Good morning. Beautiful forecast outdoors for today, but what will the fiscal forecast show?

Today’s state economic forecast could be clouded with uncertainty. That’s because a series of surprise variables could topple expected outcomes for Minnesota’s economy and state budget. Dana has got the rundown here . Just this week, the Trump administration announced a $259 million halt in Medicaid funding to the state over fraud concerns. On-again-off-again tariffs have roiled Minnesota businesses and consumers. Trickle-down impacts of federal spending policies could impact the state, as well as the local governments, that provide services to Minnesotans. And the months-long Operation Metro Surge delivered a financial hit to businesses and some workers afraid to leave home. The results today could cut down wish lists for new spending at the Capitol or even fuel conversations about budget cuts. Dana has more about what’s causing the uncertainty and what could be at stake. AND — if you’re nuts for numbers — tune in to Politics Friday during the noon hour today to hear more about the economic forecast and what it means for Minnesota.

Gov. Tim Walz criticized the Trump administration’s hold on Medicaid funds to Minnesota yesterday, calling it a “totally illegal and unprecedented” move that would cause more harm than tackle fraud. In his first in-person remarks about the federal freeze announced Wednesday , Walz said the move was part of a continued “campaign of retribution,” a word he’s used to describe several actions of late. “No state has experienced this before. How does taking and punishing children and elderly have anything to do with fighting fraud when that's not where this issue is taking place?” Walz said. “It does nothing, and they've given us no way to try and show that all the things they asked us to do, we've already done. They're not even looking at that.” There remains some confusion over how the federal action will play out. Minnesota Medicaid Director John Connolly said the way it is structured will mean that the state will owe the federal government $260 million for the last three months of 2025 and will not see a future installment for this quarter until the halt is lifted. A letter to the state from the Centers for Medicare and Medicaid Services ties it back to immigration in part, specifically questions over spending for “individuals lacking a satisfactory immigration status.” For context, Minnesota providers got about $21 billion from the federal government for Medicaid services in 2024, according to the Department of Human Services.

So what happens if the halt holds and maybe persists? A cut to the funding could force tough budget decisions. “If they take that kind of a big swing, and they withhold that kind of money from our budget, we will be in a position where we have to make cuts again,” Senate Majority Leader Erin Murphy, DFL-St. Paul, said. Republican Sen. Jordan Rasmusson said the Walz administration needs to take fraud prevention more seriously. “We need to make sure that we're protecting tax dollars and that those dollars are going to the people who truly need those services,” the Fergus Falls lawmaker said, noting the Department of Human Services needs to stick to a corrective action plan. The department says it is. But the freeze could be in place for more than one quarter, which could easily compound the state’s budget trouble. Medicaid service providers say they’re also in the dark about this unfolds. Ellie Wilson, executive director of the Autism Society of Minnesota, told MPR News the sweeping cuts will hurt people who rely on those services and said there are better ways to fix fraud. “I think if actual disability advocates were brought to the table to collaborate, to strategize on how to improve these systems without harming people with disabilities, we could be using a scalpel and not a hammer.”

Gov. Walz made his remarks during a news conference where he outlined his legislative agenda for combatting fraud. The list of 18 policies includes more required financial controls, a centralized Office of Inspector General, additional payment withholding power and site visits and tougher penalties for people who steal taxpayer money. There were some areas of overlap with proposals that both Democrats and Republicans have brought forward so far. Among ideas with the broadest backing are a new office of the inspector general and requiring site visits for service providers. Republicans pointed to some provisions they said they could get behind but said it’s too little too late. Democrats said they were glad to see the governor’s proposals and looked forward to looking on a fraud prevention package across the divided Legislature.

A northern Minnesota man is facing felony charges after threatening to kill lawmakers at the state Capitol. 58-year-old John David Tobias of Park Rapids was charged with two counts of threats of violence in Hubbard County District Court. He allegedly tagged GOP State Sen. Glenn Gruenhagen in a Facebook comment Monday saying that Gov. Walz cost him $1.4 million because of the COVID shutdown, adding “I want it now or I’m going to do my constitutional duty and kill everyone of you,” according to the criminal complaint. The complaint says Tobias allegedly also calls the Minnesota Attorney General’s office, making similar threats. When Hubbard County Sheriff’s deputies interviewed him he said he had no intention of killing anyone and just wanted people’s attention. Tobias was still in county jail as of yesterday. His next hearing is Monday.

A northern Minnesota Republican senator could be in for a tough reelection campaign because of a challenge from within his party. Sen. Paul Utke, a third-term senator from Park Rapids, is running for a fourth term. In announcing a new campaign last month, Utke said Republicans need “strong, experienced leadership to get our state on the right track and fight against the far-left metro agenda. Now, second-term state Rep. Mike Weiner has formed a campaign committee to challenge Utke. Like the senator, Weiner is a Republican. He lives in Long Prairie.

Some lawmakers want to put the kibosh on cryptocurrency kiosks in the state. A bill heard in a House committee yesterday would prohibit installation of the kiosks , sometimes called Bitcoin ATMs. The bill was set aside for continued discussion later in the session, but lawmakers of both parties say they want to see at least some action taken this year to head off the scams that often target older people. Law enforcement officials say the machines are tied to scams that are causing seniors and vulnerable adults to drain their savings. The state has about 350 licensed cryptocurrency machines. “It is inappropriate to ban a legal product because fraud is happening. Not our fault,” Larry Lipkla, general counsel for the nationwide kiosk operator CoinFlip told the committee, saying they would like to work toward other solutions.

Organ donor families, healthcare professionals and transplant recipients want to make donating and receiving organs easier for Minnesotans. Advocates support several bills including one that requires high schoolers to learn about organ donation and another that gives a driver's license fee discount for taking a class about donation. Bob Jacobson, commissioner of the Minnesota Department of Public Safety, supports the bills for professional and personal reasons. His late wife, Janie, was a donor. “Her gift touched 67 lives for those in need, from seven different states, four countries, and while our family and I still miss her greatly, we know that in our loss and our grief that others benefited because she checked the box, and you can too.”