State auditor: COVID-19 had bigger impact on large city government budgets

Wednesday, State Auditor Julie Blaha presented the annual 2021 State of Main Street, which this year looked at the ongoing impact of the COVID-19 pandemic on city and county finances.

Analysts at the auditor’s office found a mix of stimulus, spending reductions and the use of fund balances balanced lower revenue growth of Minnesota’s cities and counties.

"The key finding of this year’s State of Main Street is that local governments faced a careful balancing act in 2020 and stayed on their feet," Blaha said. "City and county budgets reflect a cautious approach to 2021, as we’ve seen 2021 budgets showing flat or decreased levels of overall revenues and expenditures when compared to 2020."

Blaha noted that local governments will continue relying on property taxes, which is the largest source of revenue for counties and cities.

"In general, the lasting effects of the COVID-19 pandemic had a greater negative impact on larger city and metro local government budgets," Blaha noted.

The state auditor said the federal government’s Coronavirus Aid, Relief and Economic Security (CARES) Act funding helped counter the pandemic’s financial impacts in 2020 and additional relief efforts will make a difference for local governments in 2021.

You can see the full State of Main Street report here.