A Closer Look at Minnesota’s Underperformance in Attracting New Residents

Fiscal Focus Special Report:
Federal Funding, Minnesota's Fiscal Exposure, and the November Election

With so much attention focused on the state general fund and the state’s own tax collections, it can be easy to overlook the important and growing role federal resources play in state service delivery.   That role has grown, now $43 billion, more than double the total of ten years ago, and now representing over a third of the state’s total available biennial resources. 

Meanwhile, Minnesota is in the early stages of its experiment regarding how much of a federal government’s textbook redistribution and social welfare interests and responsibilities a state government can take on with a balanced budget requirement and without incurring fiscal and economic consequences.  These policies have elevated the state’s exposure to federal fiscal policy changes, but the results of the 2024 national election and the effect on federal grantmaking may make the experiment a much bigger budget lift.

In this Fiscal Focus Report, we take a closer look at Minnesota’s federal fiscal policy risk.  We discuss:

• Minnesota’s growing fiscal reliance on the federal government and the nature of increasing fiscal policy risk.
• The "tools" available to the executive branch and why a federal government "trifecta" is not needed to have a potentially significant influence on federal fund flows to state and local governments.
• How the form, function, and norms of federal funds distribution could change as a result of the national election.
• Why reform of Medicaid finance, by far Minnesota’s greatest exposure, would be a seismic event for the state budget.

A Sense of Deja Vu in IRS Migration Data

A look and some thoughts on the latest statistics from the IRS on who is coming to and leaving the state.

NEW RELEASE: 50 State Property Tax Comparison Study for Payable 2023

MCFE's latest 50-State Property Tax Comparison Study -- for taxes paid in 2023 -- is now available.   The report, produced in partnership with the Lincoln Institute of Land Policy, documents the wide range of property tax rates in 2023 for more than 100 US cities and helps explain why they vary so widely.

Minnesota Sets the Table for a Progressive Policy Encore

In light of last year's extraordinary budget session, State Tax Notes columnist Billy Hamilton interviews MCFE Executive Director Mark Haveman to discuss what happened and is happening in the state in this supplemental budget year and whether this session portends a continuation of tax and fiscal policies that run contrary to how states typically think about economic development policy, tax competition, and electoral politics.

Fiscal Focus: The Reasons Why Automatic Inflationary Adjustments to Local Aids is a Bad idea

Legislators are once again looking to reestablish an automatic growth factor for local government aid appropriations based on inflation. Such a policy existed from 1994-2002 with 2002 being the high-water mark for LGA that lasted for 20 years. We examine the overlooked story and circumstances surrounding that 2002 appropriation and discuss its continuing lessons for today’s local government finance debates.