New Release: "How Does Minnesota Compare?"

If you would like to receive new blog postings directly from us via email, as well copies of our bi-monthly newsletter Fiscal Focus and notifications of new MCFE releases, please click HERE to join our public list serve.

The Minnesota Center for Fiscal Excellence has released its 53rd edition of How Does Minnesota Compare? -- our annual national comparison report on state and local government taxation and spending.

Based on the most recent data release from the Census Bureau's Annual Survey of State and Local Government Finances (FY 2018), our HDMC rankings are intended to allow for more meaningful tax and spending comparisons across states:

  • Tax rankings are based on a modified personal income basis (which we call "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.  
  • "% of US" indicates amount relative to U.S. average (US = 100)

The full report includes a "frequently asked questions" section as well as Census Bureau definitions of spending categories to help interpret the data and findings.

Summary Findings

  • Minnesota ranks 7th in the nation in total state and local taxes as a percentage of cash income.  Both individual and corporate income tax collections rank in the top ten nationally.
     
  • Minnesota state and local governments continue to be less dependent on property and sales taxes than the national average - both ranking in the bottom half of the nation.  
     
  • Minnesota's above average tax collections are offset in part by less state and local reliance on federal government and other non-tax revenues. As a result total state and local revenues are 5.2% above the national average placing the state 22nd in the nation.  
     
  • Minnesota ranks 10th in the nation in total state and local spending.   Only one area -- "public welfare" (i.e. health and human services) ranks in the top ten nationally -- 85.9% above the national average.
     
  • In addition to HHS, state and local governments spend more than the national average on K-12 education, higher education, natural resources and parks, and police.
     

Tax and Spending Summary Tables