It’s official: No tax increase in next year’s City budget

It’s official: the City of Minneapolis will not increase the property-tax levy in 2012. That’s because last night, the City Council unanimously passed the no-tax-increase budget that I proposed in September.

The newly-adopted 2012 City budget makes a major new capital investment in street improvements and invests in the coordinated One Minneapolis initiative to start eliminating racial disparities in jobs and wealth. It also maintains investments in public safety that have brought down violent crime citywide to historic lows, and eliminates no positions in the Fire Department.

This budget reflects many years of sustained hard work to pay down debt, cut spending, end a broken pensions system and restore the City’s financial health.

  • Since 2002, we have paid down $183 million in debt and restored the City’s AAA credit rating.
  • We are spending 9 percent less than 10 years ago and have 12 percent fewer full-time positions than 10 years ago.
  • We will spend basically no more money in 2012 than we are in 2011.
  • Earlier this year — after seven years of trying — we negotiated a merger of two closed City pension funds with the State’s public-employee retirement system that averted a $20 million tax increase that would have been forced on taxpayers in 2012.

With the passage of the budget, we’re also making a major new capital investment in street improvements. Starting next year, we will invest $150 million — 60 percent more than we had previously planned — in making our streets better over the next five years. It starts next year with investing $9 million more in street improvements in 2012 than previously planned, then ramps up in 2013 with $23 million more in improvements.  

This investment also means that we’ll be taking a lot of union workers in the building trades off the bench and putting them to work.

But a decade ago, when the City was debt-ridden and had lost one of its AAA bond ratings, we simply couldn’t have borrowed the money to do it. Today, however, because we’ve paid down so much debt, we can borrow at low rates to pay down our infrastructure debt. And make no mistake about it: a pothole in a street is just another kind of debt.

I’m pleased that we’re also investing in the coordinated One Minneapolis initiative to start eliminating long-standing disparities in jobs and wealth in communities of color, particularly in the African American community. We will start by training and placing people in good jobs in the green-manufacturing economy through the RENEW initiative, with help from federal economic-stimulus dollars. It’s long past time to end these shameful disparities.

This budget didn’t come easy. Even with the strong foundation of fiscal health that we have laid over the past decade, we had to work hard to bring it in with no tax increase for next year because of yet another cut by the Legislature in Local Government Aid (for a total of $405 million in the past decade), and because of continued declines in commercial and residential property values, among other factors.

This budget doesn’t come without pain, either. We made cuts to nearly every City department and service. Altogether, these cuts will mean about 100 fewer positions at the City in 2012. Some of them were already vacant, but many of them weren’t. As a result, a lot of hard-working public servants will be without jobs next year.

The residents, public servants and taxpayers of Minneapolis have been incredible partners as we have tried to balance many different but equally important needs — holding taxes and spending down, paying off debt, making streets smoother and safer, making the economy stronger and creating opportunity for our youth. I’m pleased that our years of hard work are paying off next year in a budget that will meet many of our needs without one more dollar in property taxes.

(All that said, it’s frustrating that many taxpayers will still see increases next year even though the City isn’t raising any more money from property taxes. Much of the reason is that the State Legislature eliminated a property-tax credit called the Market Value Homestead Credit. The City of Minneapolis Truth in Taxation website explains this in more detail.)

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