Lawmakers brace for possible Trump funding cuts in Minnesota, which already gives more than it gets

Whenever there’s tension between Minnesota and the federal government, lawmakers in St. Paul like to revisit a specific data point: We’re a “net giver.”

That means Minnesota sends more to Washington, D.C., in tax revenue than it receives back from the federal government in the form of loans and grants. Gov. Tim Walz recently used this fact to rail on the Trump administration after it threatened to freeze potentially billions in federal dollars for the state.

“Those are our dollars that he is stealing, unconstitutionally,” Walz said.

While Trump’s initial sweeping spending freeze was blocked by a federal judge, his administration is still exploring pausing more funding streams as it looks to shrink the government workforce and tamp down on programs and policies he opposes. The president’s Department of Government Efficiency, led by tech billionaire Elon Musk, has already stopped dozens of government contracts, paused leases on buildings and targeted funding for U.S. aid around the world in an effort to save taxpayers billions of dollars.

Minnesota Republicans have pointed to Democrats' spending under the trifecta when asked about possible federal funding cuts.

“We can’t just talk about the federal government,” said Sen. Andrew Lang, R-Olivia, at a recent hearing about potential cuts to federal education funding, citing new mandates on school districts. “We really need to work on the state aspect of it.”

With state funding from the federal government still potentially on the chopping block, here’s a look at what Minnesota gets, what it gives back and what could happen if funds are frozen again at the federal level:

According to Minnesota Management and Budget (MMB), the state’s chief budgeting agency, $22 billion in federal loans and grants are expected to flow into the state in 2025. That breaks down to roughly $1.8 billion per month. While the federal funding number varies each year, the funds tend to make up more than a third of the state’s overall two-year budget.

The state is slated to get nearly 1,000 different grants over the next year from the federal government for everything from health care coverage and Head Start to grants related to the opioid epidemic, livestock and boating infrastructure.

The biggest chunk of federal money to the state goes to the Department of Human Services, which will get $16 billion this year, according to MMB. That includes $11 billion for Medicaid, which provides health care coverage and services to more than 1 million Minnesotans who meet income and other eligibility requirements.

The second largest pot of funds, roughly $3 billion, goes to the state’s Department of Transportation for infrastructure projects.

The state gets roughly 10% of its budget for education from the federal government, or more than $1.4 billion in 2025, according to the Minnesota Department of Education. That funding helps cover costs for special education, literacy programs and rural and low-income schools.

Democratic legislators have raised the alarm that all these programs are at risk if the Trump administration follows through on an idea to dissolve the federal Department of Education, which releases these funds to the states.

Republicans in the state have said the focus should be on the other 90% of funding for school districts on the state level and new mandates imposed on districts.

Not on the state level, according to MMB, though some smaller nonprofits in the state have said they’re now unable to access some federal funds. A federal judge in Washington has ordered the Trump administration to halt all aspects of the funding freeze while lawsuits challenging them are ongoing.

The state’s Department of Revenue says in tax year 2022, about 2.7 million full-year residents paid a total of $32 billion in federal taxes after refundable credits. That number is based on a sample of Minnesota income tax returns.

Yes, this is why lawmakers often call Minnesota a “net giver.” The Rockefeller Institute of Government issues a report every year that examines this balance of payments between the states and the federal government and found Minnesota gives $779 more per capita to the federal government than it gets back, according to the institute’s most recent report.

There are only five other states that have a higher per capita balance than Minnesota, including California, Massachusetts, New Jersey, New Hampshire and Washington. The report captured all taxes from each state that went to the federal government in 2022.

The report is getting more attention following Trump’s attempted federal funding freeze, said Patrick Schumacher, a policy analyst with the Rockefeller Institute of Government.

“A lot of people are looking at that and it’s causing them to say, ‘What are we getting from the federal government, what program does this impact and how might we bolster programs?’” he said.

This question has some legislators panicking as they start to craft the state’s next two-year budget.

Minnesota is constitutionally required to have a balanced budget starting July 1. Lawmakers hope to have a deal passed and signed by Walz before the legislative session ends in late May.

Federal funds cut after the session ends could require lawmakers to reconvene in a special session to plug any budget holes.

“At the federal level, if they just take away a lot of it, we’re in deep trouble,” said Senate Finance Chair John Marty, DFL-Roseville.