2007 Budget Address

Mayor R.T. Rybak

Tuesday, August 15, 2006

Everyday in the City of Minneapolis, families are struggling with a new challenge. Somewhere, someone has suddenly become ill, or lost a job.

The families that can withstand new challenges, the ones who aren’t thrown into crisis, are almost always those families that have planned ahead—the ones who have saved their money, the ones who have stayed out of debt. They have been honest with each other about what they could afford, they have sacrificed, they have anticipated problems and, when they had to, they spent the money they needed to confront their latest challenge.

I start my budget speech this way because these values that are used by Minneapolis residents every day to face new challenges are also the values we have used in city government.

Minneapolis faces a serious public safety challenge that requires us to continue to make significant investments to fight crime. The budget I am delivering today will do just that: fund 43 new police officers, invest one million dollars in each of the next two years on public safety technology and fund a series of initiatives that attack the root causes of crime. And we are making significant investments to address the structural issues behind crime.

We can only do this because, like those families weathering new challenges every day, we have planned ahead. For the past five years we have been honest with each other about what we can afford, we have sacrificed, paid down debt and anticipated problems. Now, in spite of massive cuts from the state and federal governments, we can still make the significant investments that need to be made.

In a few minutes I will talk about the choices we made in the past few years that enabled us to step up to today’s public safety challenge and I will outline the financial obstacles that still lie ahead. I will also talk very briefly about other elements of the budget. However I want to spend most of my time today talking about the public safety challenges that face us, and the solutions to those problems that we will be funding in this budget.

The challenge is clear: crime and violent crime continue to increase in our city. The most troubling part of this problem is that it increasingly involves very violent, heavily armed young people who are being recruited into very violent gangs. Their actions have serious consequences for the entire city and state, but they are overwhelmingly concentrated in a few core areas.

Minneapolis is not alone as we face this problem. In large and medium cities across the country, shootings and other violent crime are on the rise, driven by violent youth with guns. That’s why I am working with the General Mills Foundation to convene mayors and police chiefs from across the country to meet in Washington, DC later this month to work together to address rising youth violence.

Crime is a complex problem that requires a complex set of comprehensive solutions. Our plan starts with tough enforcement, and also includes protecting livability, crime prevention and a relentless demand for clear accountability and consistent results.

The most powerful tool in any crime fighting strategy is to put more police officers on the street. We did that in last year’s budget and this year we are adding an additional 43 more officers. By adding these officers, we will return to a police force of 893 sworn officers—the same number we had in 2002, and a significant achievement considering we did that in spite of the slowed economy, the end of federal public safety funding, and $30 million less from the state each year.

More officers will be more effective in getting convictions because this budget will continue to expand the program we began that puts prosecutors in precincts so they can work directly with the police.

We can put even more eyes on the street because this budget also proposes spending one million dollars in each of the next two years on some of the groundbreaking public safety technologies that are already showing results. Two years ago Target funded 30 public safety cameras in downtown Minneapolis and our Downtown Safe Zone initiative put private security on a common radio channel with our police. These technologies have helped our police respond to developing problems and have led to record prosecution and conviction of chronic criminals.

Smart use of technology makes our police more effective and now it’s time to extend that work into more neighborhoods. We started that in last year’s budget by funding more security cameras and Shot Spotter technology. The substantial investment I am proposing in each of the next two years will enable us to dramatically expand this work, and the project can go even further because it can use the new citywide wireless Internet backbone we are also building next year. Together all these technologies will be integrated into a cutting edge network that will help our police provide the tough enforcement we need, and keep repeat offenders off the street.

All of this needs to be coordinated into a single, focused public safety technology plan and that’s why I have directed Chief Dolan to commit to spending no money on this technology until there are clear criteria in place for how we select locations for these cameras and a commitment from those communities to be willing and aggressive partners.

As I just mentioned, the single largest driver behind our increased crime is the rise in ever more violent young people. We are sending a strong message to these young offenders—especially those in the barbaric gangs responsible for random deaths—that no matter how old they are they will be held accountable. We are putting more police on the street and we want them to do their job, respectfully and professionally. But we need to remember that having a safe place to call home is a basic civil right and we will not allow the worst offenders in our city to terrorize residents working to improve their neighborhoods.

There are some young people on the fringes of these gangs who can still be won back and who we cannot give up on. That’s why the grants were made this summer by the City and the Minneapolis Foundations to fund community-based programs aimed at reaching our most at-risk kids to get them off the street and out of gangs. We already planned to spend half a million dollars on these programs in the next two years and this budget proposes expanding that investment by $125,000 in 2007. I have also worked with Gretchen Musicant in our Health Department to identify existing funds to dedicate a full-time employee to implement these programs in tight coordination with the Police Department’s Juvenile Unit to identify early offenders and get them the voluntary or mandatory programs they need to recruit them out of the gangs and into a productive life.

Our public safety prevention programs will also include increased funding for domestic violence prevention and one-time funding for new homeless outreach efforts. This second proposal follows the recommendation of our Commission to End Homelessness and will provide long-term help to move people out of homelessness, will free our police for other work and will allow us to take a stronger stand against panhandling.

Along with tough enforcement and prevention, we will increase our focus on neighborhood livability issues. This budget funds an expanded, coordinated graffiti program that includes improved graffiti removal and reporting, tougher enforcement of existing ordinances, expanded education and the installation of art walls and vines on heavily vandalized property.

We are also increasing funding for problem property demolition and renovation. And we will be funding a citywide plan you will be hearing about more in the coming weeks called Safe Passage to School, which works with neighborhoods and schools on strategies to get our kids walking to their nearby schools safely. To help keep kids busy, we are also proposing that two more skate parks be built next year.

We are putting significantly more money into public safety and that is exactly what we need to do right now. But in return, we are going to demand results and accountability. Towards that end, this budget funds the creation of a police department administrator, whose focus on daily administrative issues—like managing overtime—will allow the police department leadership to focus on strategic directions to fighting crime more efficiently and effectively.

We also propose funding an expansion of the Results Minneapolis program being led by city coordinator Steven Bosacker, which will work with the police department, and all departments, on tracking outcomes and results.

And this budget will allow our successful 311 phone system to be open on weekends, taking more pressure off our 911 operators. In addition, we are funding more technology and training for our 911 operators to ensure that our new technology works effectively.

All this investment adds up. Public safety is Priority #1 and we are putting our money where our mouth is by spending almost $200 million this next year to make Minneapolis a safe place to call home.

Funding for just our police and fire departments alone has increased more that $30 million in the last five years. This is significantly more than we have spent in the past, and more of that is coming from your property taxes. In fact, property taxes have replaced state aid as the major funding for public safety. In 2007, property taxes will now support what local government aid used to support in 2002, plus all inflationary growth since then.

How exactly can we spend more on public safety, or anything, after the huge state budget cuts of the past few years? The answer is simple: we can get tough on public safety despite these state cuts because we have spent four years getting tough on the budget. Like that family facing a new challenge I talked about earlier, we brought our financial house in order so we could step up on public safety when we needed to. The only reason we are able to add 43 more officers next year and restore our police strength to 893 officers is because of our past fiscal discipline.

Facing serious financial difficulty four years ago, we changed course and stuck to it.

Back then, the 9/11 economy was sapping city revenues, the city had built up significant debt, health care costs were skyrocketing, wages had been almost double the rate of inflation for five years, the state was in budget chaos, state tax reform gutted our community development dollars for programs like NRP, and the city’s bond rating was downgraded, thus threatening to increase the cost of fixing our infrastructure.

We took on those problems directly and honestly. We laid out a plan that called for a balanced approach: tighter controls on spending, better long-term planning and real sacrifice. We capped wages and tax increases, paid down long-term debt, worked with our labor unions to reform health care costs and kept public safety our top priority. Now in the fourth year of five-year budget planning, we have restored financial stability and have more money to invest because we are spending less on debt. For the first time in six years our bond ratings have begun to improve.

Heres one example of what that means:
As a result of our commitment to pay off the credit card, we have reduced our debt by $80 million, which means we have $7.6 million more to spend every year on things like public safety and city services. This proves that by being tough on the budget, you can be tough on public safety.

We have come a long way on our fiscal journey, but we have serious challenges ahead that require our urgent attention: property taxes, pension costs, state funding and restoration of "non-safety" city services. Let’s take them one at a time:

Property tax reform:
For many years the City’s strong commercial base, especially in downtown, helped keep property tax pressure off homeowners. In fact in 1997 commercial/industrial property generated almost 60 percent of the city’s property tax revenue. Today homeowners are paying almost 60 percent. That’s because in 2001 the legislature changed the way the state collects property taxes, shifting much more of the burden onto homeowners and away from business. This isn’t just a problem for Minneapolis; it has led to residential property taxes skyrocketing all around Minnesota. The state went too far, they are pricing people out of their homes, and I will continue to fight for more residential property tax relief.

(As an aside, people often ask why all this new development going on in our city doesn’t mean more money for the City. Don’t those new condos on the river and the new businesses locating here mean we are getting a lot more property taxes at City Hall? Well the answer is that new growth in the city helps you as a homeowner, but doesn’t actually increase City revenue. The tax revenue we get from economic growth reduces the amount that each of us would otherwise pay in property taxes, rather than automatically increase revenue for the City. I know many of us would like lower property taxes, but taxes would be worse if our city wasn’t growing.)

Pension reform:
Pension challenges are a problem for governments around the county and, as you can see in Minneapolis; our costs have quadrupled since 2002. If we didn’t have this increase in pension obligations, we could have done everything in this budget without a property tax increase, or we could have added more than 150 officers and kept them for at least the next five years. We have been working to address this problem. We convened a Blue Ribbon panel on pension reform two years ago. One of their key recommendations almost passed in each of the past two legislative sessions, but both times the reforms were killed on the final days of the session. We need the legislature to pass these reforms and continue to work with our pension funds to make sure we meet our obligations to our past employees without robbing our ability to serve today’s employees and citizens.

Local Government Aid:
Minneapolis is a good deal for the state of Minnesota. We are the financial engine that fuels the Minnesota economy, the region’s cultural and entertainment center and we put more tax money into the state than we get back. In spite of this contribution state local government aid has been cut dramatically. By 2005 the cut had reached $37 million annually. A small part of that cut was restored last year, but we still got $31 million less than expected in 2003—and deeper cuts are anticipated.

During the LGA debate at the Capitol, I took, and this city took, significant criticism from state officials about our finances. We need to set the record straight. I will put our financial management up against the state’s financial management any day of the week. Since 2003, city spending went up 9% while state spending went up 15%. We maintained our bond rating while the state lost theirs. Every level of government faces challenges these days and I look forward to an improved partnership with the state. But Minneapolis is producing for the state and we deserve our fair share.

For the record, this budget, like all the budgets I’ve delivered, is structurally balanced over five years. This year, I have pushed the boundaries of that structural balance to the limit like never before. I’ve done that to meet our most urgent need—public safety. But if we do not get new, collaborative leadership from the state, we will likely spend the next several years just trying to maintain funding for our new officers and the other public safety investments we’ve made without addressing other pressing city needs.

Other important public services:
We have rightfully focused on public safety, but our financial challenges have also meant significant sacrifices for other important basic services. Our parks, our libraries and our basic urban infrastructure maintained by our public works staff all have significant pent-up demand. I will continue to work with city staff in these areas to identify new solutions, and I will be especially focused in the next few months on working with the library board to extend hours in our extraordinary libraries that are closed far too often.

All these financial challenges have been with us for some time. We also face some new challenges on the horizon.

Tax increment financing decertification:
Tax increment financing was a tool the city used extensively in the ’70s and ’80s to revive parts of the city, especially downtown. New buildings were built with public subsidies, and the public got a return on that investment by using all the new tax dollars those buildings generated for 30 years. Well those 30 years are up and those buildings are about to go fully on the tax rolls. That’s good news for residential taxpayers because these buildings will pick up more of the cost city of city services, and provide tax relief. But it’s bad news for the City government. That’s because the state formula for local government aid penalizes us for bringing on these buildings. The net effect is that, in just a few years, tax increment decertification will cost the city government $6.1 million annually in lost local government aid.

Compensation policy:
Let’s remember why we adopted our current wage policy: it was to preserve jobs and city services. If not for the 2% policy, more than 500 jobs would have been eliminated in 2003. That was true then and it’s still true today. This graph projects the layoffs and service reductions we would face per year under higher wage policies. We know these layoffs and reduced services are not acceptable. We also know Minneapolis needs to be a competitive employer into the future and our current wage policy is not sustainable. Therefore we need to seek new revenue strategies for the City keep and retain talented employees with a compensation policy for the future that is both fair and competitive.

I will be convening Council Members and community leaders in the coming months to begin to address these new challenges with honesty and real solutions and I look forward to your partnership in that effort.

We have rightfully focused on public safety today, but this budget also makes substantial progress in other key areas, including:

Over the next few months I will be delivering policy speeches in each of these areas that highlight the work the city council and I have been doing in each of these important areas and lays out specific budget proposals to fund that work.

I want to end this speech the way I began: by talking about people in our city facing challenges.

I am painfully aware that in many neighborhoods in our city safety continues to be a major concern, and we cannot rest until everyone can call every neighborhood a safe place to call home.

To those struggling with public safety, we are saying today that there will be more police on our streets and they will be equipped with cutting edge technology to put more eyes on the street and keep chronic offenders off the street.

We are saying that we are investing in proven programs that win back kids who begin to slip away, and we are investing in fighting graffiti, problem properties, homelessness and those basic issues that affect a neighborhood’s livability. We are investing in jobs, in housing, in community development, in young people, and in all the other upstream solutions that build hope.

But in all honesty, I have to tell you that it is not enough. No matter how many police we put on the streets, no matter how much we spend downstream and upstream, we will not win this battle unless together we get at the deeper issues that are creating the problems behind our challenges.

Inside and outside the walls of City Hall, we need to reestablish the community values that surround every kid with a trusted adult, that keep kids from having kids of their own, and that prevent our communities from becoming dumping grounds with an over-concentration of needs. We need values that say NO to people from elsewhere who think it’s alright to engage in illegal prostitution in our city, that say NO to a drug trade that literally leads to death, and that say NO to a culture that finds ways to settle conflicts with deadly weapons.

In a city where so many things are going right, we know we are up to the task. And when we succeed, Minneapolis can take its rightful place as the great city of our time. And we should settle for nothing less.

See Also…

Last updated Sep. 27, 2011