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Three words — waste, fraud and abuse — are burrowing deep into the Capitol lexicon ahead of a 2025 legislative session where Republicans will have more sway than they do now and where the long-term budget outlook has triggered early alarm bells.

Lawmakers will be searching through the proverbial couch cushions in the legislative session that begins next month. The latest economic forecast shows a 

Minnesota budget increasingly under strain

. And the message of rooting out misused tax dollars has new resonance. 

For the coming two-year budget, the balance between the money coming into the state treasury and what’s slated to go out is relatively even. But down the road? It’s dicey and a deficit that could top $5 billion looms.

Some state leaders, including Gov. Tim Walz, say the projection deserves attention but doesn’t need to cause rash moves at this stage.

“We have time to address this structurally without negatively impacting the services that we’re providing to people,” Walz said. “But it’s going to take some hard decisions.”

Erin Campbell, commissioner of the Department of Minnesota Management and Budget, reinforced that as she laid out the budget forecast last week.

“Not only do we have advanced notice to spot a problem on the horizon, we also have ample time to take action and change the trajectory,” she said.

Most of Minnesota’s budget — about 70 percent — goes to schools and major social service programs. But within those categories and across the rest of the budget lawmakers will be looking for places to pull back.

House Republican Leader Lisa Demuth said there’s no reason to wait.

“Given the fact that we have a budget crisis on the horizon, we need to start working now,” Demuth, of Cold Spring, said.

Republicans campaigned hard on cracking down on what they say is wasteful spending and fraud that took off under full DFL control for the last two years.

The GOP was able to erase the DFL edge in the House. The two major parties, as of now, are set to share control of that chamber in January. 

 about their employees head counts, their unused office space due to remote work and their approach to position vacancies. 

“We have heard that sometimes they go unfilled for years,” Demuth said. “In my mind, if they’re unfilled for years — are we shorting the people of Minnesota for the work that needs to be done or do we have FTEs unfilled and we have money that is just sitting in those agencies?”

Republicans also bring up audits that identified hundreds of millions of dollars worth of fraud. 

Those tied to school nutrition and health care programs have gotten the most attention and led to prosecutions, but Republicans say accountability inside agencies is far too weak. 

Last week, Walz was asked to comment specifically on fraud detected at autism centers that were recently reimbursed over a million dollars by the state.

“We always investigate it and those people go to jail,” he said. “That won’t change.”

But his answer reflects a challenge when it comes to combating fraud as a money-saving tool: Many times fraudulent spending only surfaces after the money goes out. 

In 2023, Democrats did add more front-end safeguards by requiring grant applicants to submit more information to unlock money and giving officials more power to hold dollars back if the rules aren’t followed. A state office was 

 and training tools to help government grant managers spot problems sooner.

State Sen. Heather Gustafson, DFL-Vadnais Heights, said she’ll push to create a new watchdog: the Office of the Inspector General. Gustafson said it would be an independent unit that doesn’t pick topics based on political agendas.

“The IG office would have a little bit more capacity to identify issues and identify where government could be more efficient before they become problems, and find ways to make government just work better for people,” she said in a telephone interview

Republican critics call Gustafson’s proposal a publicity stunt. 

“In the fallout from the Feeding our Future scandal, I publicly supported creating a separate Office of Inspector General rather than piecemealing oversight in various agencies and with limited authority,” Sen. Mark Koran, R-North Branch said in a statement. “Nothing has changed between now and last session except an election.”

Sen. Eric Pratt of Prior Lake, the ranking Republican on the Senate Finance Committee, said the Walz administration needs to do more to demonstrate it’s actively addressing problem spending.

“We need to focus first and foremost on waste, fraud and abuse. The governor and his commissioners have failed to take seriously the recommendations of the Office of Legislative Auditor,” he said.

The legislative auditor has said state agencies 

don’t approach their work with an oversight and regulatory mindset

DFL House Leader Melissa Hortman said the characterization that fraud is going unchecked isn’t accurate.

“It’s an absurdity to say that people aren't held responsible when they rip off the government,” Hortman said during a Tuesday legislative leaders forum hosted by a Minneapolis law firm, Fredrikson and Byron. “When they rip off the government, we try to find them, we try to prosecute them, and I think whenever possible, we should put them in prison. And we do, and that isn’t really a budget solution.”

DFL Attorney General Keith Ellison’s office investigates fraud in the state year round. 

He said he doesn’t know that going after fraud deals with the overall budget issue, but he hopes there is compromise to be found on fraud busting. 

“I’m hoping that both Republicans and Democrats will work together to prioritize the needs of Minnesotans and sort of like not just be legislating for the next election but will be legislating for the moment that we’re in right now where people really need their government to function,” Ellison said.

The 2025 session begins Jan. 14 and a new budget must be approved by June.

MPR News senior politics reporter Dana Ferguson contributed to this story.

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As clouds form in Minnesota’s budget outlook, state lawmakers in both parties say they’ll work to squeeze out savings from programs missing the mark. But how much of a dent would that make?

‘Waste, fraud and abuse’ are words that will ring through Minnesota Capitol in 2025

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‘Waste, fraud and abuse’ are words that will ring through Minnesota Capitol in 2025

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