DFL, Republican senators weigh in on state budget forecast

The state’s latest economic forecast, revealed Dec. 4, predicts less revenue than expected and higher-than-expected costs for some government programs.

The projected budget surplus is $616 million — that’s $1.1 billion below the prior forecast.

MPR News host Emily Bright spoke with State Sens. John Marty, DFL-Roseville, and Eric Pratt, R-Prior Lake, about their thoughts on the budget forecast and what it means for the 2025 Legislative session.

To hear the full interview, click on the audio player above. You can read the full transcription of the conversation with Sen. Marty and Sen. Pratt below.

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Sen. John Marty, DFL-Roseville, chair of the Finance Committee, talks about budget forecast

The projected budget surplus is $616 million, which is a lot of money, but the state total budget is $67 billion. And just a few months ago, the state was expecting $1.1 billion more than this. Are you surprised by the drop off?

Marty: No. The budget forecasts, like weather forecasts, are constantly changing. And the further out you look, the less predictable they are. So this is not a surprise. And when I see the forecast, I remain proud of the budget we put together in the last two years for two reasons: One, because I think we passed a budget that makes Minnesotans’ lives better and life more affordable — everything from school breakfast and lunch for all students and addressing medical debt and junk fees, to making college more affordable and parent-child tax credits. And number two, we did that in a fiscally responsible manner. The budget we set leaves a $3.7 billion surplus, not counting the budget reserve of $3.5 billion on top of that.

And as you pointed out, it leaves about $600 million after factoring in inflation for the next biennium. And after that, the further out years, again, like a weather forecast, it gets less accurate the further out you go. But we don’t ignore them, we address them, and we’re going to do that.

I want to point out that I think we've done it in a fiscally responsible manner, and Republicans and others will continue to make accusations of poor budget management. You can hear it again today, but don’t take my word for it that they’re wrong. Trust the non-partisan, non-political financial experts. All the major bond rating firms gave Minnesota their highest rating, a triple-A bond rating, again this summer. And we’re going to address these issues. We have plenty of time and I’m looking forward to it. We can do it in a bipartisan manner.

The new surplus number, it’s a combination of higher spending and weaker revenue. Is one of those a concern for the lawmakers?

Marty: Well, both of them are ones that we want to be concerned about, and there’s not something we can do about all of the things. We can’t deal with the overall economy. In some ways, I very much have concerns about risks at the federal level that are going to make things worse. We don’t know. We can't predict the future. If President Trump were to do the tariffs, that could tank the economy and shock increase inflation, or mass deportation would hurt many of our local businesses and our local economy. But those are broader things.

When we talk about the spending side of things, I think I heard yesterday a lot of criticism that, “Oh, the budget’s filled with waste and fraud” — you'll hear that again — and we have to do is do what we did the last two years. We worked very aggressively to stop the fraud, to prevent the fraud and we locked up the people who committed the fraud.

Your party narrowly controls the state Senate. We expect Republicans to share control of the House with the DFL — 67 seats apiece. Does this smaller surplus make it easier or harder to reach a budget deal?

Marty: I don't know if it makes it harder or easier. It’s going to be a challenge in any case, but I think we can work together in a bipartisan manner. We’ve had divided Legislatures many times. Most years, they’re divided Legislatures, and we can do it. And I'm very hopeful and optimistic we'll be able to do it in a reasonable way. And again, the four-and-a-half-year’s-out budget cycle, the numbers are looking concerning. We can address them, and I’m optimistic we will in a bipartisan manner.

Sen. Eric Pratt, R-Prior Lake, the top Republican on the Finance Committee, offers his perspective

Why do you think the state is projecting less revenue than before?

Pratt: You know, that’s a really good question, and I have to look at many of the mandates that we’ve passed and the high tax rate that we have in the state. I can tell you, there’s a lot of people in my area who are changing their residency to another state — mostly Florida and Arizona — simply because this is not a good state to retire in.

$616 million is still a surplus. Will your approach be to make budget cuts or just to prevent new spending?

Pratt: I think we have to look at the $616 million in context, right? We have over a $3 billion budget reserve, that’s 5 percent. We have a $71 billion budget. So $600 million is relatively a drop in the bucket from what we see.

The other piece is, we are one of the highest taxed states — fourth or fifth highest-taxed state when it comes to state and local tax burden per capita. And so Minnesotans are already being taxed very highly and we have to be careful of that. Minnesota families, I think, in this last election, told us that while, you know, the administration was talking about the economy, they were really more interested in their economy.

I don’t know if there’s going to have to be budget cuts, if there’s going to have to be a look at the fraud that’s been going on. We’ve had hundreds of millions of dollars in fraud in the Walz Administration that the Office of Legislative Auditor has identified, and the administration has pushed back on many other changes. And I think that’s going to have to change.

In a recent news conference, you talked about rooting out fraud. And we know fraud and abuse does happen, but is there enough to make a dent in that overall budget?

Pratt: I think Minnesota taxpayers expect us to root out that fraud before we come back and ask them for any more money.

With DFLers and Republicans likely sharing control of the state House this year, how big of a role will Senate Republicans play in these discussions?

Pratt: You know, I hope we are very involved in the discussions. I think we have a great opportunity in the Senate to follow the House. The last two years have been extremely partisan, some of the most partisan on record, and I’m hoping that we can work together in a in a better manner.

I mean, almost every budget bill was passed on a party line vote, and I’m hoping we can work more closely together and take the governor’s word that we want a responsible, measured and bipartisan budget coming out of this session.