State promises, cuts and consequences

When I presented my 2011 budget for the City on August 16, I said that I expected the State of Minnesota to deliver fully on their commitment of Local Government Aid (LGA) to Minneapolis next year. And I meant it: Minneapolis residents should hold the State accountable for the promise it has made to us in current law. (Not least because Minneapolis is net contributor to the State’s budget — we pay in far more than we get back.)

But at that time, I also recognized that because of the State’s $6 billion budget deficit — as well as the fact that for three years in a row, they have delivered less than they have promised — we need to be ready if the State breaks its commitment to us again in 2011.

Today, I released a sequenced series of cuts to City services, totaling $18 million, to take effect if that happens. I am proposing to make these cuts in the following order, depending on the magnitude of the cuts that the State might make to Minneapolis’ promised LGA next year:

1)     Cut $6.1 million by delaying payment on pension debt;

2)     Cut $4 million in preventive street maintenance, street resurfacing and alley resurfacing;

3)     Cut $0.72 million in innovative, cost-saving initiatives;

4)     Cut $1.4 million more by delaying payment on pension debt;

5)     Cut $5 million more in street and alley maintenance and resurfacing;

6)     Cut $0.7 million in the Fire Department.

Each one of these cuts has consequences.

  • Cuts to street maintenance will mean that extended over five years, 300 miles of City streets will not receive basic preventative maintenance, 66 miles of streets will not be resurfaced and eight miles of the worst alleys will not be resurfaced. (I outlined these consequences in more detail in a September 2 presentation.)
  • Delaying payment on pension debt will mean that in subsequent years, it will be harder for the City to keep police and firefighters on the job and will make property-tax increases more likely.
  • Cuts to the Fire Department will mean layoffs of eight firefighters.

I would strongly prefer not to have to make these cuts. Indeed, I wish I could propose only one budget a year, but because of ongoing uncertainty about the State’s budget, we need to adopt this two-tiered approach to budgeting now. We must hold the State accountable to following current law and following through on its commitment to Minneapolis, but we must also spell out ahead of time what cuts we will make if it does not.

In addition, should this sequence of cuts still not be enough to fill the gap created by State LGA cuts, I will consider an increase of one more percentage point in the property-tax levy. That increase would raise roughly $2.6 million.

I am asking the City Council to pass both the budget I proposed on August 16 and these “Plan B” cuts. If necessary, the cuts will be triggered based on the budget that the new governor proposes next February.

Making cuts to City services when the State doesn’t deliver on LGA isn’t new: we’ve done it for the last three years in a row, and this year, we’re just planning even further ahead. As we know from years of experience, the sooner we make them, the less difficult they are to absorb. And by planning even further ahead, we’re making it easier for our employees to plan their work and for residents to know what services they can expect.

I’m proud that every budget that I have delivered and the City Council has passed has been balanced five years out, not just one year at a time. I’m proud that even in the midst of the worst recession in decades, we have paid down $130 million in debt and carefully managed our costs. And I’m especially proud that through it all, public safety has remained our #1 priority.

We have done some hard work, but many challenges and uncertainties lie ahead. Your feedback throughout the budget process is essential, so please contact your Council Member or me with any concerns, questions or good ideas you may have. I look forward to hearing from you.

P.S. You may also access detailed information about the budget on the City of Minneapolis website at:


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