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Report finds Mpls generates 3.5 times more in tax revenue to the state than it receives in state aid

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February 25, 2021
Minneapolis, Minn.   A new report shows the businesses and residents of Minneapolis pay significantly more to the State of Minnesota in taxes than they receive back in state aids.
 
The report, compiled by local research firm MacCallum Ross for the Minneapolis Regional Chamber, found a negative balance of payments for Minneapolis, indicating greater payment to the State in taxes than is received back in state funded aids.
 
In 2017, Minneapolis had a balance of payments of -$1.43 billion, having paid out $1.97 billion in taxes while receiving $536 million in aids from the State – a ratio of approximately 3.5 to 1.
 
This negative balance of payments for Minneapolis is closely mirrored by negative balances of payments in 2016 for the seven county Metro region (-$3.46 billion) and for Hennepin County (-$2.45 billion). This report finds that these lopsided contributions have been consistent every year since at least 2004.
 
“Minnesota has an interconnected economy, where all regions contribute to and support the success of one another,” said Jonathan Weinhagen, President and CEO of the Minneapolis Regional Chamber. “However, the data in this report makes it clear that, from a revenue perspective, those contributions are not equivalent. Minneapolis pays more than 3.5 times in taxes to the State than it receives in aid payments. We are hopeful that this data-based report will provide useful information to policymakers as they consider investments to support small businesses in Minneapolis.”
 
Weinhagen added, “The notion that the rest of the state is ‘bailing out’ Minneapolis is inaccurate. To recover from the current economic downturn, Minneapolis needs a strong Minnesota and Minnesota needs a strong Minneapolis.”
 


In contrast to the negative balance of payments found in Minneapolis, Hennepin County and the seven county Metro area, the other counties in the state show a positive balance of payments over the same period. For example, in 2016 the 80 counties outside of the metro area paid out $6.38 billion in taxes while receiving $7.41 billion in state aid, a balance of payments of $1.03 billion.
 
Minnesota’s economy has been ravaged by the COVID-19 pandemic, and Minneapolis is certainly no exception. Investments in the city’s recovery – especially in support of small businesses – are critical because as this data suggests, without a strong Minneapolis our state will not be well-positioned to recover from this economic crisis.

City of Minneapolis Balance of Payments Executive Summary

City of Minneapolis Balance of Payments Research