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An explanation of revenues and expenditures

City financing is complex, so it’s not surprising that citizens and even some council members and staff find it confusing. The following charts are intended to clarify where city dollars come from and what they’re spent on, based on averages. Hover over any of the charts shown below to get more details.

If you’d like to obtain a PDF with this information to post on your city’s Web site, simply contact us and request the City Finance Overview.

Revenue Sources

Hover over the pie-chart on the left to view more information about city revenue sources.

Taxes (40.1%)
Majority from property taxes. Also includes motel/hotel, sales, franchise, gravel and gambling taxes and tax increment financing.

State Grants (22.9%)
Includes local government aid , highway aid, DNR grants, homestead credits and taconite aid for cities on Minnesota’s Iron Range.

Charges for Services (10.0%)
Fees resident pay for general services such as sanitation collection and use of parks, cemeteries and airports.

Special Assessments (7.4%)
Charges placed on a property because it benefits from certain public improvements, such as streets, sidewalks, sanitary sewers and traffic signals.

Fines and Forfeits (1.1%)
From law violations, such as parking and speeding tickets, noise violations, etc.

County and Local Grants (2.0%)

Licenses and Permits (4.1%)
Majority from businesses for permits to sell alcohol or tobacco, handle toxic and flammable materials, or provide entertainment or gaming. Also from residents in the form of dog licenses and building permits.

Interest Earnings (2.4%)
Received from the city’s investments, which may include checking and savings accounts, CD’s, money market funds and Treasury bonds and bills.

Federal Grants (4.4%)
Predominantly Community Development Block Grants issued by the Department of Housing and Urban Development (HUD).

All Other Revenues (5.8%)

City Expenditures

Hover over the pie-chart on the left to view more information about city expenditures.

Public Safety (22.1%)
Includes police and fire salaries and equipment.

Streets & Highways (21.2%)
Includes new construction, repair costs and equipment, snow removal, lighting and traffic control systems.

Sanitation (0.3%)
Includes trash collection and disposal, recycling, street cleaning and weed and pest control.

Health (0.8%)
Includes health insurance coverage for city employees?

Culture and Recreation (11.8%)
Includes park and recreation costs and civic events.

Housing and Economic Development (9.4%)
Includes development and inspections staff salaries and administrative costs.

Capital Outlay for Funds (2.4%)
Cost to improve public services, such as utilities, that are self-supporting or produce revenue. These are called enterprise funds.

Debt Service (17.8%)
Principal and interest paid on bond issued by the city.A bond is a promise to repay an investor a specified amount of money (the face value of the bond) on a particular date (the maturity date). Bonds are primarily used to finance capital projects.

All Other Expenditures (3.5%)

General Government (10.6%)

Other Sources of City Financing

Hover over the pie-chart on the left to view more information about other city revenue sources.

Bonded Indebtedness
The amount of principal and interest remaining to be paid on bonds issues by the city. A bond is a promise to repay an investor a specified amount of money (the face value of the bond) on a particular date (the maturity date). Bonds are primarily used to finance capital projects.

Other Long-Term Indebtedness
The amount of principal and interest remaining to be paid on borrowing vehicles such as notes, equipment certificates and installment purchase contracts.

Other Financing Sources

Transfers from Enterprise Funds
An enterprise fund is a city function that is self-supporting or produces revenue, such as utilities or a hospital, whereby user fees cover the cost of the service. These funds are transferred to the general fund.

Transfers from Government Funds
This reflects the transfer of funds from special revenue, debt service and capital projects to the general fund.