MINNEAPOLIS — Minnesota Gov. Tim Walz revised his two-year budget plan on Friday, proposing additional spending cuts this year and into the future to respond to a growing projected deficit.

The $250 million in new cuts, proposed for the 2028-2029 budget, come through the reduction or elimination of dozens of grants across state government. That includes facilities maintenance funding for charter schools, reducing some aid for transit in greater Minnesota and the elimination of a state tax rebate program for political contributions.

In early March, state budget officials said Minnesota’s projected surplus for the next two years had shrunk to $456 million, while the anticipated deficit in the 2028-2029 biennium increased from $5.1 billion to $6 billion.

“By addressing the budget challenges we face today, we’re setting Minnesota up for long-term success and protecting the resources necessary to make Minnesota the best state to live, work, and raise a family,” Walz said in a statement.

His budget also boosts one-time spending to respond to the Avian influenza and continues a law enforcement training program through the Philando Castile Memorial Training Fund, which was created in 2021 as part of a bill that established new requirements related to use of force.

Republicans were critical of the administration for leaving the $6 million in law enforcement funding out of the governor’s initial two-year budget plan.

Walz’s roughly $66 billion budget proposal leaves $2 billion on the bottom line in the current two-year budget, according to a release from his office.

The governor kept many of the marquee measures in his original budget plan rolled out in January, including a plan to lower Minnesota’s 6.875% state sales tax rate to 6.8%. That equates to 7.5 cents for every $100 spent.

It expands the sales tax to cover so-called “wealth services” provided by investors, bankers and lawyers that were previously excluded. Republicans in the Legislature pushed back on expanding the tax to services that were previously exempt, noting the change would bring more tax revenue into the state and equate to a tax increase.

Walz’s budget also substantially reduces projected state spending on Medicaid waivers that serve more than 70,000 low-income Minnesotans with disabilities. The waivers cover a wide range of services that help people survive and live more independently.

The proposal would not decrease the number of people getting waivers, but would cap automatic increases for inflation in the waiver program at around 2%.

The budget also cuts state funding to private schools and includes a 5% reduction in reimbursement costs to counties for special education transportation.

Passing a state budget is the main item on the agenda for the remainder of this year’s legislative session. The governor is required in state law to propose his plan first and update it after the new forecast is released in February or March.

Walz must craft a budget deal with a Legislature that’s narrowly divided between the two parties. Republicans have criticized Democrats for passing the largest state budget in history two years ago when they had full control of government.

They face a July 1 deadline to strike a deal or risk shutting down government services.

----------

©2025 The Minnesota Star Tribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.