Top issues facing Minnesota local governments right now

By Andy Berg, CPA

From the expiration of COVID funding to the threat of tariffs and persistent inflation, local governments across the country have spent much of the year in limbo.

For the most part, our Minnesota local governments have been finding ways to adapt. They’ve kept projects moving forward and are leveraging technology in new ways to do more with less. They’re learning how to implement regulatory changes and planning for the future.

To help your organization move forward with confidence, we broke down the top issues affecting local governments this year.

Ability to fund infrastructure projects

The need to address aging infrastructure and the infrastructure needs of growing communities continues to be a top concern for local governments. Yet as COVID funding has dried up over the last year, infrastructure budgets have tightened. The result: Schools, cities and counties are forced to find and plan for funding sources for capital projects.

Local governments that have a long-term financial plan are better prepared to weather uncertainty related to funding. This plan allows organizations to better plan for projects along with their operating budgets. By identifying revenue sources, it can help to mitigate the impacts of federal and state fiscal conditions and give organizations a road map for next steps.

Cybersecurity and other fraud threats

As I mentioned, more local governments are embracing new technologies and AI to work more efficiently. This is a good thing. It does, however, expose organizations to a greater level of risk related to cybersecurity and fraud. In fact, auditing standards are focusing more on IT risk.

As local governments implement new software and AI-driven processes, it’s imperative their cybersecurity and fraud protection measures are keeping up.

Changing regulations and accounting standards

Although federal and state regulations are always in flux, this year has brought about some significant changes. One on everyone’s mind is Minnesota’s Paid Leave program. Recently, there have also been revisions to GASB and, as always, more are expected.

Keeping up with these shifts is a constant challenge for local governments. Failing to stay in compliance, however, can put your organization in the crosshairs of financial risk or, in the case of accounting and audit standards, impact your bond rating.

Staffing shortages

Over the last six months, many local governments have seen staffing shortages persist—primarily in their finance and public safety departments. Unfortunately, it’s likely this trend will continue.

Now is the time for local governments to ask: How are we using technology to solve this problem? Are we providing the right training? How will this impact our retention and recruiting policies?

Clearly envision your organization’s future success

As we look ahead to 2026, we see opportunities for local governments to continue to thrive.

From developing a solid long-term financial plan to embracing technology and creating efficiencies within your processes, we can empower you to better serve your communities in the years ahead.

At Abdo, our Audit and Financial Solutions teams can help you position your organization for what’s next.

To learn more about how Abdo empowers local governments, head to our website.