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Minneapolis gets bad budget news
by Art Hughes, Minnesota Public Radio
January 10, 2003

Minneapolis officials painted a stark picture of their financial future Friday. A new long-term analysis says the city needs to find $55 million over the next five years. Elected leaders will be grappling with layoffs, caps on raises for employees and reductions in development and neighborhood support to balance the budget.

Minneapolis, Minn. — Even with an eight percent property tax increase every year for the next five years, city officials maintain they may have to cut 550 jobs over the period. To avoid that, the council will consider limiting pay raises for employees to two percent a year. They say the plan will save them $35 million over the period. Thirteenth Ward Council Member Barret Lane considers that option to be the least damaging choice.

"What do we want to do to make sure we deliver the value to the taxpayers and that we deal with our employees in the fairest possible way. I would rather err on the side of perserving jobs than necessarily maximizing wage increase," Lane said.

The council recently finished it's budget process for this year. It doesn't officially dive into next year's budget until at least August. The new numbers come from an internal analysis that charts city finances over the next five years.

The projections indicate a need to reduce spending by $55 million in that period or violate the council's policy to stay under an eight percent property tax levy increase.

In addition to capping raises, the proposal would phase out support for city health and family services. It would take the services' general fund account from more than $3.6 million to under $600,000 by 2008. The police department would see a 23 percent slice from its projected growth, amounting to a $12.5 million reduction. Mayor R.T. Rybak says he believes there's fat in the police department. Rybak says cuts don't necessarily translate to fewer officers.

"It would be nice for us to say let's just keep our basic core services and take everything from other areas. But that's not enough. Three out of every four dollars we spend are for police, fire and public works. And we can't address the magnitude of this problem without going there, too," Rybak said.

Council Member Lane agrees and says the police budget is too prominent to escape cuts.

"The problem we're facing is simply so large that we cannot not impact those departments if you will. However we have made a lot of difficult choices in order to minimize the impact on it," Lane said.

Over the past year, councilmembers have identified police, fire and public works as spending priorities. Tenth Ward Council Member Dan Niziolek worries cuts to the police aren't in line with those priorities.

"I agree there are some savings we might be able to incur in the police department through efficiencies. I don't know if the level of savings could be this great. I don't know if we really understand what the implications to public safety this means. So I am really concerned this may not reflect our commitment to public safety because we don't know what it means," Niziolek said.

The city's new budget outlook will also mean less money for neighborhoods and social service agencies. The proposal eliminates a $4 million housing and development levy enacted last year. Lane says that frees up spending for bigger priorities.

"Four million dollars less for community development is four million dollars more for police, fire and public works," Lane said.

The proposal would also reverse a decision from a year ago to use a financial reserve fund created by the sale of the Hilton Hotel to pay for some development functions. Council Member Barbara Johnson says she doesn't see how the city can now avoid fights over limited money among neighborhood organizations, social service agencies and housing advocates.

"To me the dilemma and the tension will be in the community development function itself. I see that as a very discreet part of our business; a business line in the city just like a business line of planning or the health department or whatever," Johnson said.

Scott Vreeland is President of the Seward Neighborhood Group. He says the proposal is short-sighted.

"The investment in my neighborhood has increase the property values, has increased the investment and it has raised money for the city. So when you cut this money, you're going to cut the investment, you're going to cut the property tax. You're going to cut the income for the city. So it's penny wise and pound foolish," Vreeland said.

As bad as the projected reducations are, they don't take into consideration additional cuts expected at the state level. One councilmember worries the cut in Local Government Aid could reach $45 million for Minneapolis. But another council member, Barret Lane, says the council have to cross that bridge when it comes to it.

"Right now we're managing an annual gap between our ongoing resources and our ongoing expenditures of around $13 million a year. Whatever you want to decide the state is going to cut local government aid by, you can just add to that number $13 million," Lane said.

The council's Ways and Means committee discusses the budget reduction proposal on Monday.

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