Minnesota’s financial condition worsens despite $13.9B surplus
Minnesota ranked 15th nationally in Truth in Accounting’s 2026 “Financial State of the States” report.
The state received a “B” grade, according to the report, with a surplus of $6,300 per taxpayer.
It wasn’t all good news for Minnesota, however. Sheila A. Weinberg, founder and CEO of Truth in Accounting, discussed the findings with The Center Square in an exclusive interview.
“Minnesota was one of only 11 states whose financial condition deteriorated in 2025,” Weinberg said. “Growth in capital and restricted assets reduced the resources available to cover the state’s obligations, while expenses increased faster than revenues, further weakening its financial position.”
In total, Minnesota had $46 billion available to pay $32 billion worth of bills. That means the North Star state had a surplus of $13.9 billion.
Weinberg cautioned that the state should set aside the money to prepare for future financial challenges.
“Like many other states, Minnesota has benefited from historically high levels of federal funding and strong investment returns,” she said. “However, the state should preserve this surplus to maintain a financial cushion against future market downturns and potential declines in federal funding.”
Weinberg said all states should take steps now to strengthen their finances, rather than risk passing those costs on to taxpayers later.
“Maintaining adequate reserves and reducing unfunded liabilities would help states withstand future downturns without placing additional financial burdens on taxpayers or cutting essential services,” she said.
The report found that last year was particularly challenging for Minnesota’s finances, despite continued high levels of federal funding.
“After a $1 billion gain in 2024, its primary government reported a $103 million loss in 2025, largely due to losses in the Unemployment Insurance Fund,” the report found. “While revenues increased from higher income taxes and federal grants, expenses grew faster, driven by rising health and human services, education, transportation, and pension-related costs.”
Minnesota received approximately $25.9 billion – 34% of its revenue – from federal grants.
Because Minnesota receives federal funding, it was required to conduct a spending audit that identified accounting and oversight issues, including $304.4 million in errors caused by incorrect data.
Compared with other states, Minnesota’s financial condition was average. North Dakota ranked first in the report, with a surplus of $72,300 per taxpayer, while New Jersey ranked last at No. 50, with a deficit of $45,800 per taxpayer.
The report found that, at the end of 2025, 24 states did not have enough money to pay their bills.
Weinberg explained why this report should be helpful for taxpayers, especially going into election season.
“An accurate and understandable analysis of state finances is essential to helping citizens become informed participants in government,” she said. “By understanding their state’s financial condition, citizens can make more informed decisions about tax and spending policies and use that information to guide their voting decisions.”
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