The City’s budget is a statement of community values and expectations reflecting specific goals which the government hopes to attain and the relative priority assigned to each of those goals. Through the budget, the City determines which services and programs will be provided, for whom, at what cost, and at what desired level of quality or performance. Thus, the budget is the centerpiece of the City’s legislative and policy-making process; the most effective lever for organizational control; and the focus of its financial operation.
Budget by Fund
The City uses different funds to account for expenses and revenues associated with the various services provided.
The General Fund, where the City accounts for most property tax supported services as well as a variety of programs supported by other revenue sources besides property taxes, represents 29 percent of the 2013 Council Adopted Budget.
Special Revenue Funds
Special Revenue Funds are used for personnel costs, operating costs, contractual services, and equipment that are funded by certain non-property tax revenue sources that are explicitly limited to specific activities. These funds support, to some degree, the convention center, health and family support; public safety; federal, state and local grants, and ongoing support of closed pension funds, among other activities.
Capital Project Funds
Capital Project Funds include permanent improvement funds and are used for the construction of infrastructure projects.
Debt Service Funds
Debt Service Funds are used to pay interest and principal on City debt.
Internal Services Funds
Internal Services Funds are used to account for business-like services that the City provides to other City departments. Internal services include information technology, fleet (e.g. police squad cars and fire equipment), property services, tort claims, and workers compensation claims.
Enterprise Funds include services that the City provides that operate like a “business” – similar to internal service funds but with external customers. Charges for services are expected to recover operating costs, indirect costs, capital investments, and interest expense. Enterprise services of the City include sanitary sewer services, stormwater management and flood mitigation, water treatment and distribution, solid waste and recycling, and parking.
The City moved from traditional incremental budgeting to program budgeting in 2012 to allow for greater clarity around the resources committed to programs. Instead of focusing on what to cut, the process focuses on where to invest. Program budgeting allows the City to direct resources towards programs that provide the greatest value, helps to articulate why a program exists, and is more strategic and transparent in that it funds activities by function rather than department.
In traditional incremental budgeting, the starting point is last year’s spending with increased assumptions added to the base. Revenue shortfalls are handled most often with across-the-board cuts and departments determine how to allocate spending. In program budgeting, there is not a starting point, and departments are asked to submit programming proposals to achieve results for the City goals/priorities. This allows the City to effectively target programs for investment and cuts when necessary, allowing for a more transparent process.
Program budgeting allows for continued integration of business planning, measurement, and budgeting. This process has been implemented successfully in a number of governmental entities including Baltimore, Maryland, Savannah, Georgia; and Snohomish County, Washington, to name a few.
Annual Budget Calendar
The City’s fiscal year aligns with the calendar year; thus, the fiscal year runs January 1 to December 31 each year. The budget process is a year-round activity which integrates information from the City’s strategic and business planning processes, capital long-range improvement committee process, and the departmental performance measurement review process to establish annual resource allocations. The following timeline reflects the annual budget calendar.
The City engages in citywide strategic planning every four years to develop citywide goals and strategic directions. These citywide goals and strategic directions set guidelines for each department to develop its business plan. As a result of the decisions arrived to in these sessions, a new vision, five-year goals, and strategic directions were adopted.
Preliminary Year-End Budget Status Report
Finance and Property Services presents a year-end budget status report for the previous year to the Ways and Means/Budget Committee. This is a preliminary report, because the audited Comprehensive Annual Financial Report (CAFR) is not available until the second quarter of the following year.
Capital Improvement Budget Development
City departments prepare and submit capital funding proposals (or modifications to existing proposals) to the Finance Department. Capital project proposals are reviewed by the Finance Department and the Capital Long-Range Improvement Committee (CLIC) . After review, CLIC provides a report with recommendations on capital funding to the Mayor, and, pending any adjustments made by the Mayor, to the City Council.
Operating Budget Development
Departments work in coordination with Finance and Property Services to prepare programmatic operating budgets. In addition, departments prepare proposals that describe policy and organizational changes with financial implications. During this time, departments may also submit proposals for funding of operating capital. The program proposals form the basis for the Mayor’s budget meetings with departments held in June and July.
Mayor's Recommended Budget
The Mayor’s Recommended Budget is based on program proposals submitted by departments. These program proposals are reviewed and discussed by the submitting department, the Mayor’s Office, the Coordinator’s Office, and Finance and Property Services for priority-setting. In addition to reviewing operating budgets, the Mayor meets with representatives from CLIC before finalizing the capital budget recommendation. By City Charter, the Mayor must submit the proposed budget to the City Council no later than August 15.
Maximum Proposed Property Tax Levy
As a requirement of State law, the maximum proposed property tax levy increase is set by September 15 by the Board of Estimate & Taxation (BET). The BET, described in detail on page 134, sets the maximum levies for the City, the Municipal Building Commission, the Minneapolis Public Housing Authority, and the Park & Recreation Districts.
City Council Budget Review and Development
The City Council budget review and development process beings with a series of public hearings on the Mayor’s Recommended Budget. These hearings are conducted by the Ways and Means/Budget Committee, with all Council Members invited to attend. Following departmental budget hearings, the Ways and Means/Budget Committee forwards its recommendations to the full City Council. The committee-recommended budget includes any and all changes made to the Mayor's Recommended Budget.
Truth in Taxation
Truth in Taxation or “TNT” property tax statements are mailed by Hennepin County to property owners indicating the maximum amount of property taxes the owner will be required to pay. These statements also indicate the dates when TNT public hearings will be held. State law was changed in the 2009 Legislative Session to eliminate a separate TNT hearing. It was replaced with a requirement to allow public comments at the meeting at which the final budget adoption occurs. However, the City Council has maintained this hearing as part of its regularly scheduled budget meetings to provide greater opportunity for public engagement on budget-making decisions.
City Council Budget Adoption
The City Council adopts a final budget that reflects any and all changes made to the Mayor's Recommended Budget. Once the final budget resolutions are adopted, all department requests for additional funds or positions made throughout the year are brought as amendments to the original budget resolutions for approval by the City Council.
- City Budget & Financial Reports
- Finance & Property Services Division
- Strategic Planning and Analysis
- Department Business Plans
Last updated Nov 22, 2017