Massive state spending increase will quickly drain budget, drive away growth and opportunities
Today the National Federation of Independent Business (NFIB) is responding to today’s updated state budget forecast released by Minnesota Management and Budget. The budget forecast shows a projected surplus of $2.4 billion for the 2024-25 budget before dropping into a deficit in the 2026-27 budget.
This news comes on the heels of a massive increase in state spending during the 2023 Minnesota Legislative Session. With state government under all-Democratic control for the first time in a decade, lawmakers increased spending by nearly 40% – roughly $20 billion – over the previous budget.
“The 2023 spending spree put our state budget on the thinnest ice possible and Minnesota will likely face a deficit in two years absent corrective action.” said John Reynolds, NFIB Minnesota State Director. “The anti-growth agenda passed this session will only compound the problem for small business owners and the state budget for years to come by chasing people and investment out of Minnesota.”
NFIB MN believes key parts of the new $70 billion state budget, including the new $1.5 Billion Paid Leave Mandate, will be more expensive than predicted and make the budget picture worse.
According to the most recent edition of NFIB’s Small Business Economic Trends, small business owners continue to face challenging headwinds:
- Twenty-two percent of owners reported that inflation was their single most important problem in operating their business, down one point from last month.
- Owners expecting better business conditions over the next six months was unchanged from September at a net negative 43% (seasonally adjusted).
- Forty-three percent (seasonally adjusted) of owners reported job openings that were hard to fill, unchanged from September and remains historically very high.
Minnesota’s final budget agreement included nearly $10 billion in tax and fee increases over the next four years, the bulk of which will impact small businesses and hardworking families.
“The insatiable and unsustainable appetite for government spending in St. Paul will come back to haunt our state,” added Reynolds. “Going from an $18 billion budget surplus in one budget to a deficit in the next budget – despite raising taxes by billions of dollars – is the height of fiscal irresponsibility.”