Yesterday Gov. Tim Walz and Lt. Governor Peggy Flannagan released their budget recommendations for Fiscal Year (FY) 2026-27, officially kicking off the state’s development of a biennial budget. The proposal outlines the governor’s spending priorities, along with making a series of changes to the state tax code. Minnesota enacts a budget each biennium, or every two years, beginning on July 1 of each odd-numbered year. The governor must propose a biennial budget in January of odd numbered years, according to state law.
Under the Walz proposal, total General Fund revenues are expected to be $71.5 billion, with almost 50 percent of that coming from individual income tax. Other sources of General Fund dollars include sales tax, corporate tax, state property tax, and liquor and tobacco tax. Walz’s proposed budget would spend $65.9 billion in FY 26-27, transfer $350 million to the cash flow account, $3.17 billion to the budget reserves, and leave a General Fund balance of $2.16 billion at the end of FY 26-27.
Highlights of Governor Walz’s 2026-27 biennial budget include:
In total, Governor Walz’s omnibus budget bills spend $65.9 billion from the General Fund:
$25 billion on K-12 Education
$3.98 billion on Higher Education
$4.7 billion on Property Tax Aids and Credits
$23.5 billion on Health and Human Services
$3.55 billion on Public Safety and Judiciary
$417 million on Transportation
$456 million on Environment and Energy
$834 million on Jobs, Commerce, Ag and Housing
$1.76 billion on State Government and Veterans
$1.22 billion on Debt Service
$215 million on Capital Projects and Other
Other notable components of the proposal include:
The legislature will review each budget area in their appropriate committees and make their own budget recommendations as they work toward enacting a biennial budget by the end of the 2025 legislative session in May, 2025.
For a full recap of the budget and details on individual proposals, visit the Minnesota Management and Budget website here.
