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Last reviewed March 2023

Minnesota Issue Guide
State Budget Process

This guide is compiled by staff at the Minnesota Legislative Reference Library on a topic of interest to state legislators. It introduces the topic and points to sources for further research. It is not intended to be exhaustive.

Budget Numbers    Books and Reports    Articles    Key Statutes    Additional Resources

The structure and mechanisms of budgeting for the State of Minnesota are written in Article XI of Minnesota's Constitution, "Appropriations and Finances." Article XI consists of 15 sections, covering the range of powers and constraints the executive and legislative branches have regarding appropriations, public debt, and bonding, along with general and dedicated funds, investments, and improvements. Statutory provisions provide further detail and structure to the broad budgeting powers granted by the state constitution.

The Minnesota state budget operates on a two-year cycle, or "biennium," covering two fiscal years. A fiscal year (FY) begins on July 1 and ends on June 30 of the following year and is designated by the year in which it ends; for example, FY2021 began on July 1, 2020 and ended on June 30, 2021. The biennial budget cycle begins on July 1 of odd-numbered years.

State government programs are funded by several sources including state taxes, fees, and money from the U.S. Government. The revenue is deposited in one of the funds that make up the state budget. The majority of revenues are deposited in the general fund and major state programs are funded primarily from this source. Additionally, money from some sources is mandated to be used for specific purposes. This money is invested in specific dedicated funds such as the Permanent School Fund or the Environmental Trust Fund.

The process of creating a new state budget begins in even-numbered years. The commissioner of Minnesota Management & Budget prepares and distributes budget instructions and forms to all state agencies, as specified in Minnesota Statutes 16A.10. Each agency's proposed budget must show actual expenditures and receipts for the two most recent fiscal years, estimated expenditures and receipts for the current fiscal year, and estimates for each fiscal year of the next biennium. This information must be filed with the commissioner by October 15 of each even-numbered year. By November 30 of that year the commissioner must send final budget information to legislative Ways and Means and/or Finance Committees. This information is used as the basis for the governor's proposed biennial budget. The commissioner is required to report the collected information to a newly-elected governor immediately after the election, as it will be the governor's first order of business to address the budget.

Minnesota Statutes 16A.11 requires the governor to submit a three-part budget to the Minnesota Legislature. Part one is a budget message, part two a detailed operating budget, and part three a capital expenditures budget. Parts one and two are presented to the legislature in January or February of odd-numbered years and part three is presented to the legislature in January of even-numbered years.

The release of the governor's budget sets the legislative component of budgeting in motion. Budget proposals are introduced in the Legislature and make their way through the legislative process in a number of individual appropriations bills. Once they are approved and passed by the Legislature, each law is sent to the governor who can accept the law by signing it, veto the entire law, or line-item veto specific appropriations. The final budget passed by the Legislature does not appear in a single law but is made up of a number of separate appropriations laws. The state budget can also be modified, under certain circumstances, by the governor through the power of unallotment.

To help with the planning of the new budget and to monitor changing financial conditions that may affect the current budget, Minnesota Statutes 16A.103 requires Minnesota Management & Budget to prepare forecasts and updates of state revenues and expenditures. The forecasts are issued in November and February of each year, while the quarterly economic updates are prepared in January, April, July, and October of each year. These updates compare actual year-to-date revenue collections with the forecasts and report on significant economic developments since the last formal forecast.

State revenue forecasts are based on national trends in employment, inflation, income, and production. Those data are provided by the state's economic consultant. They are reviewed and modified by Minnesota Management & Budget and the Minnesota Council of Economic Advisors. They are then plugged into econometric models that create projections of economic activity in Minnesota. These projections are used in models that predict tax revenue collections.

State expenditures on entitlement programs (programs that guarantee certain benefits to a specific group or population segment) such as K-12 education, health care, and welfare are forecast by staff from various agencies and are based on enrollment and cost trends. Non-entitlement programs are adjusted for inflation. These revenue and spending forecasts are then combined to estimate how much money is available for the current and future budget.

Budget Numbers

Actual legislative appropriations to individual agencies or programs are found by searching Laws of Minnesota by keyword, or by using the index and looking under "Appropriations." Many other resources shed light on the budget process and provide information about proposed and actual budget numbers:

Minnesota Management & Budget

Minnesota Department of Revenue

Fiscal Analysis Department, Minnesota House of Representatives

House Research Department, Minnesota House of Representatives

Senate Counsel, Research and Fiscal Analysis, Minnesota Senate

Legislative Budget Office

Legislative Reference Library

Minnesota Budget Project

An initiative of the Minnesota Council of Nonprofits, the Minnesota Budget Project provides independent research and analysis on the state budget.

Significant Books and Reports

Brower, Susan. Demographic Changes and the State Budget: Presentation to the Legislative Commission On Planning and Fiscal Policy. St. Paul: Minnesota Department of Administration, 2013. (HB849.41 .B76 2013)

Budget Process Background. St. Paul: Senate Counsel, Research, and Fiscal Analysis, Minnesota Senate, 2010.

Earmarking State Tax Revenues. St. Paul: Research Department, Minnesota House of Representatives, 2015. (HJ2415 .M533 2015)

Comprehensive Annual Financial Report. St. Paul: Minnesota Management & Budget, 1992-present. (HJ11.M616b) [Required by Minnesota Statutes 16A.5]

Economic Forecast (current), Economic Forecast (archived) St. Paul: Minnesota Management & Budget (HJ11.M65ax) [Required by Minnesota Statutes 16A.103; also known as the February or November forecast]

Economic Updates (current), Economic Updates (archived). St. Paul: Minnesota Management & Budget. (Periodical Collection) [Quarterly supplements to the February and November forecasts]

A Fiscal Review of the Legislative Session. St. Paul: Senate Counsel, Research, and Fiscal Analysis, Minnesota Senate, 1975-present. (KFM5407 .M625)

Governor's Budget Instructions and Forms (current). St. Paul: Minnesota Management & Budget. [Some older versions available in print at HJ11 .M6954]

"Making the Budget," in Making Laws series. St. Paul: Research Department, Minnesota House of Representatives, 2023.

Minnesota Budget Process Requirements. St. Paul: Senate Counsel, Research, and Fiscal Analysis, Minnesota Senate, 2008. (HJ2053.M6 M552 2008)

Minnesota Strategic Capital Budget Plan. St. Paul: Minnesota Management & Budget, 1994-present. (HJ11.M6425c) [Required by Minnesota Statutes 16A.11, Subd. 1]

Price of Government. St. Paul: Fiscal Department, Minnesota House of Representatives, 2016. (HJ2053.M6 P72)

Governor's Proposed Capital Budget. St. Paul: Office of the Governor, 1975-present. (HJ11 .M6425c)

Governor's Proposed Biennial Operating Budget. St. Paul: Office of the Governor. (HJ11.M6425a, HJ2053.M6) [Required by Minnesota Statutes 16A.11; many proposed budgets available online from 1981/83-present; all proposed budgets from 1925/27-present are available in print the Minnesota Legislative Library]

Report on Expenditure of Bond Proceeds. St. Paul: Minnesota Management & Budget, 2013-present. (HJ2053.M6 L44) [Required by Minnesota Statutes 16A.501]

Significant Articles

(articles in reverse chronological order)

Kaul, Greta. "The February budget forecast sets the terms for the debate at the Minnesota Legislature. Where do the numbers come from?" MinnPost, March 1, 2017.

Bierschbach, Briana. "'Bonding' Will Be One of the Most Important Debates at the Minnesota Legislature This Year. So How Does the Process Actually Work?" MinnPost, January 20, 2016.

Key Statutes

Minnesota Statutes, Chapter 16A: Department of Management & Budget

A few key sections relating to the state budget:

  • 16A.04 (Budget and Cash Projection)
  • 16A.095 (State Budget System)
  • 16A.10 (Budget Preparation)
  • 16A.102 (Budgeting Revenues Relative to Personal Income)
  • 16A.103 (Forecasts of Revenue and Expenditures)
  • 16A.11 (Budget to Legislature)
  • 16A.102 (Price of Government)

Minnesota Statutes Index headings:

Other Sources of Information

For historical information, check the following codes in the Newspaper Clipping File and the Vertical File:
B30.4 (Budget-MN)

For additional reports at the Legislative Library, use these Library catalog searches:
Budget (Minnesota); Special Funds (Minnesota); Capital Budget (Minnesota).

Issue Guides

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