Minnesota Report
On its face, the Revenue Forecast has taken a $160M drop in its estimate from November, but the impact of decisions from the Donald J Trump (R) Administration can still wreak a great deal of havoc depending on the various decisions it makes. Because our state’s budget receives 1/3rd of its revenue from the federal government, and as a state we pay in more to the feds than we receive in return. If the tap’s flow is restricted or cut-off all together it will require a significant course correction.
The tariffs significantly impact our state in a variety of ways. Their application in Mexico, from which much of our fruits and vegetables emanate especially in the winter, will cause a significant rise in grocery prices. The application in Canada will mean higher electricity costs in the northwestern corner of the state, and adversely impact the electrical grid in addition to oil and mineral price increases felt across the board. The Chinese tariffs will significant hurt our farmers, especially soybean growers because they will price our beans higher than other large producing countries like Brazil, which will be where China shifts its purchases to.
As we view the 2025 February Revenue Forecast, we see a number of interesting facets. Here is a video of the presentation. The main issue being inflation, which the Trump Administration made a bold statement it could address, and as we can see practically, is neutered and unable to do anything about. Sure, Trump can blame Joe Biden (D) in many instances with unfounded and unsubstantiated ways this is now Trump’s Economy. The price of eggs have not fallen, but are continuing to rise, the declaration of “a little disturbance” doesn’t mean the ignorant class that voted him in will have the patience to wait for the ship to right itself. They want change and they want it now.
The job loss caused by the firing of people in the various state departments, might have seemed reasonable to the misguided, but these people are not just employed in Washington DC, but rather throughout the nation, in every state, county and city. They are your friends and neighbors.
The “Uncertainty” caused by Trump is the essential element in what is occurring right now. In his opening remarks Governor Tim Walz (DFL-MN) sounded like a candidate on the stump running for President in 2028. His remarks start at 59:51 of the video. He said, “There is a storm at the federal level and that storm is Donald Trump.” and “This is CHAOS this is not how you run any business, and not how you run the federal government.”
In her opening remarks, Commissioner of Management and Budget Erin Campbell expressed a common theme expenditures are higher due to the pressure of inflation.
There is a reduction in the prediction of $456M or a drop in $160M to carry forward to FY 2025-26. The major changes in expectations a more dramatically seen from the Fiscal Snapshot: Forecast Horizon FY 2028-29 reflecting a predicted approximation of a $5,995B deficit. Slide 1 in the Revenue Forecast Presentation shows this clearly.
State Economist Dr Anthony Becker provided his view of the Economic Outlook, starting on slide 6. He highlighted these factors: Trade, Fiscal and Immigration policies provide the uncertainty.
The company Minnesota currently uses for assistance in developing its forecast is SPGMI.
Later State Budget Director Ahna Minge, provided Spending and Long Term Budget Outlook highlighting the question always posed by Checks & Balances what is the state’s Debt Capacity, which we learned to be $700M.
One significant fact we learned in the projected changes in the higher cost items in the Budget, which are Education and Health and Human Services. The two are predicted to switch places in 2029. One of the most interesting aspects of this change is the recognition of state paid use of weight-loss drugs like weight loss drugs such as Ozempic, Wegovy. These are up over 90% in recent years and this fact was not lost on the legislators in the room, especially the Republicans.
In the Education, the cost/per pupil is set to increase annually due to inflationary increase in 2026.
There was no commitment of there being a need for another revenue forecast but both House Speaker Emertus Melissa Hortman (DFL 34B, Brooklyn Park) and House Speaker Lisa Demuth (R-13A, Cold Spring) expressed a need for commonly agreed to budget targets by early April and a bipartisan budget to be passed by May 19th. Speaker DeMuth continues to parrot the false narrative, which is the DFL trifecta spent $18 million last session, which was taxpayer collected monies, $12 million was Federal onetime money and that was allocated, but was not money collected from Minnesota. She should stop providing false information.
When the Republicans spoke, we asked a question at 1:52:04 on the video, one we believe is an obvious question of Ways and Means Chair Paul Torkelson (R-15B, Hanska). “Are you just going to be having conference committees on all the issues?” To which the chairman agreed to and conceded, after clarifying its dependence on the results of the Special Election in election 40B in Roseville.