ST. PAUL 鈥� Minnesota lawmakers and Gov. Tim Walz are proposing up to $2.7 billion in budget cuts across the board as they work to meet the end-of-session deadlines approaching.
In budget targets released on Friday, March 28, Minnesota Senate Democrats propose about $754 million in budget cuts for the 2026-27 cycle and $1.7 billion for 2028-29 鈥� about $2.5 billion in state budget cuts over four years. The Senate DFL numbers are similar to which outlines a total of $720 million in cuts in 2026-27 and $1.9 billion in 2028-29 鈥� over four years.
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House lawmakers, who released joint-party budget targets on Saturday, directed the bulk of their cuts toward inflationary adjustments, which would total $1.1 billion in cuts in 2026-27 and $2.6 billion in cuts for 2028-29.
House Speaker Lisa Demuth, R-Cold Spring, said the House鈥檚 budget cuts would be the largest ever for Minnesota.
鈥淗ouse Republicans are holding strong on fiscal responsibility, securing budget targets that would represent the largest spending cut in state history and taking a major step towards fixing the Democrat deficit,鈥� she said in a press release.
In response to reports that the House proposal included the largest cuts, officials told Forum News Service that neither the Senate DFL targets nor the targets from Walz include the cost of inflation when calculating cuts. Proposals released to the public identify the dollar amount cut from or added to each line item, but do not identify the starting or ending amounts for the budgets.
Without these inflationary adjustments, the House cuts total $15 million for 2026-27 and $1 billion for 2028-29 鈥� a total of $1.03 billion over four years, according to Minnesota Management and Budget.
Including inflationary adjustments across all four-year proposals, Walz's targets comprise $5.5 billion in cuts, Senate Democrats identify $5.2 billion in cuts and the bipartisan House would cut $3.7 billion, according to MMB.
The bulk of the House's proposed cuts target the Department of Human Services, which would see $1.3 billion in reductions over four years. Health department cuts would total $225 million over four years, and the Workforce Labor & Development budget would undergo $100 million in reductions over four years.
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The House proposal doesn't include any cuts to E-12 education finance, which supports elementary through high school education, but proposals from Walz and Senate Democrats each do. At $25 billion, E-12 education is the largest area of spending in the state's current 2024-25 budget, according to MMB.
Walz鈥檚 proposal includes $697 million in cuts to E-12 over four years, while Senate Democrats propose $687 million in cuts to E-12 in 2028-29 but none for the next two years.
Sen. Majority Leader Erin Murphy, DFL-St. Paul, said the proposed cuts in education are purposely set to start in 2028 versus the next immediate budget cycle.
"We are wanting to be thoughtful about the things Minnesotans depend on, and our public schools are central to so many lives and so many communities, so we thought it better to do it in the planning years to give the committee and communities across the state time to prepare," she said.
Melissa Hortman, DFL-Brooklyn Park, said at a press conference on Monday that proposing E-12 cuts similar to those pitched by Senate Democrats and Walz is not somewhere the House would 鈥渆ver land.鈥�
Murphy said that Senate Democrats' targets focus on Health and Human Services, education, taxes and transportation because these areas make up the largest spending buckets for the state.
"That's where the majority of the money is in the budget," she told Forum News Service on Tuesday. "We are, I think, approaching this in a very responsible way that allows us to do what we are expected to do, which is to balance the budget in not just two, but four years so we are prepared for what comes next for the people of Minnesota, and we keep our word that we are responsible budgeters."
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Walz and lawmakers are aiming to use the 2026-27 budget to curb the looming $6 billion shortfall MMB officials project for 2028. Walz鈥檚 proposals would theoretically turn the $6 billion deficit into a $342 million surplus, while the Senate targets would create a $113 million surplus and the House figures would result in a $1.3 billion deficit by fiscal years 2028-29.
Hortman said at Monday鈥檚 press conference that the House doesn't "necessarily" curb the deficit the most out of the three, partially because the House decided not to 鈥減ut revenue on the table.鈥�
鈥淭he Senate and the governor were willing to do the difficult political act of putting revenue on the table, and the House, in this tie situation, we鈥檙e not willing to either cut taxes or increase taxes,鈥� Hortman said at a press conference on Monday.
Walz鈥檚 proposal pitches the state's first-ever sales tax cut, reducing the current state sales tax rate of 6.875% by .075%. The cut would be offset by , Walz's proposed tax bill that would, if approved, expand what services are subject to state sales tax by including legal, accounting and banking and brokerage services.
The cumulative changes are projected to generate $192 million in 2026-27 and $246 million in 2028-29, or $438 million in additional revenue over four years, according to Walz's revised budget.
Hortman said on Monday that House leaders put their 鈥渋deological battles to the side鈥� and made concessions when crafting the budget targets. Hortman said that if Democrats had been crafting targets alone, they "would have asked the wealthy and large corporations to pay their fair share.鈥�
Senate Republicans, as the minority in the chamber, will not be releasing budget targets, but Minority Leader Mark Johnson, R-East Grand Forks, said Friday that the targets from Senate Democrats "seem to align with Governor Walz鈥檚 plan to cut services for disabilities and special education, which is the wrong way to balance the budget.鈥�
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鈥淲e know there is wasteful spending going to non-citizens here illegally, nonprofits with no accountability, and boondoggle trains that have reached the end of the line,鈥� Johnson said in the statement. 鈥淲e will continue to draw attention to this failure to put Minnesotans first as committee deadlines conclude by mid-April.鈥�
Lawmakers have a May 18 deadline to pass a budget in the regular session and until July 1 for a budget to be enacted before a potential government shutdown. House leaders on Monday said they remain hopeful the Legislature will meet these deadlines.
鈥淭his was the first real test of the power-sharing agreement: our ability to get things done in this system of divided government,鈥� said Zack Stephenson, DFL-Coon Rapids. 鈥淎nd I think it's clear that we passed that test by delivering a responsible House budget on time.鈥�
Lawmakers are working with a roughly $66 billion budget this session to craft a budget for fiscal years 2026-27, according to MMB. During the budget-crafting session in 2023, Minnesota passed a $72 billion budget, the largest in the state鈥檚 history and making a $20 billion jump from the Legislature鈥檚 $52 billion budget in 2021.
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