Purpose

• Proposes adding a constitutional provision to limit how fast Minnesota state spending can grow. The idea is to prevent spending increases that outpace inflation plus population growth.

Main provisions and what the bill seeks to accomplish

• New constitutional section (Article XI, Sec. 16) would set a hard cap on biennial state spending growth: the maximum allowed increase in state spending every two years cannot exceed inflation plus the change in state population.
• Spending for the cap is defined very specifically: it includes all expenditures and reserve increases, but excludes certain items. Specifically excluded are federal funds, excess revenue refunded to taxpayers, reserve transfers or expenditures, expenditures approved by the people after 2024, and expenditures of gifts or court-ordered damage awards.
• Inflation is defined using a specific index: the total percent change in the U.S. Bureau of Labor Statistics Consumer Price Index for Minneapolis-St. Paul-Bloomington, all urban consumers, all items, or its successor, calculated for the two previous calendar years.
• Population growth is defined as the total percent change for the two previous calendar years according to federal estimates, with adjustments every decade to match the federal census.
• If revenue is above the cap (excess revenue), the bill would require returning that revenue to taxpayers, either as a property tax refund or permanent reductions to the property tax rate.
• The legislature could exceed the spending cap for one biennium if a 60% or greater majority votes in each house.
• Submission to voters: The proposed amendment would be put to voters at the 2026 general election with a ballot question asking whether the Minnesota Constitution should be amended to prohibit state spending increases in excess of inflation and population growth.

How it would work (practical effect)

• Each two-year budgeting period would be limited to growth no greater than inflation plus population growth, based on the specified CPI measure and population estimates.
• Certain kinds of spending would not count toward the limit (e.g., federal funds, voter-approved expenditures after 2024, gifts, court-ordered damage awards, and any excess revenue refunds to taxpayers).
• If the state experiences revenue above the limit, lawmakers would be required to return it to taxpayers rather than spend it freely.
• A supermajority vote (60% in both chambers) is the only built-in way to temporarily escape the cap for one biennium.

Significant changes to existing law

• Creates a binding spending growth limit tied to inflation and population growth, effectively constraining future state budgets.
• Establishes a formal process to return excess revenue to taxpayers, rather than allocating it to other programs.
• Introduces a supermajority override mechanism for one biennium.
• Requires voter approval via a constitutional amendment to implement the limit (ballot measure in 2026).

Potential implications and considerations

• Budget predictability and long-term planning could improve, but flexibility during economic downturns or emergencies may be reduced.
• The exact effect depends on how inflation and population growth are measured and which expenditures are excluded from the cap.
• The need to secure a 60% supermajority to exceed the cap may lead to tighter spending discipline, at the cost of easier responses to crises.

Substantive definitions (key terms repeated from bill)

• Maximum biennial percentage change in state spending
• Inflation (as defined by CPI for Minneapolis-St. Paul-Bloomington, all urban consumers, all items)
• State population growth (two-year change per federal estimates, census-adjusted every decade)
• Expenditures approved by the people after 2024
• Excess revenue refunded to taxpayers (property tax refund or permanent tax rate reductions)
• Exclusions from the spending measure (federal funds, gifts, court-ordered damages, etc.)
• 60 percent supermajority override
• Article XI, Sec. 16 (new constitutional section)

Relevant Terms - constitutional amendment - Article XI - Sec. 16 - biennial spending limit - inflation - CPI - Minneapolis-St. Paul-Bloomington - all urban consumers - population growth - two-year window - federal estimates - federal census - excess revenue - property tax refund - permanent tax rate reductions - expenditures approved by the people - gifts - court-ordered damage awards - 60% supermajority - general election 2026 - ballot question: “Shall the Minnesota Constitution be amended to prohibit state spending increases in excess of inflation and population growth?”