Frequently asked questions dealing with State cuts to Minneapolis’ 2009 budgetWhy must Minneapolis redo its 2009 budget? Why must Minneapolis redo its 2009 budget?Although the City of Minneapolis’ 2009 budget was approved in December, State of Minnesota cuts in aid to cities are forcing City leaders to revise the 2009 budget with significantly less revenue. In late December, Governor Tim Pawlenty cut $13.1 million in Local Government Aid (LGA) to Minneapolis just days before that money was to be sent to cities. A revised 2009 budget must cut that amount, and budgeting must be done with an eye toward planning ahead for the likelihood of longer-term cuts in State aid. In late January, the Governor proposed a new biennial State budget that would make even more significant cuts to Minneapolis in the next two years. Cutting $13 million from the budget will be challenging, considering that even before this most recent cut, Minneapolis already received nearly $38 million less in LGA than it did in 2003. While Minneapolis has experience handling difficult financial situations, the magnitude of the needed cuts means changes or reductions to some City services will be unavoidable. It is important that City leaders move quickly on cutting the budget in order to minimize the severity of the cuts. Because the City is already spending money from its 2009 budget, each week that passes means an even larger cut will have to be made from the remaining portion of the year. How much is $13 million?$13 million is a significant amount of money for Minneapolis and the taxpayers in this city. This amount represents the equivalent of paying for 130 police officers or 150 firefighters. Looked at another way, it represents a cut that is about twice as much as it cost the City to respond to the I-35W Bridge collapse. $13 million is more than twice the amount that Minneapolis spends each year for maintenance of City streets. It is about the same amount as the City’s annual budget for operating traffic infrastructure like street lights, traffic signals, traffic signs and lane striping. It’s also considerably more than the $8 million Minneapolis spends each year to plow streets and do other snow removal. $13 million is more than one-and-a-half times what Minneapolis spends each year on criminal prosecution. What kind of spending must be cut?The $13.1 million that was cut in late December would have gone into the City’s general fund, which pays for services like police and fire protection, health and family support, and public works services like street repairs, snow removal, and infrastructure improvements. More than half of the general fund goes to pay for public safety. General fund spending for 2009 was to have been $378 million, and the cuts must come from that part of the budget. The general fund is primarily funded through property taxes and Local Government Aid from the State of Minnesota. The City’s overall budget for 2009 is about $1.4 billion. The vast majority of the budget is restricted for specific purposes. For example, water revenues can only be used to support the City’s water system. The only discretionary spending in the budget is within the general fund. How can the public share ideas about cutting the budget?City leaders are involving residents and businesses to help make these difficult budget decisions. Because making these significant cuts will affect services, City leaders want to hear from the public about how they prioritize the City services they receive. Mayor Rybak will host two community meetings in February where people can come and give their input into priorities for the upcoming budget revisions and share their ideas for saving money and cutting services. For more information on the meetings, visit www.ci.minneapolis.mn.us/2009budget. After the Mayor has completed a revised 2009 budget proposal, there will be additional opportunities for residents and other taxpayers to share their priorities and opinions as the City Council considers the revised budget. The City of Minneapolis also has resources available on its Web site at www.ci.minneapolis.mn.us/2009budget to help folks understand more about how the City’s budget works. They can also share their ideas for cutting costs and tell the City how they would prioritize the services they receive by taking an online survey. They can also take the survey by calling 311. What is the process to revise the budget?Because it’s important that Minneapolis leaders move swiftly to revise the budget, the process will unfold quickly. Following the opportunities Minneapolis residents, businesses, and employees have to share their priorities and opinions, Mayor Rybak will present a proposed revised budget to the City Council by mid- to late February. It’s expected the City Council process will lead to the approval of a new budget in March. How did Minneapolis deal with similar cuts in 2003?The State of Minnesota first made significant cuts to Local Government Aid to cities in 2003. Because of those cuts and ones that have followed, City leaders know from experience that there are only a few options. At that time, Minneapolis dealt with State cuts the only way it could, by making cuts to public safety services (which makes up more than 50 percent of the entire general fund budget), by deferring infrastructure investments, and by increasing property taxes. In the years since 2003, Minneapolis invested considerably to rebuild its public safety services, but increases in funding for police and fire have come at the expense of infrastructure. After the 2003 cuts, Minneapolis also implemented a 2 percent wage cap and worked in partnership with employee unions save money by redesigning the City’s health plans. What has Minneapolis already done to address these budget challenges?Minneapolis is in a better position today to weather difficult economic times and financial challenges than in the past. Since 2002, City leaders have taken significant steps to streamline City services, find efficiencies, and address its financial challenges. Part of that work has focused on decreasing Minneapolis’ debt. Since 2002, $86.5 million in City debt has been eliminated, including paying off an internal services fund deficit that amounted to $38 million in 2000. Long-term financial planning has maintained City reserves and assures that ongoing expenses are supported by ongoing revenue. Each year, the City plans five years in advance and implements streamlining and reductions to planned growth. Even before the governor’s most recent LGA cuts, the Mayor and City Council began taking steps to address the current and coming financial difficulties. As part of that work, the City instituted a hiring freeze for City departments in December 2008. City of Minneapolis Finance Department Jan. 30, 2009 |