St. Paul, MN – Earlier today, State Auditor Julie Blaha released the 2018 Minnesota City Finances Report. The Report was compiled from 2018 city reporting forms, financial statements, and audits. The Report summarizes the current and long-term trends for city revenues, expenditures, and debt.
“The 2018 Minnesota City Finances Report clearly shows that as the state and federal governments pull back on aid and grants to cities, property taxes make up an increasingly larger share of their budgets,” said Auditor Blaha. “These trends, which were discussed in our State of Main Street listening tour and press conference, have cities looking for greater efficiencies in service delivery, and considering new sources of funding.”
The two major sources of city revenues are property taxes and intergovernmental revenues. In 2018, property taxes as a percent of total revenues increased to 41 percent – its highest percentage in decades. Conversely, the percentage of city funding from intergovernmental grants and aid decreased to 22.4 percent in 2018 –its lowest percentage in decades.
The Report and its underlying data are available on the website of the Office of the State Auditor. Highlights of the report include:
- Total revenues of the governmental funds for Minnesota cities totaled $5.85 billion in 2018, an increase of 5.7 percent over 2017 revenues. Total revenues of cities over 2,500 in population increased 5.6 percent, and revenues of cities under 2,500 in population increased 5.9 percent.
- In 2018, total expenditures of the governmental funds for Minnesota cities totaled $6.61 billion. This represents an increase of 3.6 percent over 2017. Total expenditures for cities over 2,500 in population increased 3.4 percent, while those under 2,500 in population increased 6.0 percent in 2018.
- The largest expenditure categories for both groups of cities are streets and highways and public safety. For large cities, streets and highways accounted for 22.4 percent of total expenditures, and public safety accounted for 27.1 percent. For small cities, streets and highways accounted for 26.5 percent of total expenditures, and public safety accounted for 21.7 percent.
- Overall, small cities tend to carry a greater debt burden per capita than large cities. In 2018, small cities carried long-term debt of $1.31 billion, or $3,640 per capita, compared to $8.02 billion, or $1,876 per capita, for large cities.
- Over the ten-year period of 2009 to 2018, city revenues show that, when adjusted for inflation, revenues increased 2.7 percent.
- The proportion of total revenues derived from property taxes grew from 36.6 percent in 2009 to 41.1 percent in 2018. During this same time frame, revenues derived from intergovernmental sources decreased from 25.5 percent of total revenues to 22.4 percent.
- Between 2009 and 2018, an examination of city finances shows that, when adjusted for inflation, 2018 expenditures increased 0.2 percent over the ten-year period. Over the same period, actual total city expenditures grew from $5.38 billion to $6.61 billion. This represents an increase of 22.8 percent.
- Although inflation-adjusted total expenditures increased 0.2 percent over the ten-year period, a comparison of the two five year periods of 2009 to 2013 and 2014 to 2018 reveals a significant reversal during the most recent period. From 2009 to 2013, inflation-adjusted total expenditures decreased 10.9 percent, while from 2014 to 2018, inflation-adjusted total expenditures increased 6.0 percent.
To view the complete report, which includes an Executive Summary, graphs and tables, click here.
The Office of the State Auditor is the constitutional office that oversees nearly $40 billion in local government finances for Minnesota taxpayers. The Office of the State Auditor helps to ensure financial integrity and accountability in local government financial activities. Julie Blaha is Minnesota’s 19th State Auditor. Follow us on Twitter @MNStateAuditor.