Minnesota’s special districts, the quieter public bodies that keep transit, parks, airports and utilities running, are carrying a hefty tab. They reported $5.4 billion in outstanding long-term debt for fiscal year 2023, according to the state auditor’s latest review, just as federal pandemic-era support tapered off and state money picked up the slack.
The findings surfaced in a statewide news roundup built from the auditor’s analysis and staff interviews. As reported by The Center Square, the review covered filings from 572 special districts that submitted financial data to the Office of the State Auditor.
What the auditor found
The 91-page report from the Minnesota Office of the State Auditor shows special districts reported $1.6 billion in governmental-fund revenue in 2023. State grants made up the largest share at 37 percent, while federal grants accounted for 14 percent.
Federal grants fell about 16 percent, roughly $42 million, from 2022. Over the same period, state grants climbed about 23 percent, or about $107.6 million. The auditor’s office links those swings in part to the slow sunset of pandemic-era programs that had temporarily boosted federal funding.
Debt concentrated in a few agencies
The eye-popping totals are not spread evenly. Four entities, the Metropolitan Council, the Metropolitan Airports Commission, the Western Minnesota Municipal Power Agency and the Southern Minnesota Municipal Power Agency, carried roughly $4.3 billion of the $5.4 billion in long-term debt, about 80 percent of the statewide total.
That concentration is not exactly a plot twist. A research analyst told The Center Square it is "generally consistent" with the reality that these issuers are the ones financing large, long-lived infrastructure projects.
Enterprise losses masked by nonoperating revenue
On the business-like side of the ledger, enterprise operations, which function more like standalone businesses and lean on user fees, posted a mixed scorecard. Operating revenues came in at $2.2 billion against $3.0 billion in operating expenses, creating an $825.8 million operating loss in 2023. Nonoperating revenues, such as grants and taxes, totaled $1.4 billion and pulled enterprise funds into the black with a combined net profit of $369.1 million, according to the Minnesota Office of the State Auditor.
The report tags the Metropolitan Council as the primary driver of those operating losses, documenting $642.8 million in deficits across four of its five enterprise operations. That figure lines up with the council’s own numbers in its financial filings, reported in Metropolitan Council documents.
What this could mean for taxpayers
State Auditor Julie Blaha cast the report as a reality check for policymakers, arguing that stable partnerships among federal, state and local funders are crucial for long-term planning. When federal support drops, she warned, the bill does not disappear. It can migrate to other funding sources, including property taxes.
The report also flags a compliance problem. Of 621 districts required to file, 49 either failed to submit information or only partially completed their 2023 financial reporting. The auditor’s office says it will keep an eye on those holdouts as lawmakers and local officials decide how to pay for the next round of big-ticket projects.
