With a deficit looming, Minnesota Gov. Tim Walz to roll out his two-year budget plan

Minnesota Gov. Tim Walz is set to roll out his proposed two-year budget plan on Thursday as he and legislators grapple with a potential multibillion-dollar deficit on the horizon.

The two-term Democratic governor has said everything — including spending cuts — is on the table for the budget debate this year.

Last year budget officials projected the state would have a modest $616 million surplus for the next two years, news that was overshadowed by the revelation that Minnesota’s budget is projected to be $5.1 billion in the red for the 2028-29 biennium.

State budget officials said long-term care for people with disabilities and special education costs are the biggest drivers of the projected deficit.

Republicans have criticized Democrats for passing the largest state budget in history two years ago when they had full control of government.

Democrats are expected to hold a one-vote majority in the Senate following a Jan. 28 special election to fill a vacant Minneapolis seat, but Republicans have a temporary 67-66 edge in the House until a Roseville area seat is filled in a separate special election on the same day. That could restore a tie in the chamber.

House Democrats are boycotting the legislative session until that election and accusing Republicans in the chamber of moving ahead with illegitimate proceedings.

Walz must work with a divided government to pass a new two-year budget before July 1 or risk a government shutdown. Lawmakers will get an updated budget forecast in February, but the governor must present his plan first.

His budget proposal will be one of Walz’s first major actions in the state since his failed bid for vice president last fall.

Ryan Faircloth contributed to this report.