State and Local Fiscal Benchmarking Studies Released

MCFE has released two of its annual state and local fiscal benchmarking studies: How Does Minnesota Compare and Minnesota's Prices of Local Government

How Does Minnesota Compare

This year's edition of How Does Minnesota Compare (HDMC) is based on the most recent (FY 15) Census Bureau data on tax collections and spending by state and local governments across the country.  HDMC's rankings are intended to allow for meaningful comparisons across states by differing from other comparisons based on Census data:

  • Tax rankings are based on a modified personal income basis ("cash income") that excludes types of personal income that cannot be used to support government operations (for example, the value of all Medicaid and Medicare benefits received in the state) and adds in other income that can be and is used to pay government taxes and fees (for example, capital gains and distributions from retirement accounts).
  • Spending rankings are reported on a "unit served" basis to better align government spending with its ultimate users and beneficiaries.
  • Spending rankings are also adjusted for state purchasing power differences to accommodate state-to-state differences in the price of goods and services.

Summary Tables

Minnesota's Prices of Local Government

Where in Minnesota is local government’s claim on the economy and the income of local citizens the greatest?  How do local governments’ fiscal footprints differ across the state?  And how does the ability to export local tax burden to non-residents affect this footprint?

Minnesota's Prices of Local Government explores these and related questions by measuring the relative cost of local government to residents on a county-by-county basis across the state.  We present a dashboard of four different "price of local government" perspectives to answer the questions above.

The summary table below presents our findings for the 2015 Price of Local Government measured on a "cash income" basis* -- the claim local governments have on the income county residents have available to pay taxes and fees.

As the table indicates, those counties with the highest amounts are located in northeast and north central Minnesota, while counties with the lowest amounts are generally located in the seven-county metro area.  Over the four years we have prepared this report, this measure has grown fastest in counties along Minnesota's western border and slowest in metro-area counties.  Statewide, cash income growth has outpaced the growth of own source revenues of cities and counties.

* We calculate "Cash Income" as:

Total County Personal Income

MINUS

  • Contributions employers make toward pension and insurance plans
  • Payment employers make to the government for Social Security and Medicare
  • The value of government-sponsored medical benefits (the largest of which is Medicaid)
  • Imputed interest and rent
  • The value of Supplemental Nutrition Assistance Program (food stamp) benefits
  • The value of education and training assistance benefits
  • Government transfers to nonprofit institutions

PLUS

  • Payments employees make to the government for Social Security and Medicare
  • Distributions from IRAs
  • Pension and annuity benefits
  • Capital gains