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MMB logo Budget at a Glance

- A 3 Minute Guide to the Minnesota State Budget – 

The Biennial Budget Cycle 

Minnesota enacts budgets for a two-year cycle (a biennium), beginning on July 1 of each odd-numbered year. The budget approved for the current biennium remains in effect from July 1, 2013 through June 30, 2015. By law, the Governor must propose a biennial budget in January of odd numbered years. Once enacted by the legislature, the budget can be modified in the “off-year” legislative session. As a result of state forecasts and other changes, it has become common for the Legislature to enact annual revisions to the state’s biennial budget. These revisions are referred to as supplemental budgets.  The state’s constitution requires Minnesota to balance the budget by the end of the budget cycle.

Budget and Accounting Structure  

State government is organized into over 100 agencies, boards, and commissions representing a wide range of services. While many of the largest state agencies report directly to the Governor, elected officials or independent boards manage others. All agencies receive their spending authority from legislative authorizations called ‘appropriations’ that impose a legal limit on spending.

The state’s accounting system includes nearly 200 discrete funds that operate much like individual bank accounts with specific sources of revenue.

  • The state’s largest single fund is the General Fund. State collections of individual income taxes, sales taxes, corporate, and other taxes are deposited into this fund. Expenditures from the state General Fund can be made for any authorized state activities.  Spending is limited by legislative appropriations.  This fund receives the most attention from the Governor and the Legislature and is the fund most referenced when the state has a deficit or surplus.
  • Other state funds are less flexible. For example, certain revenues such as gasoline taxes or hunting license fees are deposited into funds that can only be spent for the specific purposes established in the state constitution or in state statutes. In budget terms, these are referred to as "dedicated funds."

Where the Money Comes From  

Minnesota receives most of its revenue from general taxes, licenses, fees, and federal grants. State laws and statutes designate where each individual revenue sources must be deposited and any restrictions on how it should be used to support state operating expenditures.

Sources of State Revenues  - All Operating Funds

FY 2014-15 Biennium

The chart below displays the major revenue sources for the state in all Operating Funds for the current biennium. The Department of Revenue collects most of the general tax revenues, while federal grants, fees and other revenues are collected by various agencies.

Pie chart of revenues FY 2014-15. Total $70.5 billion with taxes at 62.5 percent, federal at 29.4 percent, fees at 3 percent, all other 5.1percent

The chart below displays the major revenue sources for the state General Fund in the current biennium. Sources of General Fund Revenues 2014-15 Biennium 

pie chart FY 2014-15 revenues with income tax at 49.8 percent, sales at 26.2 percent, corporate 6.9 percent. statewide property tax at 4.3 percent, other taxes equal to 9.1 percent, and all other revenue at 3.7 percent

Where the Money is Spent 

The state’s current operating budget for the FY 2014-15 Biennium (from all operating funds' sources) is $69.0 billion. A separate capital budget is the source of financing for major building, renovation, and land acquisition projects.

  • K-12 Education, state support for kindergarten through grade 12 education 
  • Higher Education, state funding for public universities, state and community colleges
  • Property Tax Aids and Credits, local government aids and grants programs, property tax refunds
  • Health and Human Services, funding for mental health and other institutions, public assistance, health care, early childhood and general public health programs
  • Public Safety, includes state courts, correctional institutions, and crime-related programs
  • Transportation, transportation systems, highway construction and maintenance, and the Minnesota State Patrol
  • Environment, Energy and Natural Resources, programs for environmental protection, recreation, and economic vitality
  • Agriculture, agricultural programs
  • Economic Development, programs for improving opportunities, growth and economic success to individuals, businesses and communities
  • State Government, including administrative, constitutional offices, and legislative agencies
  • Other, miscellaneous expenses, payment of principal and interest on state bonds 

State expenditures are primarily paid for by general state tax revenues, federal funds, fee revenues, and other sources - such as earned interest and lottery receipts. The capital budget is primarily funded through general obligation bonds. Principal and interest on state general obligation bonds is paid by the general fund in the operating budget. 


The General Fund - State Operating Budget 

Approximately $39.1 billion, or about 57 percent, of state spending for FY 2014-15 is paid by the state General Fund. Because the Governor and legislature have the greatest discretion over how general fund revenues are spent, the general fund budget is usually the primary focus of state budget deliberations.

The following chart shows how general fund spending is allocated in the current biennium. Over three-quarters of spending occurs in two primary areas:  education and human services.  About one-half of total spending is for education, which includes the state share of funding for public schools (K-12), four-year colleges and universities, and two-year community and technical colleges. Health and Human Services spending accounts for 29 percent of the budget.


Historical General Fund Spending 

In the last twenty years, the state general fund budget has more than doubled – going from $14.497 billion in FY 1992-93 to the current $34.088 billion in FY 2012-13. The 2010-11 biennium spending reflects a large decrease due to the economic recession.