Minnesota’s budget basics

According to the National Association of State Budget Officers (NASBO), Minnesota’s total expenditures in fiscal year (FY) 2022 were $60.0 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Minnesota’s combined state and local direct general expenditures were $66.3 billion in FY 2020 (the most recent year census data were available), or $11,622 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.

(Note: We cite data from both NASBO and Census to provide a broader picture of each state’s fiscal situation. However, these sources detail spending from different levels of government in different years, and the COVID-19 pandemic and the federal government’s response to it significantly affected these totals in different ways in different years. Please only use one source if you are looking for historical comparisons.)

Minnesota’s largest spending areas per capita were public welfare ($3,158) and elementary and secondary education ($2,499). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Minnesota’s combined state and local general revenues were $67.1 billion in FY 2020, or $11,766 per capita. National per capita general revenues were $10,933. Minnesota uses all major state and local taxes. After federal transfers, Minnesota’s largest sources of per capita revenue were individual income taxes ($1,914) and property taxes ($1,776).

Minnesota’s politics

Governor Tim Walz, a Democrat, was elected in 2022 with 52 percent of the vote. The next gubernatorial election is in 2026.

Democrats control both the House of Representatives (70 Democrats to 64 Republicans) and Senate (34 Democrats to 33 Republicans and 2 independents). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Minnesota. All Minnesota House seats are on the ballot in 2024 because representatives serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. All senators are therefore up for election in 2024.

Minnesota’s budget institutions, rules, and constraints

Minnesota uses a biennial budget. The legislature is not required to pass a balanced budget and the governor is not required to sign one. However, the governor must submit a balanced budget, and the state’s own-source revenue and debt allowance must meet or exceed its expenditures. Additionally, deficits cannot be carried over into the following year and there are limits on total authorized debt incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Minnesota’s current budget

Governor Walz released his FY 2024-2025 biennial budget proposal in January 2023. He has not yet given his state of the state address.

Minnesota enacted its FY 2022-23 biennial budget in June 2021 .The budget included total spending of $53.7 billion in FY 2022 and $48.6 billion in FY 2023, with $25.4 billion in general fund spending in FY 2022 and $27 billion in FY 2023.

Under the American Rescue Plan, Minnesota will receive $2.8 billion in direct state fiscal aid and $1.8 billion in local government aid from the federal government. As of January 2022, Minnesota had spent part of its ARP funds on revenue replacement, public health programs, and education spending.

According to NASBO, Minnesota’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2022: $26.0 billion/$60.0 billion
• FY 2021: $23.6 billion/$48.0 billion
• FY 2020: $23.8 billion/$43.0 billion
• FY 2019: $23.1 billion/$40.8 billion

For more on Minnesota’s budget, see

• Minnesota Management and Budget,
  
• the Minnesota House of Representatives Fiscal Analysis Department,
  
• the Minnesota Senate Counsel, Research and Fiscal Analysis,
  
• the Minnesota Legislative Reference Library.

Minnesota’s economic trends

Minnesota’s per capita income (per the Bureau of Economic Analysis) was $68,010 in 2022, ranking 14th among the states. It was above both the national average of $65,423 and the Plains regional average of $60,113. The state’s median household income (five-year estimate) was $77,706 in 2021, ranking 13th among the states and above the national average of $69,021. Minnesota’s poverty rate was 9.2 percent in 2021 (five-year estimate), below the national rate of 12.6 percent.

Although Minnesota’s averages tell a story about the entire state, Minnesota is composed of diverse localities. For example, the city of Winona’s median household income was $48,662, and its poverty rate was 19.2 percent; the city of Chanhassen’s median household income was $123,566, and its poverty rate was 3.1 percent.

Minnesota’s unemployment rate has historically been below the national average.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Minnesota, the average unemployment rate in 2022 was 2.3 percent for white residents and 3.9 percent for Black residents.