Editorial: Overall, cities fared well despite cuts

Published 12:00 am Tuesday, January 11, 2005

The state auditor’s report on the shape of cities finances released yesterday, indicated that Minnesota communities fared pretty well financially despite aid cuts in 2003.

Most cities statewide decreased revenues by 1.7 percent from 2002, though total expeditures increased 2.0 over the previous year.

One difference between cities under 2,500 in population and larger communities was in their spending priorities. Smaller cities directed a greater percentage of their resources to general government and streets and highways, whereas larger cites spent more on culture, recreation and public safety.

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The report also noted that while total revenues decreased in 2003, the amount of money held in reserved fund balances actually increased slightly. The state auditor recommends cities keep a fund balance between 35 and 50 percent of their total current expenditures to cover emergencies and economic downturns.

Some smaller cities are holding a reserve fund balance of 100 percent or more of their expeditures, while three were operating with little or no reserve fund. One has to ask why. What programs or projects are not being funded at appropriate levels?

The good news is Albert Lea was not on either list. At first glance, that would indicate the city has an appropriate fund balance.

The disheartening news to come out of the state auditor’s report is the indication that despite the cuts to LGA, Minnesota cities as a whole, didn’t really decrease spending.

To see the entire report, visit www.auditor.state.mn.us.