State of the Cities Report 2016

Share of cities reporting an improved ability to meet financial needs in 2015 down slightly from last year

The 2016 State of the Cities Report presents findings from the 13th annual Fiscal Conditions Survey. The survey was sent to the chief administrative official in each member city, and the response rate was just under 40 percent. A big “thank you” to all responding cities! Our results are richer when cities of all sizes from all across the state are represented.

State of the Cities overview
The share of cities reporting that they were better able to meet financial needs during the last fiscal year fell from 71 percent last year to 67 percent. It is important to point out that the question about ability to meet needs is a relative measure only. In many ways, things are fairly stable overall for cities right now. The local government aid (LGA) program has been much less volatile, the state and federal economies are for the most part doing well, and most cities report growth in tax bases. There are issues, however, that are causing fiscal stress for Minnesota cities, including the costs to comply with clean water requirements and the Affordable Care Act, the lack of comprehensive state funding for roads and bridges, and the demand for broadband Internet.

The share of cities reporting a shortfall in the main budget categories (state aid, property taxes, and fees) fell slightly or stayed flat for the fourth year in a row.

Budget factors
The survey gives insight into the degree that different budget factors are having an impact on Minnesota city budgets. Some budget factors, when they are present, create stress. Inflation and rising cost of living are two examples of this. Other factors, such as new developments needing services like water and sewer, put pressure on city budgets but also bring benefits. Almost 75 percent of cities report increased infrastructure needs.

Read the full report for more details and trends for metro and outstate cities as well as for cities of different population sizes.

If you have questions about the 2016 State of the Cities Report, contact Rachel Walker at (651) 281-1236 or rwalker@lmc.org, or Lena Gould at (651) 281-1245 or lgould@lmc.org.

Access past State of the Cities reports

Read the current issue of the Cities Bulletin