"Electricity in the Darkness": In Budget Speech, Mayor Rybak Calls for Greatness in Tough Times
Proposed 2011 budget provides for basics of police, potholes, paychecks and pensions, but is "not enough": Mayor calls for growing tax base into the future
August 16, 2010 (MINNEAPOLIS) — Minneapolis Mayor R.T. Rybak proposed a 2011 budget for the City of Minneapolis that funds the basics of police, potholes and paychecks, and meets the challenges posed by rising pension obligations, especially two closed pension funds. But providing the basics, which Minneapolis has been able to do well because of years of fiscal responsibility, is "not enough": the only way to adequately meet the City’s future needs and maintain its financial health over time will be to grow the tax base. Mayor Rybak specifically identified investing in transit-oriented development, downtown planning and a new downtown park, and a new regional economic development entity as opportunities for doing so.
The speech, entitled "Electricity in the Darkness," is framed by the story of Earl Bakken, who became fascinated by the uses of electricity during the Great Depression and later founded the company that became Medtronic. In the face of the challenges that the City faces during these tough times — a slow economy and the State’s ongoing budget deficit — Mayor Rybak called for "aggressive steps" to creating a great city as the only way through these times. Bakken stands as an example of a Minneapolis resident who viewed the challenging times in which he lived as an opportunity, not an obstacle.
Mayor Rybak hailed the City’s sound financial management over the last nine years — paying down $130 million in debt, reducing fixed costs, restoring the City’s AAA bond rating and matching spending to revenue five years out — as the key to Minneapolis’ ability to provide vital, core services to residents. These services are:
• Keeping people safe. Public safety has been, and remains Mayor Rybak’s top funding priority, and this year is no exception. Public safety — defined as police, fire, 911 and the criminal division of the City Attorney’s office — will consume 55% of general-fund spending in 2011, and there will be no layoffs to police or firefighters next year. Mayor Rybak acknowledged this year’s high-profile violence and praised the cooperation between police and prosecutors to hold accountable people who use illegal guns in Minneapolis. He also praised the police work that has held this year’s overall increase in violent crime citywide to just 0.75%.
• Improving streets. Mayor Rybak recognized that streets have suffered as the City has invested necessary resources into public safety in recent years. Today, Mayor Rybak proposed investing $9 million more a year over five years, beginning in 2011, to dramatically accelerate improvements on a wide range of City-maintained streets, including significant improvements to residential streets. The Mayor stressed that this is not "some optional fringe program: this is work that we simply must do to maintain the streets we use every day."
• Growing the economy. Mayor Rybak pledged not to cut one dollar from the City’s job-creation and business-support efforts. He pointed out that Minneapolis has weathered the recession better than other cities, and praised the City’s economic-development efforts for their role in helping mitigate the effects of the recession here. Nearly 4,600 more Minneapolis residents were employed in June 2010 than were employed one year prior, and Minneapolis’ unemployment rate is now routinely lower than the region’s and state’s unemployment rates.
Mayor Rybak said that the City would be able to fund these key investments — keeping people safe, improving streets, and growing the economy, or "police, potholes and paychecks" — and all other City operations with no increase in the property tax.
However, Mayor Rybak said, this is not "the end of the story — and the reason it’s not is in particular our closed pension funds." He announced that of the $17.7 more that the City must pay in 2011 to meet pension obligations, nearly 90% must go to two closed pension funds: the Minneapolis Police Relief Association and the Minneapolis Fire Relief Association.
Were it not for the $17.7 million jump in pension obligations, the City would be able to lower property taxes by 0.1% next year. However, obligations to pensions — and in particular, the closed pensions — instead require a 6.5% pension levy for 2011.
Mayor Rybak explained that Minneapolis taxpayers are "stuck with" this pension levy "largely because of bad decisions made decades ago, and in particular because of mismanagement by the attorneys and managers of the closed pension funds." He stated clearly that City retirees and their survivors "have worked hard and … deserve every cent they have earned," but pointed out that courts have ruled several times that the closed pension funds have overcharged City taxpayers tens of millions of dollars over the last several years. The Mayor pledged to continue the City’s legal efforts to recover these overpayments and to seek pension reform from the new Legislature and governor.
Mayor Rybak also noted the pressures that the State of Minnesota’s "budget rollercoaster" place on the City’s budget, and pointed out that in each of the last three years, the City has had to respond to mid-year cuts in Local Government Aid after the City Council had already adopted the budget. The Mayor acknowledged that uncertainty over the State’s budget deficit, the speed of economic recovery and the identity of the new governor made another mid-year cut in 2011 possible. He said that City staff have already done ‘"significant work on a multitude of scenarios" if the State should cut LGA again next year, and pledged to "fully engage" the City Council in this work.
Mayor Rybak concluded the budget speech by stating that the City’s many accomplishments over the past nine years — restoring financial health, investing in public safety and redesigning the City’s transportation system, among many others — while essential, are "not enough. … If we want Minneapolis to be the kind of city we know it can be, there is one more thing we have to do: we have to grow."
Mayor Rybak identified three opportunities for growing the City’s tax base in the long term.
• Investing in transit-oriented development. Mayor Rybak signaled a wide range of development opportunities across Minneapolis, but identified the greatest opportunities along current or proposed transit lines — including, someday, at "the granddaddy of them all" at Lake Street and a reopened Nicollet Avenue. He announced the creation of a new, high-level coordinator of transit-oriented development to bring together private, public and foundation efforts around economic development on transit lines. The position will be paid for in part with foundation money.
• Investing in downtown planning and a downtown park. Mayor Rybak called for the City to fully engage with the Downtown Council in the current round of planning for a vision of downtown decades from now. As part of that process, he promoted the value of creating a new park on the block north of the Central Library as a tool for growing the City’s tax base. He compared that opportunity to the creation of the park and plaza around the Government Center three decades ago, in what was then an underdeveloped part of downtown. Today, the office towers that surround Government Center have added $520 million to the City’s tax base.
• Investing in regional economic development. Mayor Rybak praised the efforts of the Itasca group to bring together private-sector leaders and local mayors around the creation of a much-needed, new regional economic-development entity that will increase the competitiveness of the entire region. He asked the City Council to join him and Saint Paul Mayor Chris Coleman in committing resources to this entity.
Mayor Rybak concluded: "Now more than ever we need to look many years down the road: to not just imagine a great city, but take the aggressive steps right now to make it happen. We need to do that not in spite of the fact that we are in tough times, but because thats the only way out of them. Like Earl Bakken, times like these need people of vision who see electricity in the darkness."
To read the full text of Mayor Rybaks 2011 budget speech, go to: /mayor/news/speeches/mayor_speeches_20100816speech_2011budgetspeech
To view the slides that accompany Mayor Rybaks 2011 budget speech, go to: /mayor/news/mayor_docs_budgetaddress2011-slides
Published Aug. 16, 2010