Revised Budget Adopted by City Council

Amidst State Deficit, Minneapolis Budget Preserves Public Safety & Street Repair

March 12, 2009 (MINNEAPOLIS) Mayor R.T. Rybak today lauded the City Council for unanimously adopting his revised 2009 city budget. Despite facing $30 million in state funding cuts, the revised 2009 budget will not include significant cuts to public safety or public works, the City’s two main business lines making up around eighty percent of the budget.

"The City of Minneapolis’ finances are strong and we have done the hard work necessary to weather these difficult times without serious cuts to public safety or our transportation infrastructure," Mayor Rybak said.

"We accomplished this enormous task because we paid off millions of dollars in debt, reformed and restructured City government finances, and delivered City services more efficiently. Our wise fiscal management, combined with one-time economic recovery dollars from the federal government allows us to preserve our commitment to public safety. If not for that strong long term fiscal stewardship by the City of Minneapolis, the problems we face today would have been much worse," Rybak said.

"Unfortunately for Minneapolis and other cities across Minnesota, the State budget lurches from crisis to crisis," Rybak added. "Minnesota’s budget has not had the same long term fiscal stewardship as Minneapolis has had. For too long, the State has used short term budget fixes, and avoided strategic choices. Today’s State fiscal crisis, like the one that happened in 2003, and one we can probably expect a few years from now, could have been partly avoided if they adopted some of the long term fiscal management that has helped us restore fiscal stability to the City of Minneapolis."

"This is a responsible budget that recognizes we still face serious financial challenges down the road," said City Council President Barbara Johnson. "We have continued our disciplined approach to budgeting and controlled our costs in ways that will help us to better tackle the expected funding cuts from the state and the pension obligations we still face."

"Unfortunately, because of the likelihood that the state will cut Minneapolis funding to balance their budget deficit, our toughest challenges lie ahead," said City Council Member Paul Ostrow who chairs the Council’s Ways and Means Committee. "State cuts to our city have consequences and we need to deal with those consequences head on, to minimize the impact to our residents."

Numerous Strategies Used to Prevent Public Safety and Street Repair Cuts

If allocated equally across the city, the Governor’s proposed cuts to Minneapolis for this year would have lead to the elimination of 161 jobs, including 57 sworn officer positions and 19 civilian positions in the police department and 27 firefighter positions. The revised budget avoids those deep cuts by:

Using $7.6 million freed up by paying down City debt - In the past six years the City has paid down or avoided almost $90 million in debt, meaning there is an additional $7.6 million to spend on basic city services this year.

Focusing cuts on management positions – Of the 59 city staff positions eliminated in the budget, nearly half (27 positions) are more expensive management jobs.

Eliminating some City services – The City will no longer maintain State highways that run through Minneapolis. Mayor Rybak has also proposing eliminating a lab in the health department and shifting discrimination complaint services to the state.

Federal Stimulus – One-time funds provided by the federal Recovery and Reinvestment Act will pay for 76 positions in the police department, including 57 sworn officer positions which would have otherwise been cut.

As a result of these strategies, there will be no layoffs in the Minneapolis police department or fire department and the Mayor’s increased investments in transportation infrastructure will continue.

"We’ve been running up a deficit that doesn’t show up on the balance sheets," said City Council Member Sandra Colvin Roy who chairs the Council’s Transportation and Public Works Committee. "We have done so much to reduce the city government’s long term debt and get our financial house in order. But we need to remember that unmet public infrastructure needs are also a debt that we can’t just pass on to our kids. I’m glad we can now address this deficit as well."

Looming Crisis Ahead in 2010

While the revised budget minimizes the impact of the State budget crisis on Minneapolis, unfortunately, the hardest work lies ahead.

"Unless significant changes are made by the State, in 2010 we will need to make very tough and very painful cuts that will have an impact on every part of the City," Rybak said. "Just how painful those cuts are will depend in large part on the economy, and the State, neither of which have been very helpful lately."

To address the challenges of the 2010 budget, Rybak has said that he will be calling on the State Legislature to help on three fronts:

1. Limit local government aid cuts proposed in the Governor’s budget. Minneapolis generates far more revenue for the State than the State returns, and Minneapolis deserves to have its fair share.

2. Free the City to be able to use its own resources. Most of the sales tax collected in Minneapolis goes to the State. The only part the City keeps is dedicated to the convention center. Rybak wants more flexibility to use that part of the sales tax that stays in Minneapolis for other needs like public safety.

3. Minneapolis needs the State to pass pension reform. Right now the City’s closed Police and Fire retirement funds get all the upsides in good times, but in down times city property payers get the bill. The solution is to merge the City’s three closed pension funds into the statewide plan, with all other City employees. Without needed reform, Minneapolis property taxpayers are being overcharged and that is making it harder for to deliver basic City services.

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Published Mar. 12, 2009