Proposed Supplemental Budget - Fiscal Years 2026 - 2027
On March 17, Minnesota Governor Tim Walz released a supplemental budget request for the current fiscal 2026-2027 biennial budget. The governor is proposing a total net general fund spending increase of $63 million for the biennium, which includes the general fund impact of the governor’s 2026 Infrastructure Plan released in January. After recommended changes for the current fiscal 2026-2027 biennium budget, the remaining general fund balance is projected at $3.67 billion. Based upon a February revenue forecast, total general fund revenues for the biennium are now projected to be 1.8 percent above the prior November forecast. The recommended supplemental budget forecasts a 0.6 percent increase in fiscal 2027 total revenues compared to fiscal 2026.
Proposed Budget Highlights
The governor’s supplemental budget proposal prioritizes lowering costs for middle class families, helping Minnesotans through workforce disruptions caused by artificial intelligence, responding to Operation Metro Surge, and making responsible cuts to continue Minnesota’s record of balanced budgets. The budget aims to slow the rate of growth in programs that have been key drivers of increased spending while minimizing impacts on eligibility and service levels. Highlights of the budget include:
Lowering Costs for Families
- Expands the Dependent Care Tax Credit to help offset rising childcare costs.
- Includes additional funding for permanent supportive housing and first-time homebuyer downpayment assistance.
- Cuts the statewide sales tax by .075 percent.
Supporting Workers Impacted by Artificial Intelligence and Making Sure Tech Companies Pay Their Fair Share
- Proposes a social media tax on tech companies with over 100,000 monthly users, dedicating the revenue to workforce and economic development initiatives.
- Creates a new Governor’s Council on the Future AI Economy to help provide guidance on how funds should be invested while ensuring Minnesotans benefit from technological change.
Operation Metro Surge Response
- Prioritizes resources to help Minnesota recover including partially forgivable loans for businesses that faced significant revenue loss; an investment in the Human Services Response fund to help support the health and wellbeing of Minnesotans; and rental support through the Family Homelessness Prevention and Assistance Program.
Gun Violence Prevention, Safety, and Security
- Include proposals to ban military-style assault rifles and high-capacity magazines; require safe storage and reporting of lost or stolen firearms; close the ghost gun loophole; implement a firearm insurance requirement; establish a firearm and ammunition tax; and create and expand early intervention resources, including school resources.
Increases penalties for impersonating a police officer and funding for Capitol security enhancements.
Fraud Prevention and Financial Integrity
- Builds on previous action to protect taxpayer dollars and strengthen program integrity across state government through increased detection and oversight, strengthened investigative and enforcement authority, and increased criminal penalties.
- Also establishes a Statewide Office of Inspector General; prohibits legislatively named grants; adds capacity for fraud prevention at the Attorney General’s Medicaid Fraud Unit; strengthens program integrity at Managed Care Organizations; and allocates funding over three years to update Minnesota’s legacy IT systems.