State auditor’s report says cities rely more heavily on property taxes

Every year, State Auditor Rebecca Otto releases a report assessing how Minnesota cities are doing financially. Today, her office issued her report looking at 2010. (The data takes a while to gather and analyze so there is a bit of a lag in the reports.)

Some of the findings, like the fact that cities spend the largest chunks of their budgets on roads and policing, won't surprise those who read or listened to our Forced to Choose coverage late last year. That project detailed the decisions cash-strapped cities and counties were making when it came to which services to fund and which to cut.

The report does do a great job of identifying trends. While total city revenues increased slightly from 2009 to 2010, the longer view reveals that revenues declined by 10 percent between 2001 and 2010.

In addition, cities came to rely less on intergovernmental funding sources like grants and much more heavily on property taxes. In the past decade, "actual revenues derived from property taxes grew 100 percent," the report said.

It makes sense that with less money coming in, cities would spend less too. Total city expenditures declined by 13 percent between 2001 and 2010, when adjusted for inflation. Over the decade, cities also spent more on operating expenses and less on capital outlays and debt service, a trend we identified in our reporting as well.

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