MINNEAPOLIS — With Minneapolis taking big financial hits from both COVID-19 and the protests over the summer following the death of George Floyd, the city experienced a $156 million revenue shortfall in 2020, and Mayor Jacob Frey's proposed budget for 2021 does not expect it to recover immediately.
According to the proposal, Minneapolis can usually expect over $32 million from local sales and entertainment tax receipts to be transferred into the city's General Fund and support economic development and government services.
Because of losses in that industry, $22 million of that will not be transferred into the General Fund in 2021, and that in addition to a 5% drop in Local Government Aid from the state of Minnesota accounts for a budget loss of about $26 million.
Keeping those losses in mind, Frey's proposal assumes a year of gradual recovery. All departments would experience cuts to current service levels, and the property tax levy would increase by 5.75%.
Departmental activities that would experience the largest cuts are:
- Community Planning & Economic Development: 28% cut, from $57.9 million to $41.7 million
- Debt Service: 20.2% cut, from $150.9 million to $120.4 million
- Convention Center: 15.3% cut, from $118.6 million to $100.5 million
Despite local pressure to reallocate funds from the Police Department to fund different means of public safety, and the city council's motion to replace it, Frey's proposal will only reduce it by 7.4%, from $193 million to $178.7 million, giving it the fourth highest budget for departmental activities.
However, the budget does invest in several safety and violence prevention efforts beyond policing. This includes an expansion of the mental-health co-responder program, $2.5 million for the MinneapolUS violence interrupters initiative, and $300,000 of ongoing funding to support the continued implementation of the recommendations from the Mayor’s opioid task-force.
It also recommends the City Council adopts an early retirement incentive program to help balance the budget and prevent job losses.
“This budget makes tough but necessary decisions to minimize layoffs while preserving core city services and maintaining flexibility for important decisions in the future,” Frey said in a press release on Wednesday. “By restructuring departments to improve efficiency, we are laying the ground work for Minneapolis to be better able to expand funding for key priorities like affordable housing and economic inclusion when the recession is over.”
His priority for affordable housing involves a $7.2 million increase in ongoing funding, including a boost to the city’s Affordable Housing Trust Fund. It also makes permanent the Stable Homes Stable Schools initiative, which is a program launched by Frey that provides direct rental assistance to families of elementary school students that are experiencing homelessness.
“We cannot set aside our commitment to affordable housing and inclusive economic growth because of the pandemic – instead, we must double down on it,” said Frey in the press release. “That’s why we’ve increased ongoing funding for affordable housing to record levels and allocated funding for important recovery work.”
Frey has also proposed allocating $5 million in one-time tax increment financing (TIF) funding for the Commercial Property Development Fund (CPDF) along with $500,000 in ongoing funding for the CPDF, at least $400,000 in supports for the Minneapolis Forward Community Now Coalition, and $250,000 ongoing funding for the Green Energy Cost Share program.
