The State of Minnesota’s November Budget and Economic Forecast was released last week. According to the Minnesota Management and Budget, the budget for fiscal year 2026-27 includes a $2.465 billion surplus. However, in 2028-29, the state is projected to have a $2.96 billion deficit.

Depending on who you talk to, there’s plenty of optimism. There is also warnings of doom and gloom.

And of course, finger pointing.

“Despite the president’s tariff and destabilization of health care costs, Minnesota’s annual budget forecast has improved in both the short and long term thanks to the responsible budgeting done in Minnesota,” Gov. Tim Walz declared in his press release.

“Today’s snapshot does show uncertainty. I don’t think that’s any surprise to Minnesotans who have seen impacts on their own family budgets,” Walz said. “But in Minnesota, we know how to balance a budget. It’s what we’ve done for the last seven years, and it’s what we’ll continue to do. We’re standing on a solid foundation, and we have the tools to continue managing a budget that makes Minnesota a great place to live.”

Meanwhile, the Minnesota Chamber has a less than rosy outlook in response to the forecast.

“Minnesota’s growing deficit signals an economy being outpaced by other states — a clear warning of the economic imperative we can no longer ignore,” said Doug Loon, president and CEO of the Minnesota Chamber of Commerce. “Policymakers should act now to reshape decisions that directly affect Minnesotans’ livelihoods and restore stronger economic growth.”

Minnesota Sen. Gary Dahms, R-Redwood Falls, is the lead of the Senate Commerce Committee. In his Thursday press release, he points the finger at Walz and the Democrats.

“Minnesota’s budget forecast the cost of fiscal irresponsibility,” Dahms stated. “Governor Walz and the Democratic majority increased taxes on Minnesotans and raised spending to unprecedented levels. Years of unchecked spending and mismanagement and misuse of taxpayer dollars have fueled a future deficit.”

On the same team as Dahms, Rep. Chris Swedzinski, R-Ghent, agreed.

“It’s nice that Minnesota’s short-term budget looks solid,” Swedzinski said. “But that projected shortfall is rather concerning, and we should deal with it in the 2026 session to ease the pressure when we put together the next budget in 2027.

“This just shows why we still need a more balanced approach at the Capitol, especially after the decisions made under one-party control when Democrats spent our state into oblivion, refused to crack down on rampant fraud and continued passing extreme policies that will only make it even more expensive to do business in our state. We need to be expanding job opportunities in Minnesota, but the forecast shows Democrat decisions are having the opposite impact by chilling our future job market.”

While Swedzinski and Dahms make pretty good points in their criticism directed at Walz and the Democrats, St. Paul is not the only place where painful decisions will be considered. City and county governments join school districts throughout the state in facing difficult budget decisions. Budgets are being cut, and in some instances, taxes raised.

In Dec. 23 Truth in Taxation meeting, the Lyon County board of commissioners faced the reality of budget cuts.

“I’ll say, this is my ninth year on the board, and this has been the hardest one (budget) to work with so far,” Commissioner Gary Crowley said.

A citizen attending the meeting urged the commissioners to consider cuts.

“I don’t think the general public would be opposed to seeing a cutback in some of the (county) services in order to save some money,” she told county commissioners.

The combination of some federal funding drying up due to policy changes in Washington, D.C., and the national economy being hit with rising prices, lawmakers in St. Paul will more than likely be making some belt-tightening decisions when the Legislature opens the next session in January.