State Auditor Report Reveals Increase in Both City Revenues and Expenditures

The Office of the State Auditor released the 2016 Minnesota City Finances Report last week.
(Published Jan 8, 2018)

Cities overall saw an increase in revenues in 2016 over the previous year, according to the most recent Minnesota City Finances Report, released last week by the Office of the State Auditor (OSA).

The OSA’s annual Minnesota City Finances Report examines revenue and expenditure trends for all cities. The report summarizes city finances for all cities overall and for cities over and under 2,500 in population. It also contains detailed revenue and expenditure tables for each city as well as appendices related to fund balances and debt.

Revenues
According to the 2016 report, total revenue from governmental funds was $5.43 billion for all Minnesota cities in 2016. That’s an increase of 3.7 percent over 2015. Looking at cities by size, the increase in 2016 was 4 percent for cities over 2,500 in population and just 0.7 percent for cities with a population under 2,500.

When the analysis accounts for inflation, city revenues are lower in 2016 than in 2007. Total city revenues fell 3.3 percent over the 10-year period when inflation is factored in.

The report looks in-depth at the largest sources of revenue for cities as a group: property taxes and intergovernmental revenue. Without inflation, property tax revenue grew 41.5 percent from 2007 to 2016 while intergovernmental revenues increased 5.2 percent. When the figures are adjusted for inflation, the trends are markedly different: adjusted property tax revenues grew 18.3 percent over the 10 years, while intergovernmental revenue declined 12.1 percent.

Expenditures
On the expenditure side, total expenditures for governmental funds in 2016 was $6.3 billion, an increase of 4.6 percent over 2015. The growth rate was the same for cities over and under 2,500 in population.

Expenditures for streets and public safety made up the largest share of total expenditures for cities overall. When the expenditure data is adjusted for inflation, total city expenditures fell 1 percent between 2007 and 2016.

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