State Auditor Julie Blaha Releases Annual Financial Report on Minnesota Cities - March 16, 2021

Saint Paul, MN – Earlier today, State Auditor Julie Blaha released the 2020 Minnesota City Finances Report. The Report was compiled from 2020 city reporting forms, financial statements, and audits. The Report summarizes the current and long-term trends for city revenues, expenditures, and debt.

“The 2020 report details how the first year of the COVID-19 pandemic affected the finances of Minnesota cities,” said State Auditor Julie Blaha. “On average, the numbers show that cities held spending down, while CARES Act funding and strong property tax growth helped shore up revenue shortfalls.”

The 2020 Minnesota City Finances Report shows revenues increased by 6.3 percent and expenditures increased 3.1 percent. Among revenues, federal grants showed both the highest percentage increase year over year (262 percent), as well as the largest dollar increase -- $405 million. For expenditures, the category of general government showed the largest dollar increase ($112 million) while airports had the largest percentage increase (27 percent).

Current Trends

• Total revenues of the governmental funds for all Minnesota cities totaled $6.6 billion in 2020, an increase of 6.3 percent over 2019 revenues. Total revenues of cities over 2,500 in population increased 6.3 percent, and revenues of cities under 2,500 in population increased 5.7 percent over the two-year period.
• In 2020, total expenditures of the governmental funds for all cities totaled $7.3 billion. This represents an increase of 3.1 percent over 2019. Total expenditures for cities over 2,500 in population increased 3.0 percent, while those under 2,500 in population increased 4.1 percent in 2020.
• Overall, small cities tend to carry a greater debt burden per capita than large cities. In 2020, small cities carried long-term debt of $1.4 billion, or $4,052 per capita, compared to $8.4 billion, or $1,927 per capita, for large cities.
• City unrestricted fund balances in the General and Special Revenue funds grew 9.6 percent between 2019 and 2020. Unrestricted fund balances as a percent of total current expenditures grew from 52.5 percent in 2019 to 55.9 percent in 2020.

Longer-term Trends

• Over the ten-year period of 2011 to 2020, an examination of city revenues shows that, when adjusted for inflation, revenues increased 18.4 percent.
• Between 2011 and 2020, actual revenues derived from property taxes grew 49.6 percent, compared to an increase of 59.0 percent for revenues derived from intergovernmental sources. Over the ten-year period, federal grants increased 124.9 percent, state grants increased 38.4 percent, and local grants increased 78.1 percent. The large increase in federal grants is largely attributable to the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) act.

Governmental Expenditures

• Between 2011 and 2020, an examination of city finances shows that, when adjusted for inflation, expenditures increased 18.0 percent over the ten-year period. Over the same period, actual total city expenditures grew from $5.2 billion to $7.3 billion. This represents an increase of 41.0 percent.
• Over the ten-year period, when adjusted for inflation, total current expenditures increased 14.8 percent, capital outlays increased 53.4 percent, and debt service decreased 14.7 percent.

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