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I recently heard that Hudson will not be participating in the U14B state tournament even though they will likely end up with the 3rd best record. I assume they are being left out of the Minnesota State tournament just because they happen to live on the other side of the river.

I'm of the opinion that if you play in the league you should get to vie for the championship. Those girls went out each game and gave their best. They should have the same opportunity as the other 15 teams to show that they are the best.

Does anyone have any information about this?

I believe that the Wisconsin teams after the regular season is over move on to compete in the Wisconsin playoff tournaments.
Like River Falls in the 14UA Hudson will do the same in their division.
Because of their proximity to the border they option in to the Minnesota leagues.
My understanding is that they are better prepared after playing the Minnesota league to compete in their own state.
Given that the River Falls High School girls team has won the Wisconsin State High School title the last two years I bet they feel it's worth it, even if they don't get to play in the Minnesota State Championships.