2011 budget has City spending less than it did in 2001

In an effort to provide some property tax relief to Minneapolis homeowners, the City Council and Mayor R.T. Rybak have approved a tax levy that is $6.1 million less than the levy initially proposed in August. The new City budget reflects a 4.7 percent property tax increase — a reduction from the 7.5 percent increase proposed in the Truth in Taxation statement sent to Minneapolis taxpayers in November.

In the end, next year’s budget will have the City spending less than it did 10 years ago. Adjusting for inflation, the 2011 budget reduces City spending 7 percent below the 2001 level.

To make this reduction possible, the City will cut approximately 80 jobs in 2011 as well as reduce funding for affordable housing and projects at the City-owned Target Center. Funding to the Minneapolis Park and Recreation Board and the Municipal Building Commission will also be reduced.

In determining how to further reduce the budget, the mayor and Council looked for ways to keep providing core public safety services, make long overdue road repairs and fight the recession by continuing to fund job-creation and business-support programs.

In addition to the cuts for the 2011 budget, the Council also approved a package of cost savings for 2012, 2013 and beyond that includes budgeting for no increases in City salaries for two years and capping non-personnel spending in the old Neighborhood Revitalization Program while assuring funding for ongoing neighborhood programs.

City leaders have been committed to investing in neighborhood revitalization, recognizing that the work done by neighborhoods is instrumental in strengthening our communities and providing a unique quality of life to our residents. However, City leaders are faced with tremendous budget challenges due to the downturn in the economy, skyrocketing pension obligations and $54 million dollars in cuts passed onto the City by the State in the past three years alone.

Even with these painful cuts, most Minneapolis property owners’ taxes will still rise in 2011, in some cases by double digits. This is because many of the factors that influence how much Minneapolis homeowners pay in property taxes are out of the City's direct control. These include increasing obligations to closed pension funds that the City does not control, tens of millions in State cuts to Local Government Aid, changes in how commercial and residential property values are balanced, and the overall state of the economy. In addition, the City recertified a special taxing district to fund Target Center debt relief and neighborhood programs, which reduces the value of the property available for general taxes.

The Council also passed another $23 million in cuts that would be triggered in February if the governor’s recommended State budget includes less Local Government Aid for Minneapolis than the $87.5 million in aid that the State certified earlier this year.

These budget cuts come after years of responsible fiscal management by the City of Minneapolis. Over the last nine years, the City has paid down or avoided $130 million in debt, restored its AAA credit rating with all three national ratings agencies and structurally balanced spending to revenue five years out, not one year at a time. In addition to shrinking spending (after inflation) compared to 10 years ago, the City will also have fewer full-time positions than it did 10 years ago.

Only 33 percent of the property taxes that Minneapolis residents will pay in 2011 will go to the City of Minneapolis. The rest will go to fund other levels of government and special levies, including Hennepin County, Minneapolis Public Schools and Minneapolis Parks and Recreation Board.

For more information, see on the City's 2011 budget.

Published Dec. 13, 2010