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By all accounts, Minnesota’s recent $17.5 billion surplus represented a once-in-a-generation budget opportunity. Flush with excess cash, lawmakers could have prioritized broad tax relief, strategic one-time investments, or long-overdue infrastructure repairs. Instead, the majority of this historic windfall is being used to supercharge the state’s welfare system.
As the dust settles from the 2023 legislative session, it’s clear that this wasn’t just a spending spree — it was a structural shift. Minnesota is doubling down on its role as one of the most expansive welfare states in the country, setting the stage for long-term budget strains and increasingly lopsided fiscal priorities.
Welfare Now Dominates the State Budget
The Department of Human Services — the umbrella agency for Minnesota’s Health and Human Services (HHS) programs — is receiving a disproportionately large share of the new spending. In the 2022–23 budget cycle, HHS already consumed nearly 30% of general fund spending, three times more than the next largest budget category, Property Tax Aids and Credits.
Instead of curbing this growth or redirecting funds toward structural needs, legislators chose to deepen their commitment. For the 2024–25 biennium, general fund spending on HHS will increase by $2.5 billion, followed by another $2.3 billion increase in 2026–27. In total, over 40% of all new general fund spending through 2027 is going toward health and welfare programs.
That trend isn't just continuing — it’s accelerating.
What Exactly Is Being Funded?
This budget expansion includes a sweeping array of new programs and benefits, such as:
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Expanded childcare support for low-income families and childcare providers
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Higher monthly benefits for General Assistance recipients
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Twelve-month continuous eligibility for children on Medical Assistance
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Broader dental benefits under Medical Assistance for adults
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Increased housing assistance for participants in the Minnesota Family Investment Program (MFIP)
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Cash stipends for homeless youth pilot programs
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Elimination of cost-sharing for some Medicaid recipients
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Public healthcare coverage for undocumented immigrants through MinnesotaCare starting in 2026
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A new public option for individuals earning above 200% of the Federal Poverty Level
This represents a dramatic expansion of eligibility, access, and benefit levels. Notably, the extension of MinnesotaCare to undocumented immigrants is one of the most ambitious state-level moves in the country — and one that is guaranteed to have long-term financial implications.
Spending More Than Any Other State
According to 2020 Census Bureau data, Minnesota already spent about $38,000 per poor person — far above the national average of $21,000. The surplus allowed lawmakers to scale that spending even further, pushing Minnesota into the top tier of welfare expenditures nationwide.
Advocates argue that this reflects a compassionate and progressive approach to governance. But critics warn that increasing dependency on state programs while disincentivizing work — and failing to account for an aging population and rising healthcare costs — is unsustainable.
Structural Budget Problems Are Brewing
While the surplus offered a buffer for immediate spending increases, long-term budget projections are far less rosy. The Minnesota Office of Management and Budget forecasts a $1.5 billion deficit for the 2026–27 biennium, with continued shortfalls expected thereafter.
Even when factoring in the state’s rainy day fund and leftover surplus reserves (currently totaling about $6 billion), the path ahead looks precarious. As spending obligations ramp up — especially in the healthcare and welfare sectors — future lawmakers may be forced to raise taxes or cut back on essential services to maintain balance.
Moreover, these commitments are largely recurring. Temporary surpluses are funding permanent expansions, creating built-in cost escalators for every budget moving forward.
Where Do We Go From Here?
The debate over how to use Minnesota’s surplus was never just about dollars — it was about vision. The DFL-controlled legislature made its priorities clear: rather than broad-based tax relief or fiscal restraint, it chose a future defined by a larger, more generous welfare state.
This approach may appeal to progressive constituencies, but it raises critical questions:
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How long can the state afford this level of welfare spending?
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What happens if the economy slows and revenues fall short?
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Are we incentivizing upward mobility — or long-term dependency?
For now, the spending surge is locked in. But as structural deficits emerge and the cost of these expanded programs grows, Minnesotans may soon be forced to reckon with the real price of a government that promises more than it can sustainably provide.
Sources:
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[Minnesota Office of Management and Budget Forecasts (2023)]
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[U.S. Census Bureau Public Welfare Expenditures (2020)]
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