CIVIL TO EACH OTHER.

♪ ♪ >> THE STATE BUDGET FORECAST TECHNICALLY IMPROVED TO A MORE THAN $3 BILLION STATE SURPLUS.

ALTHOUGH A SHORTFALL STILL LOOMS IN THE FUTURE.

FEDERAL SHUTDOWNS AND SHIFTING POLICIES FROM THE TRUMP ADMINISTRATION PUNISHING THE STATE FOR FRAUD MAKE THESE PREDICTIONS FAR FROM CERTAIN, THOUGH.

POLITICAL REPORTER MARY LAHAMMER PUTS THE DOLLARS AND CENTS AND THE POLITICS OF FRAUD INTO SOME CONTEXT.

>> MINNESOTA'S ECONOMY CONTINUES TO BE ONE OF THE MOST RESILIENT AND DIVERSE IN THE COUNTRY.

>> THE STATE BUDGET FORECAST ARRIVES WITH UNPRECEDENTED UNCERTAINTY.

>> CONTINUED FEDERAL FUNDING, UNCERTAINTY COULD HAVE IMPACTS ON OUR GENERAL FUND BOTTOM LINE.

>> THE ECONOMIC IMPACT OF IMMIGRATION ACTION IN THE -- TO QUANTIFY -- IS DIFFICULT TO QUANTIFY.

>> IT IS LIKELY RESTRICTIONS ON IMMIGRATION WILL HAVE AN ADVERSE EFFECT ON THE NATIONAL ECONOMY BUT MINNESOTA IN PARTICULAR, MUCH OF OUR LABOR FORCE GROWTH OVER THE LAST SEVERAL YEARS HAS BEEN BECAUSE OF INTERNATIONAL IMMIGRATION.

>> THE LOSS OF FEDERAL FUNDS WILL AFFECT THE STATE BUDGET AND LEAVE LAWMAKERS SCRAMBLING.

>> THIS IS NOT A NORMAL FORECAST DAY IN PART BECAUSE THIS FORECAST COMES WITH THE BIGGEST ASTERISK EVER.

ALL OF THE IMPROVEMENT WE SAW IN THE FORECAST TODAY, IN FACT MORE THAN ALL OF IT, WOULD BE OFFSET BY JUST THE CUTS TO MINNESOTA'S MEDICAID FUNDING THAT WERE ANNOUNCED BY THE TRUMP ADMINISTRATION EARLIER IN THE WEEK.

>> THE ESTIMATE FROM THE CITY OF MINNEAPOLIS ON THE IMPACT AND THEIR ECONOMICS IN THE CITY, IT'S OVER 200 MILLIONED ANDS THAT'S JUST ONE CITY.

SO CERTAINLY THE ECONOMIC IMPACT FOR THE STATE IS GOING TO BE TREMENDOUS AND AS WAS MENTIONED THAT ISN'T IN THE FORECAST RIGHT NOW.

>> IT'S GOOD I GUESS THAT FINALLY IN THE EIGHTH YEAR OF THIS GOVERNOR'S ADMINISTRATION HE'S IMPLEMENTED SOME BARE MEASURES OF FRAUD THAT HAVE SLOWED DOWN THE AVALANCHE OF FRAUD THAT'S BEEN ALLOWED UNDER HIS ADMINISTRATION.

>> WHEN WE'RE LOOKING AT FRAUD AND IT HAS GONE ON FOR YEARS UNDER THE CURRENT ADMINISTRATION, THERE NEEDS TO BE A LEVEL OF RESPONSIBILITY THAT WHEN IT WASN'T TAKEN AT A STATE LEVEL, THE FEDS ARE GOING TO HELP US MAKE SURE THAT THERE IS NOT MORE FRAUD GOING ON.

>> TEMPORARILY HALT CERTAIN AMOUNTS OF MEDICAID FUNDING THAT ARE GOING TO THE STATE OF MINNESOTA IN ORDER TO ENSURE THAT THE STATE OF INNESOTA TAKES ITS OBLIGATIONS SERIOUSLY TO BE GOOD STEWARDS OF THE AMERICAN PEOPLE'S TAX MONEY.

>> A QUARTER OF A BILLION DOLLARS IS BEING CUT OFF.

>> THE TOP BILLER SUBMITTED 450 DAYS WHERE THEY CLAIMED THEY WERE WORKING MORE THAN 24 HOURS A DAY.

EVEN IN THE WHITE HOUSE THAT'S TOUGH.

IT'S HARD TO WORK MORE THAN 24 HOURS A DAY.

>> THE FEDERAL GOVERNMENT SAYS THEY'RE TAKING THE LARGEST ACTION THEY'VE EVER TAKEN AGAINST FRAUD SET UP WITH MISINFORMATION IN THE STATE OF THE UNION.

>> WHEN IT COMES TO THE CORRUPTION THAT IS PLUNDERING -- REALLY, IT'S PLUNDERING AMERICA.

THERE'S BEEN NO MORE STUNNING EXAMPLE THAN MINNESOTA.

>> WHAT DO YOU THINK IS BEHIND THIS?

FROM THE IMMIGRATION ACTION -- >> IF I KNEW WHAT WENT ON IN DONALD TRUMP'S MIND I THINK THE WORLD WOULD BE REALLY GLAD TO HAVE ME SAY WHAT IT IS.

I HAVE NO DAMN IDEA, MARY.

I THINK THE NUMBER IS NOW 19 BILLION ACCORDING TO THE PRESIDENT, AND YOU KNOW, LOOK, THE THING ABOUT THAT IS AND WE'VE BEEN VERY ANDID AND OPEN TRYING TO SOLVE THIS.

MISINFORMATION DOESN'T ELP US FIX FRAUD.

THIS IS A TARGETED RETRIBUTION AGAINST A STATE THAT HE PRESIDENT DOESN'T LIKE.

>> GOVERNOR WALZ ANNOUNCED AN EXTENSIVE ANTIFRAUD PACKAGE THAT INCLUDES BETTER DETECTION, INVESTIGATION, AND INCREASED CRIMINAL PENALTIES.

HE SAYS IT'S HIS TOP PRIORITY THIS SESSION BEFORE HE LEAVES OFFICE.

>> THE PERSON WHO'S ANGRIEST ABOUT THIS FRAUD IS ME.

THERE'S NO POLITICAL UPSIDE TO HAVING FRAUD IN YOUR STATE.

>> THE THEFT OF OUR PUBLIC FUNDS IN PARTICULAR -- [ AUDIO CUT OUT ] IS PARTICULARLY EGREGIOUS BECAUSE WE HAVE INDIVIDUALS PREYING -- >> -- THAT WILL HELP PREVENT FRAUD.

>> HOUSE DEMOCRATS ALSO ANNOUNCED SEVERAL FRAUD BILLS INCLUDING SITE VISITS, BACKGROUND CHECKS, MORE TECHNOLOGY AND AUDITS.

>> HOUSE DEMOCRATS ARE OUTRAGED BY THE AMOUNT OF FRAUD THAT HAS BEEN DISCOVERED IN -- TAKING STRONG ACTION.

>> IT'S REALLY IMPORTANT FOR US TO LOOK THROUGH THE SYSTEM AND SAY WHERE ARE WE FAILING TO DELIVER A GOOD PROGRAM.

>> INDIVIDUAL HOUSE MEMBERS HAVE BEEN CRITICAL OF GOVERNOR WALZ AS COMMITTEES REPEATEDLY FAILED TO ADVANCE A BILL CREATING AN OFFICE OF INSPECTOR GENERAL.

>> I DON'T REALLY CARE WHAT THE GOVERNOR LIKES OR WANTS TO DO.

>> OH.

>> THAT IS WHAT WE CHOOSE ERE IN THIS BODY TO DO, THAT'S OUR RESPONSIBILITY.

>> THE CONVERSATION IS CLEAR THAT THIS BILL IS NOT READY AND IT IS NOT, THE HOUSE WORK IS NOT YET COMPLETED.

>> THIS BILL HAS BROAD BIPARTISAN SUPPORT IT.

HAS COME OVER THE SENATE WITH AN EXCEPTIONALLY STRONG SENATE POSITION.

>> WHY WAS IT SO EASY IN THE SENATE LAST YEAR AND THE HOUSE IS REALLY STRUGGLING?

>> IT WASN'T EASY.

IT WAS NOT EASY.

I THINK SENATOR GUSTAFSON, SENATOR KREUN AND OTHERS WORKED VERY QUIETLY AND IN A COMMITTED WAY BEHIND THE SCENES TO FIND A PATH FORWARD.

I DON'T KNOW ABOUT YOUR CAUCUS BUT THERE WERE LOTS OF QUESTIONS N OUR CAUCUS THAT NEEDED TO BE RESOLVED.

I THINK THERE WERE NINE OR 11 COMMITTEE HEARINGS.

IT'S NOT AN EASY POLICY.

>> I THINK THE SENATE OPERATES A LITTLE BIT DIFFERENT TOO.

WE HAVE HAD RESPECTFUL CONVERSATIONS BEHIND THE SCENES WITH HEATHER GUSTAFSON AND MICHAEL CREEUN WHO HAVE DONE A REALLY GOOD JOB BUILDING THAT