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Facing a hazy economic outlook, Minnesota legislative leaders are turning to budget cuts to stave off potential shortfalls down the road.

Democrats in the Minnesota Senate and leaders of the DFL and GOP in the Minnesota House released their budget blueprints over the weekend, known at the Capitol as targets.

The targets lay out how much legislative leaders would like to spend on different areas of state government — like schools, public safety, health programs and other services. Committees will use the targets to decide what they can fund this year and what existing programs and services might need to be cut.

 showed that the state has a $456 million surplus for the two-year period lawmakers are planning for, assuming funding levels stay the same. But the state is projected to have a $6 billion shortfall in the two-year budget that follows.

Leaders in both chambers proposed reduced spending to account for that potential deficit down the road. Gov. Tim Walz has also proposed cuts to avoid a shortfall.

Lawmakers will begin filling in the details in coming weeks while legislative leaders and the governor meet to negotiate a global deal that brings all the sides onto the same page.

Once they have those totals, they can start recalibrating budget bills and try to get them to Walz by May 19. The governor said it’s a good sign that both chambers put forward targets with weeks left in the legislative session.

“This bodes really well for us, getting a working budget, making sure we're funding the things Minnesotans care about, but also addressing those over the horizon, structural issues,” Walz said Monday.

Lawmakers have to pass a balanced budget by July 1 or face a potential government shutdown.

Senate Democrats and House leaders both proposed making cuts to various state programs in the next two years. And both put forward reductions to health and human services, an umbrella of programs that includes assistance to disabled, elderly or low-income Minnesotans. 

House leaders proposed reducing spending to human services by $300 million and to health by $50 million over the next two years. Senate DFLers proposed a combined $534 million in reductions for health and human services. Walz also proposed reductions for health and human services that would curb spending for disability services over time.

County officials and disability service providers have voiced concerns about the costs falling to them if state funding is cut. 

Overall, Republican and DFL leaders in the tied House said they'll aim to shave about $1.15 billion in costs over the next two years. Most of that would come by slowing inflationary spending growth in programs.

The Senate DFL proposed about $750 million in overall reductions in the next two years. In addition to cuts to human services, they recommended cuts to transportation and public safety.

House DFL Caucus Leader Melissa Hortman, of Brooklyn Park, talked about the targets Monday. She said no one wants to cut but with the potential of a budget deficit down the road, tough calls have to be made.

“The House, Senate, the governor have similar appetite for cuts: nobody likes them,” Hortman said. “But the Senate and the governor were willing to do the difficult political act of putting revenue on the table, and the House, in this tied situation, we’re not willing to either cut taxes or increase taxes.”

House Speaker Lisa Demuth, R-Cold Spring, said in a news release that the House targets, if adopted, would “represent the largest spending cut in state history.”

There’s a split between how they’d propose to fund education — from preschool through high school. The House proposed boosting funding by $40 million while the Senate would keep funding flat. Under the last budget, lawmakers approved inflationary adjustments for education, so there will be an increase either way.

Senate Democrats and the governor have also proposed new taxes and fees that could mitigate some of the cuts. The Senate plan hasn’t been detailed yet on where those new costs would hit.

The Senate DFL also put in a target to pass a larger public construction projects bill, known at the Capitol as a bonding bill. The caucus targets would set aside funding for a $1.3 billion proposal while the House plan would include a $700 million borrowing toward public works projects.

Federal funding changes could shift outlook

Legislative leaders have said that they based their budget targets off of the state’s economic forecast last month. But things could change — and require another look — if  Congress makes significant changes to the money that comes to Minnesota.

Senate Majority Leader Erin Murphy, DFL-St. Paul, said a special legislative session is not out of the question.

“It is the case that we may have to come back in the summer or the fall, depending on what the Congress does,” Murphy said. “I’'m hoping my congressional colleagues pull their heads out of their behinds and they step away from the cuts that they're talking about, because they would be so damaging to our schools, our hospitals, our clinics, the families.”

Dana Ferguson

Author

The targets kick off more serious debate at the Capitol about Minnesota’s next two-year state budget. 

MPR News senior politics reporter Dan Ferguson talks about budget plans

A view of the capitol with a sign in front.

Clay Masters | MPR News

Peter Cox

Three people stand near a podium to talk to press.

‘Nobody likes them’: Spending cuts included in House, Senate budget blueprints

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