Budget forecast, environmental permitting make news ahead of legislative session

By Doug Loon
President and CEO
Minnesota Chamber of Commerce

It's been an important week with some noteworthy headlines, and I want to highlight the recently released economic forecast. This forecast offers a snapshot of where our state's budget stands and our economic performance. Released earlier this week, it includes critical data that deserves attention.

As we recall, the previous two legislative sessions spent through our budget surplus, resulting in increased spending with permanent, long-term economic impacts on the growth of our budget and its effects on the private sector economy. Looking ahead to the 2026-2027 biennium, we are now projecting a very narrow balance. However, the outlook for the later years is quite startling and concerning. For fiscal years 2028 and 2029, projections indicate a sizable budget shortfall, with revenues falling short of expenses, resulting in a projected $5 billion deficit for the state.

This serves as a wake-up call for policymakers to consider the future economic performance of our state and how we can ensure fiscal stability after growing the state budget by nearly 40%, much of which was permanent new spending. Spending is outpacing economic performance, and this must be a focus for policymakers as we work to position Minnesota's economy for long-term strength and sustainability. We must enact a responsible, balanced budget without resorting to tax increases. Raising taxes would disadvantage Minnesota and could further harm our economic performance.

Instead, we need to foster a more competitive business climate, enabling our economy to grow at a faster pace and meet the state's obligations. If this is not possible, policymakers must take a hard look at spending. Costs matter, and whether we face deficits today or in the future, state costs play a critical role. Excessive state spending could drag on the performance of Minnesota's private sector economy.

Let me also mention an exciting event for the business community next week in Saint Paul. On December 10, we will host our Women in Business Minnesota program featuring legislators. This legislator luncheon will include updates from our team on the Benchmarks Report and other policy priorities. Most importantly, it provides an excellent opportunity for legislators to sit down with business leaders to hear firsthand how laws impact their operations. This kind of meaningful and respectful dialogue can help us work together to ensure a stronger, more prosperous future for Minnesota's economy.

Additionally, I want to highlight our work with local chambers of commerce across the state. Recently, we held an important meeting of our Chamber Federation, a network of more than 80 local chambers. This group comes together around shared policy priorities that impact businesses of all sizes across Minnesota. By working through this local chamber community, we can focus on the most pressing issues and prioritize them as we prepare for the next legislative session, which begins in just a few weeks. We look forward to working closely with legislators and local chambers throughout the upcoming 2025 session.

Earlier this week, the Legislature began work on an issue critical to the statewide business community: permitting reform. The Chamber and its Foundation recently released a report on the performance of Minnesota’s permitting system. Unfortunately, it is not meeting expectations. Compared to other states with similar economies, Minnesota’s permitting system is less efficient, even as we maintain the high environmental standards we all value.

This week, the House Subcommittee on Water Policy heard from Sean O'Neal of the Chamber, who presented findings from the Chamber Foundation’s permitting report. The report outlined necessary improvements to the permitting process to ensure businesses can stay and grow in Minnesota. A more transparent and accountable permitting system will result in greater prosperity and economic opportunity across the state.

These are just a few updates from the Minnesota Chamber this week. Thank you for your continued support, and we look forward to catching up with you on next week’s podcast!