Minnesota cities increase reliance on property taxes, spend less
Minnesota cities have continued the trend of relying increasingly on property taxes to pay for the services they provide, a state auditor's report shows. Over the past decade, cities have both raised property tax revenue and spent less money overall.
The report for 2009 says the state's 847 cities received 37 percent of their revenue from local property taxes. That's up a few percentage points from the previous year and up from 23 percent 10 years earlier. In terms of inflation-adjusted dollars, property tax revenue rose 41 percent in the decade.
Over that same 10-year period, revenue from other governments, such as state and federal aid, dropped to 26 percent of the cities' totals, down from 30 percent in 2000.
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Overall, when adjusted for inflation, Minnesota cities took in 11 percent less than they did in 2000 and spent 8 percent less. (See the bottom lines on these two charts.)
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The numbers are in an annual report released this morning by the office of state auditor Rebecca Otto, and they clearly reflect the trends city officials have been talking about for several years -- less ability to rely on state aid and a heavier, if reluctant, dependence on property taxes. Across the state cities have trimmed services in a great variety of ways, from reduced library hours to less street maintenance.
The report shows that spending, when adjusted for inflation, rose for public safety but declined for all other major spending categories over the past 10 years -- parks, housing, economic development, streets and general government spending.
Otto's report notes that the area of city spending that has been cut the most over the years is in capital outlays. This reflects city officials' choices to cut first from long-term big-spending plans instead of current operations.
Total spending for all the cities dropped to $5.38 billion in 2009, down 3 percent from a year earlier.
As in the past, the largest expenses for cities are public safety and streets and highways. Together, they account for nearly half of all city spending in Minnesota.