets on Wednesday for how they propose to allocate the remainder of the state’s projected surplus. After accounting for bills passed so far by the Legislature, a $7.1 billion general fund surplus remains in FY 2022-23 and $5.1 billion in FY 2024-25.
| Budget Targets | FY 2022-23 | FY 2024-25 |
| Transportation | $360 million | $486 million |
| E-12 Education | $320 million | $680 million |
| Health and Human Services | $300 million | $700 million |
| Public Safety | $200 million | $250 million |
| Cash for infrastructure projects (in bonding bill) | $150 million | |
| Housing | $50 million | $50 million |
| State Government | $35 million | $25 million |
| Energy | $23 million | $24 million |
| Higher Education | $20 million | $26 million |
| Jobs | $11 million | $14 million |
| Environment | $10 million | $10 million |
| Debt Service for bonding | $8.0 million | $64 million |
| Agriculture | $7.5 million | $7.5 million |
| Commerce | $3.0 million | $5.0 million |
| Other items (includes broadband, mental health, IIJA flexible fund) | $102 million | $59 million |
| Net changes | $1.6 billion | $2.4 billion |
| Tax cuts and aids to local governments | $1.6 billion | $2.4 billion |
| Budgetary balance | $3.9 billion | $271 million |
The budget agreement calls for $1.6 billion in net new general fund spending in FY 2022-23 and $2.4 billion in FY 2024-25. The agreement calls for an equal amount of the surplus to go for the tax bill, $1.6 billion in FY 2022-23 and $2.4 billion in FY 2024-25, which will likely come from a combination of tax cuts and increases in tax credits and aids to local governments. That means policymakers are giving the single largest piece of the surplus to tax changes.
The agreement also leaves $4.2 billion of the projected surplus unspent, or “on the bottom line.” This provides some cushion should a slowing economy cut into the projected surplus, but if the projected surpluses hold true, policymakers will make decisions on how to allocate these dollars in 2023.
Today’s announcement fills in the gaps from the announced “budget framework” released earlier in the week. Of the new targets released today, the largest increase in FY 2022-23 is in Transportation, where policymakers have agreed to an additional $360 million in FY 2022-23 and $486 million in FY 2024-25. Of this amount, $282 million in FY 2022-23 and $377 million in FY 2024-25 will go to items that will secure additional resources through a federal funding match from the Infrastructure Investment and Jobs Act (IIJA) passed by Congress late last year.
A lot of work remains to be done to fill in the details of the specific budget bills. Budget and tax conference committees must continue their work over the next few days if they are going to finish legislative business by the time session ends on May 23.
Throughout this session, we’ve called on policymakers to put the state’s resources to work to address the real challenges that Minnesotans are facing and build an equitable recovery. Policymakers should focus on Black, Indigenous, and other Minnesotans of Color as well as lower-income Minnesotans who struggled disproportionately during the pandemic and under the unequal status quo that predated it. They should take bold steps so Minnesotans have health care, child care, paid family and medical leave, affordable housing, a quality education from the earliest years through college and training, clean air and water, and other building blocks of a high-quality standard of living.
It’s an important time for policymakers to be hearing from their constituents. Use the action alerts below to send a message to your elected representatives on the following:
- Enact the House’s transformational changes to the Renters’ Credit.
- Use the surplus to solve challenges everyday Minnesotans face, not unfair tax cuts.
- Protect health care for kids through continuous eligibility, which keeps temporary increases in their parent’s income or paperwork issues from costing kids their health care coverage.