For all the money trouble state government has had since 2008, Minnesota local governments have had it worse. So concludes a report in the latest issue of Fedgazette, the regional business and economic newspaper of the Minneapolis Federal Reserve.
Among the six states in the Ninth Federal Reserve District, Wisconsin and Minnesota have endured more sustained financial stress in the past five years. In Minnesota, the report says, trouble has more than trickled down to local governments.
The response has been job cuts and widespread consolidation of basic city and county services, including the formerly untouchable police and fire. For example, spending in Minneapolis is down 20 percent and its workforce is down 11 percent since 2009, the story says.
According to a Minnesota legislative auditor’s report, 80 percent of counties and 40 percent of cities say they’ve entered into service-sharing agreements with other units of government in an effort to cut costs. That report documented cuts in local government expenditures in every category save for health care since 2009, and widespread tax increases.
State and local governments are so financially entwined in Minnesota that their fiscal conditions cannot be fairly measured in isolation. Local stress translates to higher property taxes and more demand for state spending on property tax relief. That demand is the reason Gov. Mark Dayton added $1.4 billion to his proposed 2014-15 state budget for property tax rebates.