Economists warn of multi‑billion dollar deficit; committee presses on Medicaid and long‑term care growth

At a Feb. 10 meeting of the Minnesota House Ways and Means Committee, economists from the Center of the American Experiment told members the state faces a projected $5,140,000,000 general‑fund shortfall in the 2028–29 biennium and a recurring structural imbalance across fiscal years in the forecast period.

“we are all aware of the budget deficit which is the $5,140,000,000 we're expecting in the 20 28, 29 biennium,” said Mathenjalomaly, an economist who introduced the presentation for the Center of the American Experiment. The presentation showed recent forecasts in which spending outpaced revenues in each year through 2029 and highlighted the rapid growth in Health and Human Services (HHS) and K‑12 education as the primary drivers.

The presenters emphasized the change that occurred in the 2023 legislative session. The material shown to the committee noted that general fund spending rose sharply between 2023 and 2024, and that per‑capita, inflation‑adjusted spending increased from about $4,800 in 2023 to over $6,000 in 2024. John Phelan, the center’s other economist, urged policy makers to close the 2028–29 gap with spending reductions rather than new taxes: “tax hikes are not an option in our opinion,” he said.

Why it matters: committee members said the numbers underline difficult choices ahead for lawmakers who must reconcile service needs, demographic change and the state’s tax structure. Presenters and several members focused discussion on Minnesota’s Medicaid program (Medical Assistance, MA), long‑term‑care waivers and forecast assumptions — all areas that drive large projected increases in HHS spending.

What the presenters showed and recommended - The Center’s slides presented…