New data from the U.S. Census Bureau show that Minnesota is about average in government revenues.
Minnesota ranks 27th among the 50 states and District of Columbia in total revenues as a share of personal income in the state. This comprehensive measure of state and local government revenues includes taxes, but also a broad range of other revenue sources such as federal funds, fees, public university tuition and public utility revenues.
Minnesota is below the national average in federal funding for public services. Minnesota gets less funding from the federal government and has to raise more revenues on its own to provide health care and other services that in other states are more heavily subsidized by the federal government. This is in part a reflection of Minnesota’s economic success; federal funding formulas frequently send more dollars to poorer states.
Minnesota is also about average for what’s called “own source general revenue,” another comprehensive measure that includes taxes, fees, tuition, etc., but takes out federal dollars and also removes state revenue that can only be used in very limited ways (public utility revenue, for example). On this measure, Minnesota ranks 20th as a share of personal income. This Census measure is similar to Minnesota’s Price of Government, which measures revenues coming into the state, counties, cities and schools as a share of personal income. And the Price of Government has been dropping over time, as state and local government has become a smaller share of the state’s economy.
State rankings are popular because they simplify a complex array of decisions that the people of a state make about how they want to fund their schools, police and fire protection, roads and bridges, health care, playgrounds and libraries. But they don’t by themselves tell us whether we are making the right decisions for our state and for our future.