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State budget outlook shows structural imbalance driven by health and human services
Summary
Minnesota Management & Budget told the Compensation Council that the state expects a roughly $3.0 billion remaining balance at the end of the current biennium but sees a structural imbalance into the next budget window driven mainly by health and human services and education growth.
Minnesota Management & Budget presented the state’s latest biennial forecast and long-term outlook, telling the Compensation Council that the state currently estimates roughly a $3.0 billion general fund balance at the end of the 2026–27 biennium but projects a structural imbalance of about $3.0 billion going forward when standard inflation assumptions are included.
"We estimate at the end of this current biennium a balance of $3,000,000,000 in our general fund," said Travis Bunch, deputy state budget director. He cautioned that the November and February forecasts will update that figure and that assumptions about discretionary inflation and other items materially affect the out-year balance.
Key figures presented: current biennium revenue of about $67 billion and biennial spending of about $71 billion; health and human services and education together account for the largest shares of general fund outlays. MMB noted a $33.8 billion general fund reserve and a $500 million carve-out for hospital stabilization enacted in the last legislative session.
Why it matters: Council members heard those numbers as context for considering judicial compensation requests, with staff emphasizing that the figures will be updated in November and February and that long-term spending growth—particularly in Medicaid waiver and long-term care services—drives most of the structural pressure on the general fund.
Next steps: MMB will incorporate updated economic data into the November forecast; the council was advised that the governor and legislature will use updated forecasts as the basis for budget decisions in the months ahead.
