ST. PAUL, Minn. (FOX 9) – Minnesota Gov. Tim Walz will present his two-year budget proposal on Thursday amid an ongoing power struggle at the Capitol. 

Watch live: Walz is scheduled to present his plan at noon. You can watch it live in the player above. 

Minnesota budget outlook

The backstory:

Two years after seeing a record-setting projected surplus of $17.5 billion in 2023, the Minnesota Legislature will be faced with much less of a fiscal cushion this session as state leaders projected a $616 million balance at the end of the Fiscal Year (FY) 2026-27 biennium, according to the budget outlook released in December 2024. That’s $1.1 billion lower than previously forecast. 

The budget outlook is often the playbook for crafting the two-year budget. And with less money to spend this year, it’s expected that Walz’s plan will likely feature measures to control spending. 

This comes after the last budget year in 2023 when Democrats, who controlled the governor’s office, House and Senate, passed a roughly $70.6 billion budget plan — the highest ever in the state. 

What’s next:

Another economic forecast will be released in February, and then state lawmakers in the House and Senate will craft their own budgets. 

The budget will need to pass both chambers and receive the governor’s signature before July 1 or some parts of the state government could face a shut-down. 

Power struggle at the Minnesota Capitol

Dig deeper:

Walz’s budget announcement on Thursday comes as a power struggle in the Minnesota House of Representatives continues. Democrats and Republicans continue to argue about a power-sharing agreement in the House, with DFLers sitting out the first day of the legislative session believing they blocked a quorum. However, Republicans carried on as usual with a regular floor session — albeit a half-empty one — and committee hearings.

Democrats have filed a petition to the Supreme Court against Republicans after they carried on business as usual this week, and they’ve asked the court to decide whether a quorum requires 68 or 67 members of the 134-member body. Only 133 members are currently sworn in, and Republicans have the current majority, 67-66. 

READ MORE: Taxpayers footing bill for political battle over Minnesota House

A special election on Jan. 28 in House District 40B will determine if the House is evenly split 67-67 or if Republicans control the House by a margin of 68-66. 

Meanwhile, in the Senate, Republicans and Democrats have agreed on a power-sharing agreement for the time being. The chamber is tied at 33-33 due to a vacant seat in Senate District 60. A special election for that seat will be held on Jan. 28.