Ninety-eight Minnesota mayors warned state leaders that reckless spending of an $18 billion surplus is now producing real pain for cities, with an announced $2.9–$3 billion shortfall looming for the 2028–29 biennium and criminal fraud eating into funds meant for vulnerable residents.
On Dec. 22, a coalition of local leaders delivered a blunt letter to Gov. Tim Walz and the Legislature, saying one biennium’s splurge has left a bitter hangover for municipal budgets. They lay out a simple consequence: when the state runs out of saved surplus, cities and towns will shoulder more costs or raise property taxes to keep basic services running.
Many of the mayors tied the budget crisis directly to fraud and unchecked programs that funneled money away from core government work and into schemes that never served taxpayers. They argue those failures strip cities of the ability to plan, maintain infrastructure, recruit and keep staff, and provide core services without burdening local taxpayers.
“As mayors, we see firsthand how these decisions ripple outward. Fraud, unchecked spending, and inconsistent fiscal management in St. Paul have trickled down to our cities—reducing our capacity to plan responsibly, maintain infrastructure, hire and retain employees, and sustain core services without overburdening local taxpayers.”
The letter points to a stunning pattern of theft: roughly $9 billion stolen from 14 social programs meant to help children with autism, struggling families seeking affordable housing, and feeding programs for kids. Those losses are not theoretical; they represent vanished help that towns counted on and now cannot replace.
Federal officials have weighed in, and U.S. Attorney Joe Thompson said he believes half or more of the $18 billion the state spent across 14 programs was likely fraudulent. That assessment raises a question voters will not easily forget: who was watching the books when billions were being spent and misused?
The progression of alleged fraud has been dramatic. It started in small pockets like a $14 million abuse of an autism program, ballooned into a $250 million Feeding Our Future scandal, climbed past $1 billion in later investigations, and now federal prosecutors are examining roughly $9 billion in losses. That escalation undercuts claims this was a series of minor failures and points to systemic oversight breakdowns.
Spending a huge surplus today and then expecting municipalities to absorb the fallout tomorrow is poor policy, plain and simple. The mayors say this pattern forces local officials to make impossible choices: trim services, delay capital work, or shift costs to homeowners and businesses through higher property taxes.
The political fallout is already messy. The governor has somehow blamed the fraud mostly committed by Somalians on white supremacy during a recent news conference. That explanation deflects from the central issue of accountability and will not fix busted systems or reimburse communities that lost money.
The mayors pressed the Legislature to act differently next session and to restore basic fiscal discipline at the state level. “We urge the Legislature to course-correct and to remember that every dollar you manage belongs not to the Capitol, but to the people of Minnesota.” That line captures the core complaint: these are taxpayer dollars, not slush funds for poorly designed programs.
Local leaders want reforms that stop fraud, tighten oversight, and protect core services without shifting costs down to homeowners. If state government wants to rebuild trust, it starts with better accounting, stronger audits, and a clear plan to stop wasted dollars from becoming the next municipal problem.
