ST. PAUL, MN – State Auditor Rebecca Otto released the 2016 Minnesota City Finances Report on December 28, 2017. The report summarizes, through data tables and charts, the financial operations of 850 Minnesota cities for calendar year 2016.
“The City Finances report is issued each year to help local government officials, policy makers, and the public better understand city financial operations,” said Auditor Otto. “The Report also analyzes long-term financial trends for large and small cities across Minnesota.”
Highlights from the report include:
Current trends
• Total revenues of the governmental funds for all Minnesota cities totaled $5.43 billion in 2016, an increase of 3.7% over 2015 revenues. Total revenues of cities over 2,500 in population increased 4.0%, and revenues of cities under 2,500 in population increased 0.7%.
• In 2016, total expenditures of the governmental funds for all cities totaled $6.30 billion. This represents an increase of 4.6% over 2015. Total expenditures for cities over and under 2,500 in population each increased 4.6% in 2016.
• The largest expenditure categories for both groups of cities are streets and highways and public safety. For large cities, streets and highways accounted for 23.3% of total expenditures in 2016 and public safety accounted for 26.0%. For small cities, streets and highways accounted for 23.8% of total expenditures and public safety accounted for 21.9%.
• Overall, small cities tend to carry a greater debt burden per capita than large cities. In 2016, small cities carried long-term debt of $1.28 billion, or $3,615 per capita, compared to $8.19 billion, or $1,960 per capita, for large cities.
Long-term trends
• Over the 10-year period of 2007 to 2016, an examination of city revenues shows that, when adjusted for inflation, 2016 revenue levels are below 2007 levels and decreased by 3.3% over the 10-year period.
• Between 2007 and 2016, actual revenues derived from property taxes grew 41.5%, compared to an increase of 5.2% over that same period for revenues derived from intergovernmental sources. Additional analysis of actual intergovernmental revenues over the 10-year period shows federal grants decreased 12.0%, state grants increased 6.2%, and local grants increased 30.9%. When revenues are adjusted for inflation, the 10-year period shows an 18.3% increase in property tax revenues while intergovernmental revenues decreased 12.1%.
• The proportion of total revenues derived from property taxes grew from 32.3% in 2007 to 39.5% in 2016. During this same time frame, revenues derived from intergovernmental sources decreased from 26.4% of total revenues to 24.0%.
• Between 2007 and 2016, actual total city expenditures grew from $5.32 billion to $6.30 billion. This represents an increase of 18.4%. Over the same period, an examination of city finances shows that, when adjusted for inflation, 2016 expenditure levels are below 2007 levels and decreased 1.0% over the 10-year period.
• Although inflation-adjusted total expenditures decreased 1.0% over the 10-year period, a comparison of the two five-year periods of 2007-2011 and 2012-2016 reveals a significant reversal during the most recent period. From 2007 to 2011, inflation-adjusted total expenditures decreased 12.1%, while from 2012 to 2016, inflation-adjusted total expenditures increased 10.3%.
To view the complete report, which includes an Executive Summary, graphs and tables, go to http://www.auditor.state.mn.us/default.aspx?page=20171227.000.
The Office of the State Auditor is a constitutional office that is charged with overseeing more than $20 billion spent annually by local governments in Minnesota. The Office of the State Auditor does this by performing audits of local government financial statements, and by reviewing documents, data, reports, and complaints reported to the Office. The financial information collected from local governments is analyzed and is the basis of statutory reports issued by the Office of the State Auditor.