Feb 25, 2021 - News

Scoop: How much Minneapolis pays in taxes — and gets back in state aid

Downtown Minneapolis

Photo: Aaron Lavinsky/Star Tribune via Getty Images

Minneapolis generated nearly $2 billion in tax revenue for the state in 2017 — 3.5 times more than what the city got back in state aid, per a new analysis commissioned by the Minneapolis Regional Chamber of Commerce.

Why it matters: The report, released to Axios yesterday, showcases the outsized role the state's largest city plays in Minnesota's overall economy — and the impact pandemic recovery here will have on the state as a whole.

Driving the news: A fight over whether Minneapolis should get more state aid for disaster relief and trial security has consumed the state Capitol in recent weeks.

  • Lawmakers are debating proposals to send $150 million to metro businesses damaged by last year's civil unrest and create a $35 million fund that could be used to reimburse law enforcement agencies for costs related to the Derek Chauvin trial.
  • Many Republicans oppose the proposals as a "bail out" for Minneapolis at Greater Minnesota taxpayers' expense, citing concerns about local proposals to cut MPD funding and overhaul the department.

The other side: Supporters of the measures say the "balance of payments" breakdown underscores their argument for more state investment in rebuilding the city's businesses and preventing another round of unrest.

  • "This report makes a good case for why protecting Minneapolis as an asset is important to the state," Chamber president and CEO Jonathan Weinhagen told Torey.
  • "A strong Minneapolis is really important for Minnesota...We have an interconnected economy."

By the numbers: More than 90% of the money Minneapolis sent to the state in 2017 came from income and sales/use taxes, the analysis of state revenue and aid by the firm MacCallum Ross found.

  • Most of the $536 million the city got from the state that year was for schools ($400 million) and Local Government Aid ($78 million).
  • While the metro receives more total cash, the 80 counties that make up Greater Minnesota consistently get more state funding than they give in tax revenue, per the analysis.

It's not just Minneapolis proper making an outsized contribution: The seven-county metro paid $3.46 billion more than it received in 2017.

Chart showing total aid and total taxes in Greater Minnesota versus the seven-county Minneapolis metro area
Data: Minneapolis House of Representatives Research Department Major State Aids, Credits and Taxes Data. Chart: MacCallum Ross/Minneapolis Regional Chamber

What's next: Negotiations and hearings on both the emergency assistance fund, known as the SAFE Act, and proposals for rebuilding aid are continuing.

Of note: It's not just Republicans blocking the SAFE Act. A handful of House Democrats representing the metro have concerns about a lack of police accountability measures.

  • Weinhagen said the chamber has been "working actively" with the Minneapolis delegation to find a "path forward."

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