Two Minnesota cities earned “C” grades for city financial health and ranked in the low-to-high 20s for a fiscal health evaluation of the nation’s largest 75 cities released Tuesday.
That’s according to the 2020 Financial State of the Cities (FSOC) report from Truth in Accounting (TIA), a think tank that analyzes government financial reporting using the fiscal year 2018 Comprehensive Annual Financial Reports.
St. Paul ranked No. 27 out of the 75 cities cited in the report with $271.7 million of debt needed to pay bills, a per-person tax burden of $2,300.
That number is down from the prior year’s taxpayer burden of $2,900
The city is short $194.6 million to pay its pension debt and is $229.9 million short of paying its retiree health care benefits.
St. Paul is one of 15 cities that has more retiree healthcare debt than it has pension debt, TIA CEO and Founder Sheila Weinberg told The Center Square.
St. Paul was third-to-last of the 75 cities for timeliness of their audited comprehensive annual financial reports (CAFRs), filing 260 days after the fiscal year’s end compared to the Government Financial Officers Association standard of 180 days post the fiscal year.
Minneapolis ranked No. 22 out of the 75 cities with $310.1 million needed to pay bills, or a $1,900 per-person tax burden. That number is down from the prior years’ burden of $2,100 per person.
The city system is short $646.4 million and has a $36 million shortfall to pay retiree health care benefits.
Minneapolis has $848.3 million of bills and $576.7 million available after counting restricted capital and assets.
The city isn’t pre-funding retiree healthcare debt, Weinberg said, so they’re pushing that cost onto future taxpayers.
“That goes against the principle that elected officials shouldn’t push costs onto future taxpayers, so they should be putting money aside, so a future taxpayer isn’t paying for a retiree who never worked for them,” Weinberg said. “They’re not providing any government services or benefits for them, but they’re stuck with their retiree healthcare benefits.”
Minneapolis filed its CAFR 175 days after the end of the fiscal year, beating the 180-day deadline.
Weinberg recommended the two cities use full accrual calculations and techniques (FACT) based budgeting, which requires the city to properly fund their pensions and retiree healthcare benefits and other costs as they’re earned, instead of pushing costs onto future taxpayers.
Unless changes are made, future taxpayers in St. Paul and Minneapolis will be stuck with a $2,300 and $1,900 bill, respectively, to cover prior shortfalls, Weinberg said, for which they won’t receive any government services or benefits.