State Auditor Julie Blaha Releases the 2021 Minnesota City Finances Report - March 7, 2023

Contact: Donald McFarland | 651-236-0494

Saint Paul, MN - “City revenue sources that were negatively affected in 2020 by public health concerns strongly rebounded in 2021,” said State Auditor Julie Blaha. “These increases helped offset lower levels of intergovernmental revenues and interest earnings.”

The Report is compiled from 2021 city reporting forms, financial statements, and audits and it summarizes current and long-term trends for city revenues, expenditures, and debt.

The 2021 Minnesota City Finances Report shows total revenues of Minnesota cities decreased 2.1 percent and total expenditures decreased 1.7 percent between 2020 and 2021. Fewer intergovernmental revenues ($231.7 million) and interest earnings ($150.5 million) were the primary drivers of the overall decrease in revenues. Decreases in general government expenditures ($131.8 million) and streets and highways expenditures ($100.9 million) helped push overall expenditures lower.

Current Trends

  • Total revenues of the governmental funds for all Minnesota cities totaled $6.5 billion in 2021, a decrease of 2.1 percent from 2020 revenues. Total revenues of cities over 2,500 in population decreased 2.9 percent, while revenues of cities under 2,500 in population increased 6.6 percent over the two-year period.
  • In 2021, total expenditures of the governmental funds for all cities totaled $7.2 billion. This represents a decrease of 1.7 percent from 2020. Total expenditures for cities over 2,500 in population decreased 2.7 percent, while those under 2,500 in population increased 8.3 percent in 2021.
  • The categories of public safety and streets and highways represent the largest categories of expenditures for both large and small cities. Among large cities, public safety accounted for 28.6 percent of expenditures, while streets and highways accounted for 22.0 percent. Among small cities, streets and highways accounted for 28.8 percent of total expenditures, while public safety accounted for 20.6 percent.
  • Overall, small cities tend to carry a greater debt burden per capita than large cities. In 2021, small cities carried long-term debt of $1.5 billion, or $4,251 per capita, compared to $8.6 billion, or $1,943 per capita, for large cities.
  • In 2021, unrestricted fund balances as a percent of current expenditures averaged 53.6 percent for large cities, compared to 122.2 percent for small cities.

Longer-term Trends

  • Over the ten-year period of 2012 to 2021, an examination of city revenues shows that, when adjusted for inflation, revenues increased 7.7 percent.
  • Between 2012 and 2021, actual revenues derived from property taxes grew 47.9 percent, compared to an increase of 38.9 percent for revenues derived from intergovernmental sources. Over the ten-year period, federal grants increased 50.0 percent, state grants increased 33.4 percent, and local grants increased 57.9 percent.
  • In actual dollars, the proportion of total revenues derived from property taxes grew from 39.4 percent in 2012 to 43.3 percent in 2021. During this same time frame, revenues derived from intergovernmental sources increased from 24.9 percent of total revenues to 25.6 percent.
  • Between 2012 and 2021, when adjusted for inflation, expenditures increased 6.2 percent over the ten-year period. Over the same period, actual total city expenditures grew from $5.4 billion to $7.2 billion. This represents an increase of 33.0 percent.

View the complete report, which includes an Executive Summary, graphs, and tables, on the OSA website.