Minnesota
Minnesota budget surplus forecasted at $616 million, but warning signs linger
ST. PAUL, Minn. — ST. PAUL, Minn. (WCCO) Minnesota is expected to have a $616 million surplus in the next two-year budget, state officials said Wednesday, but there is a looming $5 billion deficit in future years—teeing up a debate in the legislature about how to rein in spending to stave off that projected shortfall.
That surplus for the next biennium, which covers fiscal years 2026 and 2027, shrunk by $1.1 billion compared to what officials anticipated at the end of the legislative session this year. There is an anticipated structural imbalance—spending exceeding revenues—but a carryover balance blunted the impact and left some money on the bottom line for lawmakers when they put together the next budget when they return in January.
But in fiscal years 2028 and 2029, if the state keeps at this pace, it will see that deficit. Costs for special education and disability services are two drivers of increased spending, the forecast showed.
“Liike many other states, Minnesota is facing some significant economic and financial headwinds,” said Erin Campbell, commissioner of Minnesota Management and Budget, who cited a decline in COVID-era federal stimulus funding and related consumer and business spending, which boosted tax revenues in the state.
Campbell underscored that the decisions lawmakers make next year for the budget in the near term will impact the future years, so they should act wisely. Providing a budget forecast for a four-year window with this information allows them to course correct, she said.
“Not only do we have notice about a problem on the horizon, we also have ample time to take action and change the trajectory,” she explained.
Gov. Tim Walz told reporters “everything is on the table” to address the state’s financial outlook when the legislature returns in January, this time with a divided government. The House right now stands at a 67 to 67 tie, ending the DFL trifecta that defined the last two years.
Republicans in response to the forecast news were quick to place blame on Democrats for putting the state’s finances on the brink. They noted how Management and Budget last year warned of the mismatch between the amount of money the state was spending compared to the revenues it was raking in.
“The results that we saw with this budget forecast that came out today is exactly what House Republicans have been warning for the last two years would be the case,” said House Republican Leader Lisa Demuth, R-Cold Spring. “Democrats ignored those warnings from Republicans. They ignored the warnings from their own party’s administration, and now again, we have that moving $5 billion deficit projected just a few short years.”
Meanwhile, DFL leaders highlighted the state’s robust rainy day funds that exceed $3 billion and tempered some concerns about the state’s future finances, vowing a balanced budget and bipartisan work this year to get it done.
“I am confident that we will do what we have done over the previous cycles, which is to responsibly manage Minnesota’s budget to leave long term economic stability and surpluses,” said House Speaker Melissa Hortman, DFL-Brooklyn Park.
Demuth pledged that House Republicans were sending out letters to all state agencies to get information about how many full-time positions for which they get a state appropriation are unfilled; the terms of leases on any buildings that may not be fully used due to hybrid work; and how many “DEI employees” have been added across each department.
She suggested the latter should be streamlined, so staff aren’t doing duplicative work.
“Given the fact that we have a budget crisis on the horizon, we need to start working now to evaluate efficiency of our state programs and working to root out the hundreds of millions of dollars in fraud that is still likely going on across state government,” she said.
The next legislative session begins January 14. To see the full budget documents, click here.
Minnesota
Karl-Anthony Towns drops 40, but Wolves spoil Minnesota return
MINNEAPOLIS — Anthony Edwards scored 38 points to help the Minnesota Timberwolves beat former teammate Karl-Anthony Towns for the first time and hold off the New York Knicks 115-104 on Tuesday night.
Julius Randle had 17 of his 25 points in the fourth quarter and Rudy Gobert contributed 11 points, 16 rebounds and his reliably fierce rim protection for the Wolves (20-10), who have won 10 of 12.
Towns scored a season-high 40 points before fouling out in the final minute for the Knicks (20-9) in the absence of fellow All-Star Jalen Brunson, who rested his previously injured ankle.
Knicks coach Mike Brown pointed to Towns’ foul trouble as a factor in Tuesday’s loss.
“Oh, you know, KAT — obviously he can score. He had 40 tonight,” Brown said. “I said it before, he’s a walking double-double. He just has to continue to try not to pick up cheap fouls. He had a couple of cheap fouls where he led with his hand or hooked the guy, and now we have to sit him for X amount of minutes when he needs to be on the floor.”
Tyler Kolekstarted for Brunson and had 20 points, 11 rebounds and eight assists.
Brunson, who had 47 points in a win overMiamion Sunday, joinedOG Anunoby(ankle),Miles McBride(ankle) andLandry Shamet(shoulder) on the shelf to leave the backcourt thin — and make Towns the go-to scorer in his homecoming game against his original team.
Towns had 32 points and 20 rebounds in his first game back at Target Center a year ago, when the Knicks won 133-107. He didn’t play in the rematch in New York the next month, a 116-99 win for the Wolves. Earlier this season, Towns had 15 points toward a 137-114 victory over Minnesota at Madison Square Garden.
These matchups are emotional for Randle and Donte DiVincenzo, too, whom the Wolves acquired in the stunning trade before last season that sent their cornerstone East. Randle came alive down the stretch, flexing to the crowd after a couple of tough shots to help the Wolves recover from a 16-point lead they squandered earlier and build their advantage back to 17 late in the fourth quarter.
The Associated Press contributed to this report.br/]
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Minnesota
Minnesota Vikings QB J.J. McCarthy will miss Christmas game vs. Lions with fractured hand
Minnesota Vikings quarterback J.J. McCarthy has a hairline fracture in his hand and will not play on Christmas Day against the Detroit Lions, head coach Kevin O’Connell said Tuesday.
McCarthy suffered the injury in the first half of the team’s 16-13 win over the New York Giants. Undrafted rookie Max Brosmer played the second half and will start against Detroit, O’Connell said.
O’Connell described it as a “very, very small” fracture that will not require surgery, and said McCarthy may be available for the season finale against the Green Bay Packers.
This is the third injury of the season for McCarthy, who missed five games with an ankle injury and another with a concussion. He also spent his entire rookie season on injured reserve.
Brosmer’s lone start this season, Week 13 against the Seattle Seahawks, was disastrous. He completed 19 of 30 passes for 126 yards, no touchdowns and four interceptions in a 26-0 shutout loss.
The Vikings beat the Lions 27-24 at Ford Field earlier this season. Kickoff at U.S. Bank Stadium is set for 3:30 p.m. on Thursday.
Minnesota
98 Minnesota mayors sign letter to Gov. Walz on state spending concerns
Almost 100 Minnesota mayors, including over half a dozen in the Northland, have signed a letter to Minnesota Governor Tim Walz and members of the legislature, raising concerns about the rising costs and financial pressures cities are facing due to state mandates.
The group of 98 mayors published the letter publicly on Monday, December 22nd, highlighting rising property taxes, declining state budget projections and the recent fraud investigations as reasons for “deep concern—and growing frustration” about the state’s fiscal direction.
“As mayors, we see firsthand how these decisions ripple outward. Fraud, unchecked spending, and inconsistent fiscal management in St. Paul have trickled down to our cities—reducing our capacity to plan responsibly, maintain infrastructure, hire and retain employees, and sustain core services without overburdening local taxpayers,” the letter says, in part.
Rising property taxes are preliminarily set to increase by nearly $950 million across the state next year — a 6.9% increase from 2025. The local leaders say those increases are necessary because of state policies and unfunded mandates, which include requirements for schools, health and human services systems, and public safety policies.
“Every unfunded mandate or cost shift forces us into difficult choices: raise taxes, cut services, delay infrastructure, or stretch thin city staff even further,” the letter states.
The mayors also cited a recent report from the Minnesota Chamber of Commerce, which showed the state slipping in national rankings over the past six years, something the chamber said should be a “wake-up call” to state leaders.
According to those statistics, Minnesota’s GDP has grown by just 1% per year since 2019, compared to the national average of 1.8%; the labor force has increased just 0.2% annually, ranking 40th nationally; and nearly 48,000 more Minnesotans left the state than moved here between 2020 and 2024.
In their letter, the mayors called on state lawmakers to “course-correct” and focus on policies that encourage growth and local stability.
The League of Minnesota Cities lists 856 cities in the state, so the 98 mayors would account for roughly 11.5% of cities. The map below shows the locations of each city in the Northland whose mayor signed the letter.
A spokesperson for Governor Walz sent our Hubbard sister station KSTP the following statement:
“The Governor’s focus on lowering property taxes is exactly why he has provided more funding than any administration in history directly to local governments.
“The surplus went directly back into the bottom line of local governments: $300 million for their police and fire departments, the largest infrastructure budgets in state history, funding to remove lead lines, the largest-ever increase in flexible local government aid, and property tax relief directly to taxpayers.
“The governor will continue to focus on ways to lower costs, but local governments also have a responsibility to manage their budgets and state aid responsibly.”
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