Minnesota State Auditor Julie Blaha recently presented “The State of Main Street” local government financial trends and recommendations to keep local government finances stable.
The Office of the State Auditor (OSA) analyzed township, city and county numbers and provided 20-year trends in local government revenue, expenditures, debt and reserves. These recommendations are the culmination of six regional listening sessions that took place in January 2020 in Thief River Falls, St. Cloud, Duluth, Saint Paul, Marshall and Albert Lea.
Blaha was joined by local elected officials and local government financial staff to hear their feedback on the 20-year trends. These listening sessions allowed the state auditor to collect direct feedback to see if the statewide trends tell the real stories of communities across Minnesota.
“To support continued stability in local government finances, decision makers need to keep five ideas in mind,” said Blaha. “Local control can be effective in keeping local budgets stable, partnerships can reduce local costs, falling intergovernmental aid has shifted local costs to more regressive forms of taxation, surprises have a bigger impact than the sticker price and long term planning and including consideration of emerging issues like climate change, can improve stability.”
Local governments on average have held revenue and expenditures steady over the past 20 years despite external pressures on their financial stability.
External pressures include falling state aid, changes in resident demographics, increasing requirements in administrating state and federal programs and unexpected costs due to issues like weather, changes in funding levels due to error and health and human services needs. In addition, maintenance on infrastructure delayed during the last recession can no longer be put off.
Municipalities have used a number of tactics to weather these pressures including cooperative partnerships, increasing reliance on property taxes, seeking grants, strengthening long-term planning, cutting services and utilizing reserves.
To support stability in finances, decision makers need to keep five ideas in mind.
• Local control can be effective in keeping local budgets stable.
• Partnerships can reduce local costs.
• Falling intergovernmental aid has shifted local costs to more regressive forms of taxation.
• Surprises have a bigger impact than the sticker price.
• Long-term planning, including consideration of emerging issues, can improve stability.
Learn more at www.osa.state.mn.us.
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