State Auditor Rebecca Otto said Tuesday she would appeal to the Minnesota Supreme Court after the state Court of Appeals rejected her lawsuit seeking to overturn a state law that undercut the power of her office.

In 2015, the Legislature passed and Gov. Mark Dayton signed a law that allowed Minnesota counties to retain private audit firms to inspect their books rather than turn them over to the auditor's office. Otto subsequently sued Becker and Wright counties after they hired private firms; she also sued Ramsey County after it declined to commit to a multiyear contract with her office.

Otto alleged the law removed a core function of her constitutional office, and that its passage violated a provision of the state Constitution that requires a law be about only one subject.

Roughly 60 percent of the state auditor's budget is derived from auditing the counties. If a substantial number were to use private firms instead, the state auditor's office would be imperiled, Otto argued in court.

A lower court disagreed last year, throwing out Otto's lawsuit. In a 2-1 decision issued Tuesday, the Court of Appeals agreed that the law is constitutional.

"The statute does not disturb the state auditor's ultimate authority as the state's general accountant," stated the decision written by Judge Louise Dovre Bjorkman.

In a statement after the ruling, Otto said that "I must do what is right, not politically expedient, and therefore, I will be asking the Minnesota Supreme Court to settle this issue."

Otto, first elected state auditor in 2006, is running for the DFL nomination for governor. Her office has spent more than $250,000 on its legal challenge thus far.

"Any further appeal to the Minnesota Supreme Court would serve no purpose other than to waste taxpayer dollars to promote the auditor's gubernatorial bid," Rep. Sarah Anderson, R-Plymouth, sponsor of the 2015 law, said in a statement.

J. Patrick Coolican • 651-925-5042